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The World Bank's shared history with Singapore

Jordan Z. Schwartz's picture
The 50th birthday of the nation this year has given Singaporeans a chance to look back with pride at the achievements over the course of one generation—as a country, as an economy and as a people.
 
But it is not only Singaporeans who have a vested interest in understanding the causes of their economic growth and vast improvements in quality of life over this past half-century.
 
For those of us in the field of economic development, who advise and invest in emerging markets and developing economies so they might alleviate poverty and grow equitably and sustainably, we view these ingredients of success as critical to our mission.
 
If only we could reverse-engineer the magic elixir, the recipe for success could then be applied to other countries still struggling to improve health outcomes and reduce illiteracy, to offer their populations reliable and affordable basic services, good jobs and better lives.
 
There is a mountain of literature on how Singapore and the other East Asia Tigers grew so quickly. But because the Singapore Story mixes strong elements of liberal economic policies—free trade, low taxes, open financial markets with strong elements of government intervention—economic historians tend to find their own biases confirmed by the Singaporean experience.
 
Perhaps the development community must go back into our shared history with Singapore to understand what worked and how those choices came to be.
 
Surprisingly, the answer to our quest to understand how different economic policies were married successfully in one storyline may be found, in part, in the World Bank's own archives.
 
The World Bank’s support for Singapore pre-dates independence. Just prior to unification, a mission from the World Bank travelled to Singapore and Malaysia for three months. They studied the economic potential of each area and the impact and challenges that unification would confront.
 
The World Bank’s Department of Operations for the Far East quietly produced a less public report titled The Current Economic Position and Prospects of Singapore in February 1963.
 
The team that authored that report wanted to build a program of financial and technical support based on what they saw as Singapore's potential growth areas and the need for an organized structure around trade and industrial development. It called for greater investment in basic service delivery and trade infrastructure and a strengthening of the institutional capacity for planning.
 
It analyzed and endorsed Singapore’s ability to take on external financing for more infrastructure.
 
Although Singapore had practically no external debt in 1963, lending to the island so it could expand public service and trade infrastructure may not have been intuitive. A quarter of its land was being used for agriculture purposes and commercial trade was declining, driven by the world's waning demand for natural rubber.
 
Moreover, the World Bank team estimated unemployment at 10 per cent while the population was growing at nearly 4% per year and the rate of growth in the labor market was increasing.
 
Still, the team of analysts recognized Singapore’s potential to convert power, water and trade infrastructure into factors of productivity. While inspired by a commitment to free trade and open markets, the World Bank report endorsed the Government’s commitment to deepening education and professionalizing the civil service and establishing and funding the Economic Development Board to implement industrial policy.
 
By 1970, however, the loans grew more varied, as did the economy. The World Bank Group is reestablishing itself in Singapore.
 
Inspired by Singapore's own success, by its central location and by the location of numerous institutions, private investors and capital markets operating, the World Bank is now growing its local office into a large hub, the first to be focused on infrastructure and urban development.
 
Across the region and beyond, Singapore provides a reminder that a strong social contract creates a virtuous cycle.
We all grumble about our taxes, tolls and tariffs, but life without safe water, predictable power, good roads and reliable public transport is much more costly—literally and figuratively.
 
Just ask any of the 1.3 billion people in the developing world who still have no access to electricity.

Comments

Submitted by kathy khuu on

Thanks for this nice history lesson Jordan and look forward to hearing more about our work there !

Submitted by JordanSchwartz on

Thanks, Kathy. The office in Singapore, which is a joint World Bank-IFC-MIGA Hub, will grow from about 80 staff to over 200 over the next two years. The main "themes" of the office are infrastructure and urban development as well as Treasury services. On the Bank side, we have PPP-CCSA staff and the Global Infrastructure Facility with growing presence from Urban (SURR Global Practice); Water; Transport; ICT; Energy & Extractives; and Trade & Competitiveness. On the IFC side, PPP Advisory Services (C3P) for all Asia is based there and there is a growing presence of investment officers in infrastructure as well as other sectors. IFC Treasury is also opening a trading desk with an adjunct team from Syndications arriving in parallel. The IFC's Asset Management Company has two equity funds based at the Hub as well.

Submitted by Wei Leen on

Thanks for this piece Jordan. I live in Singapore but did not know about her ties to the World Bank. Hopefully this will be the first of many excellent articles.

Submitted by JordanSchwartz on

Thanks for the comment, Wei Leen! As a Singaporean, you might find it interesting to know that the 14 loans that the Bank prepared for Singapore between 1963 and 1975 included financing for the deepsea terminal of the Port, for the Water Connector with Malaysia (which still provides about 50% of Singapore's potable water resources), power generation, mass transit systems, sewerage and flood management. We also capitalized Development Bank of Singapore (now DBS) and helped finance the new campus of the National University of Singapore. It is a rich history of engagement that focused first and foremost on basic infrastructure but then expanded into education, development finance and environmental management. We are very proud to have been a small part of Singapore's success story.

Submitted by GovindD on

Thank you for the information Jordan. It is interesting to know that the World Bank capitalized DBS and helped finance NUS. With the rich experience on its side, I am sure the World Bank Group can play its part in recreating the success in other countries in the region. All the best!

Submitted by Lay on

This is such a helpful article to appreciate the ties between the World Bank and Singapore. May the Singapore Hub continue to flourish under Jordan's good leadership and the talented team here to share their time and expertise.

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