If we go back 50 years, and speak to the people in Asia, nobody would have believed that a tiny nation in the Malacca Strait could one day have a higher GDP per capita than the United States right now, as of 2025. Looking at the statistics from the time when Singapore became an independent state in 1965, its nominal GDP per capita was around US$500, around the same level as South Africa at that time. So what happened? How did a limited-resource state achieve such a great leap through its trade?

If we dive into the history, Singapore became an independent state on 9 August 1965 after separating from its neighbouring country, Malaysia. The separation was the culmination of all the underlying disagreements that had occurred, including deep-rooted political and cultural differences. To make it even clearer, Singapore have a land area of only 735 km², which is smaller than New York City. Also, this tiny state does not have an abundance of natural resources, unlike its neighbours, Indonesia or Malaysia.

Realistically, most other nations in such a position would not have survived and even would lead the country into stagnation. Also, many cases have shown that countries that lack resources tend to struggle to attract foreign investment and create adequate employment opportunities. But that’s not the case in Singapore; instead of getting trapped in the shadow of stagnation, Singapore successfully charted their own path of success as a state.

However, there’s one tremendous opportunity that Singapore has, and that it can really take advantage of is its strategic location.

Singapore sits strategically in the Strait of Malacca, a global trade route that connects two oceans: the Pacific and Indian Oceans. Furthermore, the strait serves as a strategic route for international trade, where around 25-30% of global maritime trade passes through this area, according to the World Economic Forum. Instead of treating this opportunity as a pit stop, Singapore recognised and took advantage of it by building the infrastructure and attracting people from many countries to make a deal with Singapore, as a global hub for international trade, logistics, supply chain, finance, etc. 

Quickly realising and aware that they could not rely heavily on their domestic demand, Singapore directly implemented an export-oriented strategy. But the big question remains the same: how could they implement this export-oriented strategy if they faced a scarcity of resources, unlike their neighbours?

The answers lie in how the state runs and actively approaches foreign investment and the development of human resources as a key part of the growth. Singapore built its strengths by establishing an Economic Development Board to attract foreign investment. Furthermore, Singapore is committed to developing its human capital through a robust education system and advanced STEM development.

These key processes are also inseparable from the role of Singapore’s astute government. The efficiency and integrity of Singapore’s government under Lee Kuan Yew’s leadership have increasingly attracted and encouraged investors to further engage in Singapore.

Their journey did not end there; they were also highly ambitious in sustaining and multiplying their financial success. Singapore realised that relying on revenue alone for growth was not sufficient.

To further develop its financial resources, Singapore established Temasek Holdings in 1974, a state-owned investment company to manage its domestic companies and seize global investment market opportunities for growth.

Furthermore, in 1981, Singapore also developed another financial strength called GIC. The establishment of the GIC as a sovereign wealth fund illustrates Singapore’s early foresight. GIC was established as a Sovereign Wealth Fund to preserve the country’s stability even further through a very prudent, intelligent, and diversified asset management.

This dual balance approach helps Singapore to maximise opportunities not only in the present but also for the long term, which will ensure an optimised future growth and sustained national stability. 

Singapore realises that being a global centre does not stop at aspects of trade, finance, and education alone. It also extends by maximising & embracing entertainment as a promising future opportunity.

By hosting global events such as Formula 1 Grand Prix (the first night race in F1 history), which draws thousands of spectators around the world, until the phenomenon of “Swiftonomics” in 2024, where Singapore’s government offered exclusive incentives to ensure Taylor Swift’s concert tour in 2024 was exclusively performed in Singapore, rather than elsewhere in Southeast Asia.

This brilliant strategy from Singapore demonstrates that economic growth and success can originate not just from fundamental sectors like trade and finance, but also from sectors like entertainment. Collectively, these efforts have been orchestrated into a sustainable engine of progress for a nation.

By Mahi Giyath Malaming