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Toasting a city state with no natural resources

Ben Paul
Ben Paul8/9/2018 09:00 AM GMT+08  • 7 min read
Toasting a city state with no natural resources
SINGAPORE (Aug 6): The narrative drummed into my head since my schooldays is that the prospect of survival for post-independence Singapore was a long-shot, because it had no hinterland or natural resources and a population that comprised diverse and relat
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SINGAPORE (Aug 6): The narrative drummed into my head since my schooldays is that the prospect of survival for post-independence Singapore was a long-shot, because it had no hinterland or natural resources and a population that comprised diverse and relatively recent immigrants. Even at that time, I had a feeling this wasn’t entirely true.

Singapore became a British trading outpost in 1819, and it has been attracting people from around the region eager for jobs and opportunity ever since. By some accounts, the local population was only about 1,000 when Sir Stamford Raffles first arrived, but swelled to 10,683 when the first census was taken in 1824. Singapore’s population grew further to 228,555 by 1901, and to 557,745 by 1931. The first post-war census, in 1947, put the population at 940,824. In 1965, when Singapore separated from Malaysia, its population was close to 1.9 million.

This week, as Singapore celebrates the 53rd anniversary of its independence, it continues to display all the hallmarks of a burgeoning city. Tall buildings are sprouting on its skyline, its airport is expanding and busier than ever, and its population has continued growing despite a chronically low birth rate. According to the Department of Statistics, Singapore’s population had topped 5.6 million in 2017.

None of this happened by accident, of course. Singapore actively sought out new growth drivers for itself as old ones waned. In particular, as the British withdrew in the 1970s, Singapore opened itself up to MNCs. Some feared the MNCs would exploit Singapore just as the British colonisers did. In fact, the MNCs created jobs, offered access to foreign markets, and brought technological and organisational know-how. Today, Singapore touts its international trade agreements, intellectual property laws, and transport and technology infrastructure as reasons for MNCs to base their regional headquarters here.

One could argue that Singapore positioned itself for globalisation long before it become a buzzword. And, it demonstrated the enormous value that can be created by platforms that help the world connect long before the advent of the internet. Just as Airbnb is a hospitality giant that owns no hotels, and Uber a transport juggernaut with no vehicles, Singapore is one of Asia’s most important cities despite owning none of the region’s markets or resources.

Globalisation in retreat?

Ironically, some cities that possessed the natural hinterland that Singapore worried it lacked fell on hard times in recent decades. For instance, cities in the UK’s coal mining and industrial heartland — like Manchester — were badly affected during the Thatcher years, with social consequences still being felt today. Two hundred years ago, Manchester was thriving as people were drawn to it by jobs in factories, mills and coal mines in the area. In fact, when Nathan Rothschild was sent by his family to establish a presence in Britain in 1798, it was Manchester that he initially chose as his base.

In the US, the city of Detroit saw its population rise from less than 300,000 in 1900 to nearly two million in 1950 as the automobile industry boomed. Then, as US automobile giants decentralised their manufacturing operations, and competition from Japan and Germany took off, the city began shrinking. Poverty and crime became endemic. In 2013, Detroit filed for bankruptcy. In 2015, the city had fewer than 700,000 people.

Now, global economic shifts and technological disruption are pressuring the middle class everywhere. And, many are taking to the ballot box to express their disaffection with globalisation and its proponents. In the UK, the referendum on its European Union membership was won by the Leave faction. In the US, Donald Trump rode to the White House on promises to renegotiate the country’s trade deals and tighten immigration.

Clearly, it would be bad news for Singapore if the rest of the world were to now retreat from free trade and globalisation. Meanwhile, some observers say the shifting weight of economic activity from the West to the East, and the possibility of new trade routes — such as the Northern Sea Route, across the top of Russia; and the Northwest Passage, across the top of Canada — could result in Singapore gradually losing its strategic geographical advantage.

Does an independent city state such as Singapore have a long-term future? Or, is it doomed to go the way of the Italian city states of Venice, Genoa and Florence as global trade patterns change? What does Singapore need to do to keep growing?

Reinvent to stay relevant

While many cities have already seen their best days, new and ever larger cities are constantly emerging. By some estimates, there are 29 cities in the world now with populations of more than 10 million people. There were only two such cities in 1950. By 2030, there could be as many as 53. There are also currently more than 468 cities across the world with populations of more than one million people, up from only 83 in 1950. More than 53% of the world’s population currently live in cities, up from only 30% in 1950.

Cities that are likely to endure in the future, in my view, are the ones that are capable of reinventing themselves as the world changes, not cities that are reliant on their natural hinterland. London is a case in point. From 1800 to 1913, as the British Empire flourished, the city’s population grew from just over one million to more than seven million. By 1939, its population had reached 8.6 million. Then, London’s population began falling. This was initially because of evacuations during World War II. But it continued after the war too, because of a deliberate policy to halt the city’s sprawl. By the late 1980s, London’s population had shrunk to under 6.5 million.

By then, the seeds of a turnaround were already being planted. In 1986, the Thatcher government deregulated the financial services sector, which strengthened London’s position as a global financial centre. In 2015, London’s population surpassed its 1939 peak, and some forecasters see it hitting 10 million by the middle of the next decade. Interestingly, its recent population growth is said to be largely attributable to a rise in birth rates to levels not seen since the mid-1960s, suggesting that London’s revival has not been just about its economy but also its culture and lifestyle.

Bigger population is better

The size of a city’s population could also be a defining factor in its ability to cope with continuing technological disruption and global economic shifts, according to a New York Times report that cites research from Mark Muro of the Brookings Institution’s Metropolitan Policy Program.

Muro compared the 100 largest metropolitan areas in the US (those with populations above 550,000) with the 182 smallest (which have populations ranging from 80,000 to about 215,000). He found that the big ones got out of the recession faster than the small ones, The Times reported. The difference in performance was even sharper when he compared the big and small metropolitan areas in the 10 US states that have been especially affected by automation and job displacement as a result of foreign trade.

The Times report also cited research showing that larger cities have a productivity advantage over smaller ones, and consequently are able to offer better wages. It also pointed to research that showed big cities have higher rates of innovation. Specifically, a city with twice the employment density (jobs per square mile) of another city will exhibit a patent intensity (patents per capita) that is 20% higher. While manufacturing activities in past decades easily took root in big and small cities alike, opportunity in the information era is clustered in dense urban enclaves with rich pools of skilled and creative people, The Times noted.

Big and dense cities can be a challenge to manage, though. In particular, there would have to be sufficient investment in transport infrastructure, affordable housing and public spaces to eschew a sense of over-crowdedness. It would also be necessary to ensure that immigrants are able to integrate with the rest of society and contribute positively to the economy. And, it would be important to create a sense of upward mobility for everyone.

Singapore could do nothing about its lack of natural resources when it stumbled into independent nationhood half a century ago. But there are some things it can do to build on its current success and improve the odds of turning itself into a thriving global city of tomorrow.

This article first appeared in issue of The Edge Singapore (Issue 842, week of Aug 6)

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