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).