Over the span of its relatively short 50-year history, Singapore has emerged as a leading global city and an economic powerhouse. For the past 50 years, Singaporeās Gross Domestic Product (GDP) per capita has risen at a 10 % compound annual growth rate (Hughes and Whiffin 2015). As of 2014, Singaporeās GDP per capita stands at 56,286.8 USD (World Bank 2015). Aside from this meteoric economic rise, Singapore has also established itself as the worldās most liveable city (Harjani 2015). These achievements are particularly noteworthy when Singaporeās small geographic size of 718 square kilometres is taken into account. As the worldās only functioning city-state, Singapore encapsulates all the trappings of urbanity and statehood within the confines of its small geographical space.
However, it is Singaporeās position as a leading international financial centre (IFC) that is often of interest to observers of the city-stateās success. The cityās rise to prominence as an IFC is both a sign and determinant of its economic strength. According to the latest iteration of the Global Financial Centre Index (GFCI), Singapore is currently ranked the fourth most competitive financial centre in the world, trailing its closest competitor Hong Kong by only 4 points (Yeandle 2015b). Hong Kong trails second-placed London by 26 points. Singapore is similarly ranked fourth in the Xinhua-Dow Jones International Financial Centers Development Index (2014) (National Financial Information Center Index Research Institute 2014) and sixth in the Deloitte Wealth Management Centre Ranking 2015 (Brandes et al. 2015).
While these rankings can be a measure of the scale and systematic importance of Singaporeās position as an IFC, they do not provide a discussion of how Singapore has achieved this position. Given that these rankings are often based on economic analyses, they tend to overemphasize quantifiable and economic-structural factors such as the size and depth of markets, regulatory environment, and so on. Although these factors are important for understanding where Singapore stands today and what it needs to focus on in order to retain its position, there is also a need to address the role of more qualitative and dynamic variables such as socio-political relations.
This book seeks to address this lacuna by focusing on the history, politics, and policy of Singaporeās development as an IFC, in the process laying out the social, political, economic, and spatial aspects of IFC development. Specifically, it argues that Singaporeās success as an IFC has hinged upon the convergence of key historical, political, and policy factors. This extends the analysis beyond the existing focus on economic-structural variables and assesses the impacts of historical contingency, spatial dynamics, policy decisions, and political developments. Furthermore, taking an integrated approach allows for a more nuanced analysis that recognizes how historical, policy, and political developments are deeply entwined in the real world. These arguments are driven by the following inter-related research questions:
- What are the roles of history, space, policy, and politics in driving Singaporeās development as an IFC?
- How have history, policy, and politics influenced the spatial and economic development of Singaporeās financial centre, and vice versa?
Rationale
As I discuss in Chap. 2, existing studies on IFCs tend to take a more quantitative approach that focuses on economic-structural variables, although there are exceptions. As a consequence, the qualitative and contextual aspects of IFC development tend to be underestimated. This is especially the case for domestic political drivers and impacts of IFC development. This book seeks to address this gap in the literature by providing a more qualitative and nuanced understanding of IFC development that takes into account historical, political, spatial, and policy-related factors. Importantly, it aims to do so in an integrative and cross-disciplinary manner that incorporates all these factors.
While existing studies have tended to address these factors separately and in accordance with researchersā own disciplinary backgrounds, taking an integrated approach provides a significant dose of nuance and realism in the analysis. The politics and policy of financial sector development are in reality interdependent, mutually enforcing, and situated within the IFCās historical and spatial context (Woo 2015a). There is therefore a need for a more multifaceted and cross-disciplinary approach that will provide both scholars and policymakers with insights on how successful IFCs navigate the socio-political milieu and spatial confines within which they are embedded.
On this account, Singapore provides a useful case study. Singapore has, by most measures, attained a high level of success as an IFC. However, it has done so despite its relative youth as a nation, geographic constraints, and lack of an economic hinterland. Furthermore, Singaporeās location, in emerging Asia, places it solidly within the Asian economic and financial development story. While the bulk of existing IFC studies have focused on IFCs from the Western developed context such as New York or London, the emergence of Asia as a financial and economic powerhouse warrants greater attention to Asian IFCs such as Singapore. Furthermore, Asian IFCs differ markedly from their Western counterparts in terms of the political systems and financial governance models (Woo 2015b).
In short, this book aims to address two relatively less-explored areas of research on IFCs. First, it seeks to situate IFC development within the socio-political-spatial context. In doing so, it aims to introduce greater nuance and contextual sensitivity to the study of IFCs. This will serve to complement existing quantitative and economics-based studies of IFCs. Second, this bookās focus on Singapore places greater attention on the financial sector development and policy in Asia. As I discuss at greater length in Chaps. 4 and 5, Singaporeās political system and its financial governance model differ from those of more established IFCs in Western developed economies. This book therefore presents a useful foundation for further research on the politics and policy of IFC development in Asia.
Methodology
In order to address the two areas identified above, this book relies on qualitative methods and focuses on the case of Singapore. In general, qualitative data analysis allows a researcher to fulfil two purposes: (i) provide detailed descriptions based on both observable and non-observable information and (ii) draw and explicate causal relations between variables. These are known respectively as descriptive inference and causal inference (King et al. 1994). More importantly, the āthick descriptionsā that arise from qualitative studies contribute to various forms of validity (Maxwell 1992; Creswell and Miller 2000) and, on the whole, allow for greater nuance and richness of data.
Given this bookās aim to extend beyond existing quantitative approaches to studying IFCs, taking a qualitative approach allows contextual variables such as history, politics, policy, and spatial dynamics to be delineated and studied, and ultimately incorporated into the overall analysis in an integrated manner. Both primary and secondary qualitative data were collected and analysed. Primary data includes in-depth interviews with senior financial policymakers, private sector professionals, and experts in the financial industry as well as official speeches, documents, and reports published by relevant government agencies and major financial institutions.
This is complemented with secondary data sources such as existing research and publications. Using both primary and secondary sources allows for the triangulation of data, hence ensuring its veracity. Triangulation also involves combining the use of different primary data sources. For instance, both interview data and official publications were collected. This minimizes biases from any potential āinterviewer effectsā. This is complemented by further triangulation within a particular primary data source. Specifically, this involved collecting interview data from a variety of financial policy actors such as financial regulatory policymakers, private sector professionals, and independent experts. This ensures a greater range and inclusivity in the data collected.
Lastly, this book takes Singapore as its case study. While quantitative approaches tend to favour large-n studies, this does not necessarily mean that small-n or single case studies are in any way lacking in generalizability or validity. It has been noted that single case studies may involve multiple layers of analysis that contribute to validity by enhancing causal and descriptive inference (Eisenhardt 1989; King et al. 1994; Yin 2009). Furthermore, single case studies contribute to generalizability when more of them are conducted over time (Flyvbjerg 2006, pp. 224ā228). The single case-study approach is therefore appropriate and valid, given this bookās aim to provide an in-depth and contextually rich understanding of Singaporeās development as an IFC and its position as a stepping stone to future studies of other Asian IFCs along the same lines.
Overview of the Book
Chapter 2 provides a comprehensive overview of the existing IFC literature, with a specific focus on IFC studies from the various disciplines of international political economy (IPE), finance, economic geography, and policy studies. It will also address existing studies on financial sector development in Singapore and its development as an IFC. This chapter will provide a critical appraisal and discussion of this existing literature, in the process situating the book within existing IFC studies and providing the theoretical foundations for subsequent chapters. Having provided an extensive review of the existing literature, the following chapters will delve into the various aspects of Singaporeās development as an IFC.
A historical overview of Singaporeās emergence and subsequent growth as an IFC is provided in Chap. 3. Given its focus on history, this chapter is necessarily organized chronologically, spanning the pre-independence origins of Singaporeās financial services sector to its current position. Importantly, this chapter addresses the internal and external stimuli and factors that have shaped the trajectory of Singaporeās financial development, and the various policies and institutions that have emerged in the process. As is the case with most global cities, Singaporeās financial sector is deeply entwined with the real economy and the global financial markets. The historical origins and determinants of such linkages are discussed in this chapter.
This historical trajectory of Singaporeās financial development has made an indelible mark on its physical and spatial configuration as a city. Chapter 4 discusses the spatial aspects of Singaporeās development as an IFC, focusing in particular on the financial centreās rise to prominence in public awareness and imagination, the physical separation of front-office and back-office functions across the city, and the impact of the financial centre on property pricing and urban planning. In focusing on spatial dynamics, this chapter discusses Singaporeās financial centre from a global city perspective and addresses both the tangible and intan...