SINGAPORE: Singapore's economy may not see spectacular growth like it enjoyed over the past 10 years, but prudent government policies have also ensured that economic growth does not stall to hit low levels seen in matured economies.
That is the view of renowned economist Professor Lim Chong Yah who was also the key architect who overhauled Singapore's wage system in the late 70s.
Presenting his Trinity Growth Theory at the East Asian Economic Association conference on Friday, Professor Lim highlighted the importance of government, labour, entrepreneurs and connectivity to the rest of the world as factors that will drive any economy to higher growth rates.
Professor Lim classified the different national economies into three broad groups: the 'turtles', 'horses' and 'elephants'.
'Turtles' refer to economies with the lowest income and are still in the pre-industrial stage.
'Horses' are galloping economies with high levels of economic growth rates.
However, any reduction in foreign skilled labour may stall growth rates and turn the economy into an 'elephant'.
Professor Lim said: "Singapore would have become an 'elephant' economy with slow growth rate but... we have continued to invite foreign investments and we open the door widely to the influx of foreign labour. It makes us and contributed to our growth rate."
However, attracting skilled foreign labour remains a challenge for Singapore.
Song Seng Wun, regional economist, Singapore Research, CIMB Research, said: "Labour growth is likely to be slower and unless we see significant improvement in how existing labour is being deployed and how capital is used... it is sensible to say that Singapore would follow the traditional model of where developed economies have gone to - a more matured state and slower growth."
Professor Lim noted that Singapore's economy is in demand for skilled and professional workers, however, the influx of low-cost unskilled foreign workers has contributed to a lowering of wages.
Professor Lim said: "It contributes to the lowering of wages at the lower level, that's why we have a lot of people drawing less than S$1,000 a month."
The professor added that the current free-trade zones in Southeast Asia are also a good way to promote economic growth.
However, he warned that the region should stay away from initiating a move towards a single currency.
He believes this may cause the same problems faced by the eurozone.
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