Given Singapore’s dependence on the world economy, however, the consequences of declining foreign demand were inevitable. The 1985 recession was the worst in the nation’s history. Singapore staggered under a year of negative growth (-1.5 percent), then recovered slightly in 1986 (+1.9 percent). The causes lay both outside and within the country. Externally, worldwide slumps in petroleum related and marine-related sectors were reflected in reduced demand for Singapore’s goods and services and raised the specter of worldwide overcapacity in shipbuilding and ship repairing. Furthermore, the slowdown in demand for semiconductors and electronics in the United States sharply reduced demand for Singaporean components and parts.
However, the growth saga continued even in 1990s even though increased labor costs affected productivity. Naturally Singapore concentrated on export oriented high technology manufactured goods. In early 90s manufacturing accounted for 30% of the GDP. The electronics industry accounted for the largest share of value-added in manufacturing.
From the period from 1960s-1990s, the nation of Singapore had developed sound trade ties with many trading countries. A lot of manufacturing plants were set up in the island which further created employment opportunities. A lot of multinational companies had begun shifting their Asian region headquarters to Singapore due to its prosperous economic development.
Today, Singapore has more than 3000 multinational companies working in a region that is no bigger than 685 sq km and has no reserves of natural resources. Even then, Singaporeans have one of the highest living standards observed by the researchers. The GDP of the Singapore has been rising ever since its trade started to boast and the per capita income too of the country began to accelerate.
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