Singapore´s Development: Harnessing the Multinationals

Abstract

Various opinions have been expressed concerning relations between multinational corporations and their host nations. To some, these relations are seen as exploita tive and highly damaging to the nation.1 To others, the contributions of multi national corporations to their host nation's development have been positive and highly desirable.2 In spite of these diverse opinions regarding multinational-host nation relations, most host nations do believe that could induce business firms to respond adequately to national interests'' .3 The fact that most host nations do offer incentives to multinationals to do business in their respective countries does imply this fundamental belief of host governments. Otherwise, the offer of incentives would be meaningless, unless one chooses to believe that host nations are so much under the dominion of the multinationals or their home nations that they are coerced into offering such incentives. It is no doubt true that many nation-states are fearful of their loss of sovereignty,4 which could be economic or otherwise, with the invasion of multi nationals onto their national soils. The conflict of interests is real.5 The social costs incurred by the presence of multinationals in the host nation could be considerable and the political ramifications could be frightening. Yet, most nation-states do desire multinationals on their shores. Singapore is one such nation. Its past history is one which is closely linked with multinationals and its present development also derives much from them. The importance of multinationals (foreign investment) in Singapore's development today is clearly seen in the following statistics: 1. The net investment commitments in manufacturing in recent years are mainly foreign. For the years 1979 to 1985, official statistics reveal that foreign net invest ment commitments in the manufacturing sector varied between a high of 87.3 per cent in 1979 and alow of 65.8 per cent in 1981. In 1984, it was 73.1 percent, and in 1985, 79.6 per cent.6 2. The foreign component of the gross national product (that is, GNP at market prices minus the indigenous GNP) constituted about 20 per cent in recent years (23.1 per cent in 1980, 19.7 per cent in 1981, 19.6 per cent in 1982, 20.0 per cent in 1983, 18.6 per cent in 1984, and provisionally 18.7 per cent in 1985).7 This paper traces the historical evolution and development of the symbiotic relationship between Singapore and the multinationals, and how this has led to Singapore's development. It also examines how Singapore manages to harness 56