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International Production and Industrial Transformation: The Singapore Story

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  • Prema-chandra Athukorala
  • Raveen Ekanayake

Abstract

The expansion of global manufacturing value chains (GMVCs) as a major mode of economic globalization opens up opportunities for latecomer countries to industrialize and carve out niches to specialize within the value chain, instead of producing a good from start to finish within their national boundaries. However, whether this provides a pathway for self-sustained industrialization remains a debatable issue. Sceptics argue that, since multinational enterprises (MNEs), which are the ‘lead firms’ of GMVCs, dominate upper-end activities of the value chain such as product design, research and development, global marketing, and after-sales care and services, a country located lower rungs of the value chain has little room for industrial upgrading. This paper aims to contribute to this debate through an in-depth case study of industrial transformation over the past six decades in Singapore, the first country to embark on an MNE-led export-oriented industrialization strategy based on the prophetic foresight of unfolding opportunities for global economic integration within GMVCs. The findings suggest that, while Singapore had some country-specific advantages, it was hard-headed national development policy that was instrumental in transforming the country from ‘the third world to the first’ within a generation. The key general lesson from the Singaporean experience is that industrialization success within GMVCs requires embedding FDI promotion in a comprehensive national development strategy that makes the country an attractive location for international production and continuously monitoring and recalibrating the development strategy in line with evolving patterns of international production.

Suggested Citation

  • Prema-chandra Athukorala & Raveen Ekanayake, 2024. "International Production and Industrial Transformation: The Singapore Story," Departmental Working Papers 2024-4, The Australian National University, Arndt-Corden Department of Economics.
    • Handle: RePEc:pas:papers:2024-4
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    File URL: https://acde.crawford.anu.edu.au/sites/default/files/publication/acde_crawford_anu_edu_au/2024-06/acde_td_athukorala_and_ekanayake_2024_04_r1.pdf
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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