Nobel Prize in Economics has been awarded since 1969 and close to a hundred people has since been bestowed with this honor. Predictably, the prize has gone to professional economists who have made contributions as university professors or working at research institutions. Surprisingly though none of the recipients has been a practitioner of economics—those who used their economic wisdom to improving living conditions of the people in real and unusual ways, like lifting the whole economy, from Third World to First World status.This is the story of Lee Kuan Yew, who devoted a life-time making his country, Singapore, a First World oasis in a Third World region.
Lee Kuan Yew started his journey after Singapore's independence from Great Britain in 1959, seeking economic nirvana for his people. He had little resources needed for the country to progress on economic front, and its future further darkened when it was expelled from the Malay Federation in 1965.
Lee tells the story of Singapore's transformation from a fishing village half a century ago into an economic powerhouse in his memoir, From Third World to First: The Singapore Story: 1965-2000. There is no example of any other country achieving the sort of transformation Singapore has seen over such a short time span, most of it occurring during Lee's premiership, from 1965 through 1990.
How did he do this? Lee KuanYew's achievement is a miracle as well as an enigma, much more the latter.
The Singapore model
Lee looked at the ingredients of nation-building, and his major discovery was a program that could lay the foundation for a modernizing economy which, inevitably, meant industrialization. However, that called for capital resources, labor skills, and modern technology which Singapore didn't have. Lee then crafted a strategy that would make Singapore an investment-heaven and attract foreign investors.
And they came in droves, to take advantage of incentives Lee offered. The ingredients of this new economic model were simple: law and order; zero corruption; low taxes; pro-investment labor laws; open trade; freed capital flows; financial discipline; and credibility of government policies. This was enough to attract uninterrupted inflow of foreign resources in terms of capital, technology, and human talent which in turn helped build Singapore of Lee's imagination.
In fact, it wasn't just bricks and mortars which Lee amassed to build Singapore and its world-class economy. Even more admirable was his ability to carry out his laboratory experiment that, invariably, is done in an isolated and restricted environment. For the most part, Lee kept politics out of economic decision-making. He ran Singapore as a one-party State that scuttled standard democratic rights but Lee judged that his economic experiments were unlikely to work unless backed-up by iron-clad rules. And that made Singapore good and great.
Lee's critics have made much of his authoritarian style of leadership but that had nothing to do with his personal interests, which normally has been the case with authoritarian rules. Most other authoritarian leaders had focused on empire-building—developing a political following and amassing personal wealth—but they did little to improve the plight of their people.
However, in the case of Singapore, economic development was carried out as a single mission, in order to establish government legitimacy. He discarded everything that was perceived as impediments to this mission. Of Singapore model, Lee said that it is ideology-free. "Lee possesses an unsentimental pragmatism that infuses the workings of the country as if it were in itself an ideology," wrote one New York Times commentator. "When considering an approach to an issue, Lee says: Does it work? Let's try it, and if it does work, fine, let's continue it. If it doesn't work, toss it out, try another one."
Lesson for Nepal
Can Nepal become another Singapore, wealthy and prosperous? The answer is both yes and no. To begin with, the country's politics, currently in disarray, must be sorted out. After some forty years of struggle, we did get democracy but we misused and abused it. Such an outcome is, indeed, expected of a poor country where politics is taken as a route to power and acquisition of wealth. This rent-seeking politics inevitably attracts a multiplicity of interest groups vying for power and we end up with 140 parties contesting for State coffers. In short, politics in Nepal isn't conducive for economic growth, like the way it is for Singapore.
A second impediment to growth and prosperity has been the country's diversity, in terms of both human and natural resources. If the country had used its diversity wisely, following the Singapore model, this could have given strength for development and prosperity but, instead, this has become a development roadblock. Singapore made diversity work for nation-building by making its governance neutral and merit-based, which primarily meant an end to ethnic discrimination. The fairness of its governance helped end nepotism and a regime of special favors which, in large part, created a level-playing field for everyone and made the country corruption-free.
A third difference was the act of social engineering—a drive for changing habits and attitudes expected of a developed society. Lee's approach to social transformation would look fanatic and intrusive elsewhere but it made important contribution to improvement of public life: 'Do not spit in side-walk. Do not chew gum. Do not throw garbage from rooftops. Do not write graffiti. Smile. Perform spontaneous acts of kindness.' Lee's critics complained that he made Singapore into a nanny state, to which Lee replied that he never regretted doing so! No less important was language neutrality—"use of English as the language of business and the common tongue among the ethnic groups, while recognizing Malay, Chinese and Tamil as other official languages," in the words of New York Times.
Such insights were the genius of Lee Kun Yew's formula of nation-building that worked perfectly for Singapore and can work elsewhere. Unfortunately, most countries are unprepared and unwilling—even hostile—to making changes needed for a Singapore model. They view such changes as destabilizing and prone to creating disorders. Unfortunately, such risks are unavoidable.
We shouldn't give up. One option is renting out Nepal to Singapore, say for a period of fifty years. The bargain with Singaporeans will be that if they failed in their task of improving Nepal, they would rent us Singapore. We would promise to make their country like Nepal in as little as a year!
The author teaches economics at several US universities
sshah1983@hotmail.com
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