Since the early days of independence, Singapore has had to learn by doing, alert to opportunities and threats at all times, while correcting and adjusting policies along the way. As a result, the need to be tough, disciplined, and pragmatic has permeated the mindset of Singapore’s leadership. This has translated into the following fundamental tenets of governance:


The principle of self-reliance. No one owes Singapore an existence. Singapore has had to eke out a living with hard work and the ingenuity of her people.


A firm belief in the importance of “Reward for work; Work for reward.” The Government discourages corruption and nepotism and promotes meritocracy for the best use of talent. There are minimal welfare benefits, and government subsidies are focused on education, health and public housing, with co-payment elements to discourage over-consumption.


Test for results, not popularity. Policies should not be determined by ideology or dogma. Ultimately, the methods adopted are the ones that deliver the most effective results.

Effectiveness of the market system

The above fundamentals underscore the importance of rational analysis and economic principles in policy making. From the outset, Singapore’s leaders recognized both the effectiveness of the market system in rewarding effort, innovation and enterprise, and the potential to make use of market forces to improve the functioning of government. Over time, Singapore has grown to rely on the market as the predominant mode of resource allocation. The Government intervenes only when market failures exist. I.e. when there are positive or negative externalities or lack of competition and poorly inform buyers and/or sellers.

Market principles are integrating into many government policies, programs, and operations. Some examples include social security; public housing; health care; education; road congestion and vehicle ownership and usage; the foreign workers’ levy; government-linked companies’ technology and cluster development; and markets in government agencies. It’s illuminating to take a brief look at how these policies were developed.  Additionally, consider the use of market principles in each.

Quality of Governance

Using market mechanisms to improve the quality of governance has become a popular idea in recent years. It is drive by the need to make government more efficient financially and more effective in terms of delivering a set of essential benefits to its population. The incorporation of market-driven activities in what used to be exclusively government’s territory is happening in many ways in countries throughout the world, through privatization, though the private sector displacing the public by being more effective at particular activities, and by government initiative driven by the need to be more efficient and effective. In considering how to use markets to govern better, Singapore provides valuable lessons. This is because it has one of the most proactive governments in the world in seeking market-based techniques to enhance the quality of government performance.

To provide greater access to this important experience there are many ways which Singapore has used the market and market based techniques to improve the quality of government. In fact, the examination was done of the Singapore policy environment. Results varied to a large degree from Singapore’s unique history and situation. In fact, it is this environment of strong leadership, self-reliance and discipline, using medium and long term results, not popularity, as the test for effective policy, and small size in terms of population and geography that has facilitated a process of exploring the best ways to use the market to improve governance.


Second, they review the specific principles that guide the Singapore’s use of market mechanisms. Examining both market and government failure shows how market and government can each use to reinforce the other’s shortcomings and thereby obtain desire results.


Third, the nine specific cases that are even online providing show how Singapore uses market-base mechanisms to meet public goals where it is persuading they will perform more efficiently than government. These cases provide other countries with an important opportunity to observe and learn from carefully throughout and tested policies across a range of activities from social security systems, to infrastructure management, and activities to promote economic development. It is these cases that provide the richest potential for learning and the transfer of experience. Fourth, it concludes by suggesting that Singapore’s experience shows how using market-based mechanisms in the public service has strengthened rather than eroded the quality and influence of government.

In Singapore, the extent of market use in governance reflects strong government. Many observers of Singapore’s success have to ponder how it might be replicating in their own country. Such hopes are illusory. As it was many times before pointed out, Singapore’s overall success or development model is to an important degree, the result of its unique context and circumstance. In fact, it cannot be replicated elsewhere. Such wishes often cause others to overlook the great opportunity Singapore does offer to learn from its specific successes in finding pragmatic policy solutions to issues many countries face.

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