World Bank

The World Bank is currently advising newly industrialized countries on how to encourage growth and they have asked for your help.

Using the internet and other resources, research the factors behind economic growth in Hong Kong and Singapore. Which of these methods of encouraging growth would you suggest to a newly industrialized economy?

It appears the East Asian market, especially, Singapore and Hong Kong have come out of there economic slump quite miraculously. Through a variety of methods they have ensured a strong economic future, not only for themselves, but for the world economy. They currently rival Europe in its trade with the United States (Stanford News Service, 2006). The question is how they got to this point and how other It appears Singapore and Hong Kong’s success lay in three common factors. By creating a strong infrastructure, following an American economic philosophy, and utilizing economic freedom they have risen from the ashes to become a strong power in an economy based world (Stanford News Services, 2006). According to John M. Leger, hard work + low taxes + high savings + minimal government have equaled an economic boom (Stanford News Services, 2006). Leger has found East Asians work longer hours and have fewer paid holidays than workers in Europe; in addition Koh has found the maximum income tax rate is lower which encourages savings (Stanford News Services, 2006). All in all this allows a strong development of infrastructure due to the countries being able to finance domestic investment, especially in education (Stanford News Services, 2006). In areas of education and post secondary education, birth rate mortality, agriculture, and a lack of severe price distortions Singapore and Hong Kong have been able to create a strong, stable infrastructure (Stanford News Services, 2006).

newly industrialized nations can follow in their foot steps.

Singapore has since realized that it cannot continue this level of growth by just increasing inputs to production. Therefore they are trying to increase their rate of technological progress. I found that the government promotes high levels of savings and investment through a mandatory saving plan known as the Central Provident Fund. They also spend a large portion of the budget on education and technology, with the former accounting for 21% in 2005 compared to the 4% the United States spent in 2005. Singapore is service by two large engines, manufacturing and financial business services account for 26% and 22% of the GDP respectively.