International Production and Industrial Transformation: The Singapore Story

Abstract

The expansion of global manufacturing value chains (GMVCs) as a major mode of economic globalisation opens opportunities for latecomer countries to industrialise by carving out niches to specialise 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 industrialisation remains a debatable issue. Sceptics argue that, since multinational enterprises (MNEs) dominate upper-end activities of the value chain, a country located in the lower rungs has little room for industrial upgrading. This paper aims to contribute to this debate through a case study of Singapore, the first country to embark on an MNE-led export-oriented industrialisation 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 hardheaded 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 industrialisation success within GMVCs requires embedding foreign direct investment (FDI) promotion in a comprehensive national development strategy and recalibrating the development strategy in line with evolving patterns of international production.