The impact of immigration on Singapore economy

Introduction:

In the globalize world today, the immigration has become a trend while the immigrate workers has played a crucial role in maintaining the economic growth and development as well as simulating the international trade and integration. With her unique geographical condition and dramatichistory, Singapore has always known as a nation of immigration. Since the establishment of British east India Company in 1819, Singapore has been a destination of foreign workers. Numerous of labor workers from China, India and Malaysia has flowed in Singapore during the colonial era which bring up Singapore population and development. The immigration flood in Singapore was restricted during 1950s to 60s when Singapore aimed to gain her self-governance and grabbed the independent in 1965. However, not long later when Singapore started to industrialize in 1980s, the immigration flood of foreign workers to Singapore returned and dramatically increase which continues its trend until today (Yeoh and Lin, 2012).

            In 2010, permanent and non-permanent residents in Singapore consisted of 36.4% or of total population (3,230,719 people in 2010),While the foreign labor forces were 34.7 % (1,088,600 people) of total labor force which were3,135,900 in 2010 (Singapore Department of Statistics, 2011). With this large proportion of immigration, it draws the attention on what could it effects on theeconomics of Singapore. This paper is going to explore how immigration effect on Singapore economic and development?

            The immigration to Singapore could be including citizens, permanent residents and non-resident. Citizens (except naturalize citizens) refer to the foreigner who got citizenship from Singapore government. Permanent residents are the immigrants who receive the right for living permanently in Singapore. Then, non-residents are who would just live temporary in Singapore such as studentsandsome workers (Yeoh and Lin, 2012). This paper includedonly the permanent resident and non-resident workers (including skilled and unskilled workers) into the discussion, and aim to find out the effect of this immigration on the economic growth, inflation, wage and employment situation in Singapore.

            Singapore’s limited citizens and low fertility bring it hard to full fill the need for its speedy growing industrial, while the immigrated worker could fill in those needs. Singapore needs those foreign workers to her development. Therefore, the immigration could help maintain the economic growth and development in Singapore.

Related Studies:

With the increasing trend in immigration and the increasing immigrated labor mostly in developed countries, there are many studies on the economics effect of host countries. Some claim that the immigrated skilled workers could bring about improvement in education and economic as filling the gap of domestic human capital (Stark and Wang, 2002) while others argue that the immigration lead to inflation, wage gap and unemployment (Rowthorn, 2004).

In Bojars study (1995), immigration surplus was claim as pushing up the income of host countries population since the low labor force cost of migrant worker could lead to more capital investment and migrant skilled worker could contribute to the increase of the productivity as well. He also stated that the amount of immigration surplus is depend on the difference skills or types of job of migrants worker (unskilled or skill workers). Then, the immigration surplus could be maximize only when the migrants flow go into completely difference work force of local workers so that it could form a perfect complement and gain the productivity of the host countries. However, Bojars revealed a potential issue hidden under the immigration surplus which is the unequal distribution of income of host countries population. While the immigration surplus go to the employers (the employers enjoy the low cost migrant labor), the native workers was suppress from the lower wage post by the employers.

Other study stresses the negative impact of low skilled labor on the technology innovation in the productivity. In his study, Lewis (2005) found out that the technology adopted in the firm in United State has been seriously impact by the low cost migrant labor. The firms lost courage to adopt new technology into the production process which cost more than the labor base and even adjust the technology according to the ability of low skilled workers. Then in the Singapore case study, Thangavelu (2010) claim that the migrants labor respond negatively to  capital investment rate. The firm lost incentive to invest more capital and technology because the labor would be more productive when there is less capital and technology insert.Moreover, Thangavelu (2012) found out that immigrated worker especially skill workers had a positive effect on Singapore economy in innovative sectors (refer to the sector that respond in conducting research and development new products).

Robert Rowthorn, in his report (2004), claims that the immigration of unskilled workers have negatively impact onnative workers. He raised the case of the South British workers who find hard to get jobs while demanding high wage from the employers, since the employers reject and show favor to the migrant workers who demand lower wage. In this case, he accused the employers on forming a fake shortage of human capital while truly greed for cheaper labor.This imply thatit could lead to increase the unemployment of native worker when there are large amount of foreign workers inflow.

The problems posted by immigration:

            The large inflow of immigrants might lead to inflation which results as the rising of cost of living. The sky-high price of housing is always the major concern of Singaporeans. When there is increasing demand of housing posted by the immigration, along with the limited land supply and housing units, the price of house significantly increase. Singapore real estate price has grown 50.5% in 5 years from 2006 to 2011, and the average of primary property is $25,600 per square meter which is the highest in South east Asia (Naidu-Ghelani, 2012). This cause Singaporean find difficult to afford the house especially young people and newlywed which require a home for their independent life. Beside the house, other living cost such as medical care, transportation and education also increase in the similar logic. 

            There is also the problem of widening the wage gap. Unskilled Singaporeans find hard to compete with the unskilled migrant workers who demand lower wage. The low wage of unskilled migrant workers relatively effect to wage of unskilled Singaporeans. The wage of unskilled worker become lower and lower, so that it widen the gap between high salary skilled worker bigger and bigger. This kind of inequality wealth distribution could lead to many problems in the society such as class division, jealousy and discrimination (David Yin, 2012).

Economic benefited brought by Immigration

            The Total Fertility Rate among Singapore residents was only 1.2% in 2012 (Population in brief, 2012). Seeing the example of Japan who restrict on immigration, it now become an aging society. With low Total Fertility Rate, Singapore might turn into small population and aging society. According to the report on Cannel News Asia, “Without immigration that often exceeds the natural yearly growth, Singapore’s economic growth rate would be as sluggish as Japan’s” said by Mr. Lee Kuan Yew (Ting, 2011).Therefore, the government need to liberal immigration policy to maintain a young and dynamic society.  Moreover, Singapore economic growths today depend on the service sector which requires large amount of human capital in the sake of maintaining both the productivity and sustainability. Singapore’s GDPgrowth outlook for 2013 would contribute byManufacturing around 20% of and Final service about 12 percent (Lim, 2013). Singapore also face shortage of human capital to supply the uprising industrial such as medical tourism, so the pulling of talent from abroad is needed for the complement of shortage. With the increase demand of labor force, foreign employment run up by 84,800 in 2011 from 59,700 in 2010 (Ministry of manpower, 2011).

            The immigration could increases the human capital stock in Singapore and assists her development plane. Because Singapore is scare in natural resource so in order to keep the growth up, she needs to enhance her high valued added manufacture and service. Singapore aims to become a Knowledge Base Economy (KBE) which her economic growth would depend on largely“idea” instead labor force. However, those sector demand large number and high skilled human capital. Nevertheless, Singapore faces the problem of shortage in talent which could bring up the plane (Chia, 2000). Therefore, foreign talent immigrants along with the government liberal immigration policy would fill up the need and set off the plane. Moreover, the skilled workers are not only increase the human capital directly but also indirectly by transfertheirknowledge to Singaporeans. Skilled migrant workers could also bring the distinguish knowledge which could link Singapore to globe and achieve a sustainable development.In tertiary institutions such as Nayang Technology University (NTU) and National University of Singapore (NUS) ,there has beenmany talented foreign professors and school presidents have believed in serving as a linkage to internationalinstitutions and bring new educational system to Singapore (Leow, 2010 ).

The immigrant worker also could help in reducing inflationary pressure on Singaporean. They could simulate some costs of living of Singaporean. Some said that the immigrant workers steal the jobs of native Singaporean. However, the ministry of manpower claim in their paper that the immigrant labor force flow into the sector that Singaporean unwilling to do. For example, the constructing sector Importing cheaper foreign labor could allow companies gain more by cheaper of input cost in the production. The construction companies need to pay higher wage to Singaporean if there are no immigrant labor forces. Then, when the company cost more in inputs, it would result in higher price in outputs which mean that the price of house would be increase. According to DBS group research, restricting the immigrant worker inflow could lead to higher labor cost and higher inflation (2012). Therefore, immigrated worker play a critical role in maintaining the price of property in Singapore.

                Some said that the immigration lead to the unemployment of the native workers. However, the immigrant workers mostly only take the jobs which unsavory by Singaporeans. Then, according to the report of ministry of manpower, the unemployment rate is about 2.0% overall, which the residents is about 2.9% and Singapore citizens is about 3.0% in  2011. These set of rate was claimed to be the lowest recorded in 14 years (Ministry of manpower, 2011). Obviously, while the immigrants’inflow keeps increase, the unemployment hasn’tparalleled increase as claim above. Therefore, the accused on the immigrant workers as the cause of unemployment of native workers seem to be wrong.

               

Conclusion:

There are many studies on the effect of immigration on the economy of host countries. The study of Bojar (1995) claimed that the immigration bring positive impact on economic growth while others claimed that the unskilled worker post negative effect on native workers (Rowthorn, 2004) and capital investment incentive (Lewis, 2005; Thangavelu, 2010; 2012). In the case of Singapore, there are some problem lead by immigration such as inflation, and widen wage gap. However, the immigration is believed to bring more benefits than cost to Singapore. The immigration could maintaina young and dynamic Singapore society give ease to her further development. Moreover,the immigration could lead to increase human capital and assist Singapore development plane and goal of becoming a KBE. Also, the skilled immigrant workers could produce more human capital throughtransferringtheirknowledge to Singaporeans. Furthermore, the unskilled immigrant workers could reduce inflationary pressure on Singaporean by preventing the higher cost of input in the production.

Immigrant workers remain an important source for economic growth and development, and maintain Singapore competiveness in global market. Even some problem might occur along the way, various solutions and adaptation could be made. However, the immigration to Singapore could never be eliminated. Since pre-independence of her land until her day of a developed independent state, Singapore was and always a nation of immigration.      

References

Borjas, G. J. (1995). The economic benefits from immigration. Journal of Economic Perspectives, 9(2). Retrieved from http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.9.2.3

Chia, S.Y .(2000). Singapore: Toward a knowledge-base economy. Retrieved from http://www.nomurafoundation.or.jp/data/20000127-28_Siow-Yue_Chia.pdf

DBS group research. ( 2012). Singapore: Recession and competitiveness. Retrieved from https://www.dbsvresearch.com/research/dbs/research.nsf/(vwAllDocs)/987736FCC9004F0C48257A8C000404FA/$FILE/sg_2012Oct02.pdf

Leow, S.W. (2010 ). 3 of 4 s'pore universities to be led by foreigners. The Straits Times, p. B1. Retrieved from http://newshub.nus.edu.sg/news/1010/PDF/FOREIGNERS-st-19oct-pB1.pdf

Li, C.W. (2000). Endogenous vs. semi-endogenous growth in a two-R&D-sector

         model. The Economic Journal, 110, C109-C122.

 

Lim, K. (2013). Economists raise Singapore 2013 GDP growth outlook to 2.8 pct-MAS survey. Retrieved from http://www.reuters.com/article/2013/03/20/singapore-economy-cbank-idUSS7E8EQ02420130320

Population in brief (2012). Retrieved from http://www.singstat.gov.sg/statistics/browse_by_theme/population/statistical_tables/popinbrief2012.pdf

Singapore department of statistics (2011) . Yearbook of Statistics Singapore. Singapore: Department of Statistics. Retrieved from http://www.scribd.com/doc/87131151/Singapore-Book-of-2011

Stark, O. &Wang, Y. (2002). Inducing human capital formation: migration as a substitute for subsidies.Journal of Public Economics, 86(1), 29-46. Retrieved from http://home.cerge-ei.cz/munich/labor07/Resources/Stark_Wang_JPE2002.pdf

Thangavelu, S. M. (2010). Impact of Migration on Singapore Economy. In Thangavelu, S. M. (2012). Economic Growth, Welfare and Foreign Workers: Case of Singapore. Retrieved from http://www.nottingham.ac.uk/gep/documents/conferences/2012/malaysia-conference/shandre-thangavelu.pdf

Thangavelu, S. M. (2012). Economic Growth, Welfare and Foreign Workers: Case of Singapore. Retrieved from http://www.nottingham.ac.uk/gep/documents/conferences/2012/malaysia-conference/shandre-thangavelu.pdf

 

Tng, Y. H. (Sep 10, 2011). Singapore: Encouraging immigration to solve population woes? Retrieved from http://asiancorrespondent.com/64635/singapore-encouraging-immigration-to-solve-population-woes/

Ministry of manpower (2011). Employment situation. Retrieved from http://www.mom.gov.sg/Publications/mrsd_Q42011empsit_310112.pdf

           Naidu-Ghelani, R. (April 29,2012). The world's hottest real estate markets. Today news. Retrieved from     http://www.today.com/id/47197011/ns/today-today_news/t/worlds-hottest-real-estate-  markets/#.UZmVA6JBOIe

Yeoh, B.S.A. & Lin, W. (April, 2012). Rapid Growth in Singapore's Immigrant Population Brings Policy Challenges. Retrieved from http://www.migrationinformation.org/feature/display.cfm?ID=887

Yin, D. (2012). A new nation of immigrants: Challenges and opportunities posed by Singapore’s population growth. Retrieved from http://yaleeconomicreview.com/a-new-nation-of-immigrants-challenges-and-opportunities-posed-by-singapores-population-growth/

      

Obstacles is existed to get over

Everyone meet obstacles, no one can escapes from them and go smoothly throughout their life. The important point is that everyone needs to get over the obstacles and make it as your leader to help you climb higher. The story about Dr. Guadelupe Qunitanilla and Jeremy Lin are may the good examples of defeating obstacles and managing a successful life.

The story of strong woman, Dr. Qunitanilla, inspires me to put more effort in doing everything and should never give up. The part of her story which impress me the most is when she struggling to find a place to learn English. Because of her low education, Lupe had met with rejection after rejection and they nearly destroyed her little self-confident. However, Lupe never gave up , she never stopping to find a place to learn English which she finally make her dream come true. From one grade educated to doctoral degree in education graduated, Lupe managed through all of them. She showed us that the effort and strong commitment is important and fundamental for getting success. With this effort and commitment everything is possible.

Another similar story is from Jeremy Lin who is a well-known Asian Americans professional basketball player. Lin is never expected to become a professional basketball player as well as putting his foot in National Basketball Association (NBA) due to his Asian background and appearance. However, he has made everyone who low estimated him shock by becoming a global known NBA star in one week which led to the era of “Linsanity” during February this year.

Lin was born in an Asian background family in Los Angeles and growing up in San Francisco. Since his was small, Lin was doing well both in study and sport. Lin father taught Lin to play basketball at local sport association which led him start to love basketball. In his high school senior year, Lin was named first-team all-state and Northern California Division II player of the year. With his high average point of 15.1 of basketball playing activity, Lin has high expectation to get a sport scholarships and enter his dream school , Stanford. Nevertheless, both scholarship and Stanford never turned to him. Obviously , when come to the Alternative between black or white player and Asian, the coach normally prefer to the Black or White than Asian who consider as naturally physical weak and can never win over Black or White. Finally, with his 4.2 grade point average in high school ,Lin got into Harvard which is a school famous in everything but not basketball.

In Harvard, Lin continued playing his basketball. Lin was considered as “the weakest guy on the team” in his freshman season. However, in his senior year, Lin was the team leader and finished his year as the first player in the history of Ivy League (a league of University basketball which Harvard in) to record 1450 point. Lin graduated from Harvard in 2010 with degree in economics for a 3.1 grade point average. With this grade, Lin can easily find a good job as an economist. By the way, he was not going to give up his dream of becoming a professional basketball player.

After graduated, Lin went to NBA where he was undrafted at the first time and was assigned to NBA Development league (D-league) three times. He also has been waived twice in just one month during December 2011by the Warriors and the Houston Rockets (basketball teams). Finally, he joined New York Nicks in December 27, 2011. After joining Nicks , Lin stills an abandoned player who has less or even don’t have chance to play in the game. The worst was that , Nicks planned to releasing Lin before his contract become guaranteed on  February 10,2012. For Lin, he never gave up no matter what happen and try to grab his last opportunity while he had chance to play in the game and got 25 point which was he all career high and which led Knicks got victory on February 4. On February 10, Lin scored a new career high of 38 point which outscored Kobe Bryant’s 34 point in the game. Following this , Lin had help Knicks won 6 games on a roll in about a week.

After this exploitation of Lin from an abandoned player to a main hero for wining game, Lin become the most searches in internet and become a well-known basketball player around the Unite State as well as the world. His popularity leads birth of a new term “Linsanity” which come from his name “Lin” plus the word “Insanity”. This new term shows that all people are crazy about him. “Linsanity” is also be recognized as an English word by Global language Monitor due to it met the criteria of 25,000 citations across the English speaking world. Lin is also rank on the top of Time Magazine’s 2012 list of the “Top 100 most influential People in the world”. Lin makes hope for many Asian people that they can do as well as or better than the white and the black. There is no natural limitation,  you can achieve anything you want to with your hard work.

To sum up, story of Dr. Guadelupe Qunitanilla and Jeremy Lin have taught us that we can get success with our strong commitment and effort and should never giving up. We need defeat obstacles that we meet in order managing a successful life……..