5 May 2017

How education drove Singapore’s development

Markéta writes:*

Singapore’s ability to grow from a third-world country to one of the most developed countries in the world [pdf] might sometimes be (by mistake) only attributed to the Singapore’s ability to generate economic growth. Although, the economic growth played a crucial role in Singapore’s success, the role of education should not be underestimated.

When Singapore gained independence, its prospects did not look good. Singapore was very poor, undeveloped with no natural resources (Ibid.). Moreover, approximately 40 % of the population was illiterate and still living in slums along the polluted river. Singapore’s first prime minister Lee Kuan Yew), early realized that Singapore’s success would rely on the capabilities of its population to effectively respond to the regional and global opportunities. Therefore, Lee Kuan Yew emphasized the importance of having educated and well skilled labor force [pdf]. In another words, he emphasized the importance of the provision of a merit good (education) that has a positive impact on the society as it generates positive externality of “consumption”. In the case of Singapore, the provision of education significantly contributed to the improvement of the quality of human capital, which ensured the Singapore’s ability to grow from the third world country to one of the most developed.**

Lee Kuan Yew was not worried about embracing elements from other school systems, which seemed as very effective. Thus, Singapore’s education was largely built on the British educational system that was introduced to Singapore during the colonial era in 1800. The success of the Singaporean educational reform was achieved through gradual focus] on the provision of education for all citizens and its emphasis on fields that supported the economic growth of the state. Furthermore, the provision of education in English in such diverse environment functioned as a bonding tool among the citizens.

In the 1960s-1970s, the government focused on the provision of primary education for all as there were many illiterate inhabitants. Later, in 1980s [pdf], the government started to emphasize the importance of secondary education with the main focus on science, mathematics, technology and engineering. Lastly, in the 1990s, Singapore experienced the boom of the tertiary education (universities) with the focus on the business education. Nowadays, Singapore continues to highlight the importance of education.

Bottom Line: Efficient provision of education can have a significant positive impact on the quality of human capital and thus can contribute to improvements in development.

Bottom Line

* Please comment on these posts by students in my growth & development economics course. It really helps if you highlight unclear analysis, alternative perspectives, better data, etc.

** In a figure:

Description: The Marginal Social Benefit (MSB) curve represents all the benefits enjoyed by the society from “individual’s consumption of education”, which is represented by demand curve D2. The Marginal Private Benefit (MPB) curve shows the private benefits that each individual enjoys from being educated, which is represented by demand curve D1. The difference between the MSB and MPB demonstrates the “size” of the external benefit which is imposed on the third party (MSB >MPB). The supply curve S1 represents both Marginal Private Cost (MPC) and Marginal Social Cost (MSC). The initial market equilibrium was at E1 at Q1P1, however the socially optimal equilibrium E2 was at Q2P2. By introducing the effective educational reform and governmental subsidies, Singapore generated new equilibrium E3 at Q3P3. It allowed Singapore to shift closer to the socially optimal quantity of education (Q2).


  1. Krisna Baghouzian5 May 2017, 23:23:00

    Dear Markéta,

    Thank you for the interesting blog-post, I had no idea that such a high investment in education was made in Singapore to contribute to its development! I especially liked the visualization of the supply of education (subsidized by the government) against the 'real' demand (versus what quantity should really be desired when considering the social returns from education in the long-term).

    You wrote that Singapore's education was largely built on the British education system and I think it would be interesting to elaborate on why exactly this style of education contributed to the development of Singapore, or how exactly the investment in education was a catalyst in Singapore's successful development. I state this because the article of Yousef (2004) that we read pointed out that in some countries in the Middle East, there are high levels of unemployment among youth with intermediate and upper levels of education because this particular education prepared them for jobs in the public sector (of which there are limited positions) rather than (practical) skills that may be necessary in the private sector. In class we speculated that this could have been one of the factors that led to the Arab Spring. Another example is Taiwan, which invested in higher education from the 1960s but there were some issues associated with this such as a devaluation in educational qualifications, with a high number of unemployed graduates (and people increasingly value practical education which lead to a higher guarantee for a job). You did mention that Singapore gradually invested towards higher education levels over the years, and perhaps this may be connected to the success of its educational investment. Furthermore, some other provisions or institutions (perhaps thinking in the direction of an expansion in the job market), or the particular forms of education provided by the government may be identified that allowed this to be a significant contributor to human capital in Singapore.

    I hope this is helpful and good luck on writing your final paper!

  2. Dear Marketa,

    Thank you for your blogpost about the correlation between having a strong educational system and the development of an efficient economy.

    However, I believe that there might be an interesting dimension that you should include in your final essay to make your point stronger. I believe that including a counter example of how a weak educational system might influence a weak institutional framework (both politically and economically.) For example, Cambodia would be a good case application for this approach. Through this counter example you could emphasize the importance that education has on the underdevelopment of the country. If you use Cambodia you could also take into account that both countries are South East Asia and then use education are the cause for their divergent development tracks. However, you must take into account the Khmer Rouge genocide, and maybe then focus on the educational system before this? They were a French colony and therefore had their education system built on the French one, afterwards, the Vietnamese implanted their educational structure into Cambodia. Therefore, maybe you could talk about how important the British Educational system was for the development of Singapore by showing that in Cambodia, the French and Vietnamese ones did not work. Therefore, Krisna has an interesting point, exploring the British education system and highlighting its strengths is a very important point to address in your essay since this could be the leading reason why Singapore’s education system is strong nowadays. If the British one is effective, then it probably had a lot of influence on the one the Singapore has today… which could imply path dependence? Good luck on your final draft, I think this is a very interesting analysis.


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