This economics article is contributed by a kind reader
This economic perspectives essay deals with the rise of new, disruptive technologies, and their impact on Singapore's economy - and what Singapore can do to prepare for this technological change.
Today, the advance of new and disruptive technologies is unfolding on many economic fronts. While not every emerging technology will drastically transform the business or community landscape, some technological trends and changes do indeed have great potential to disrupt the economic status quo, massively altering the way people live and work.
In fact, in late 2016, Singapore’s Prime Minister Lee Hsien Loong singled out technological disruption as the defining challenge among the economic issues Singapore is currently grappling with. As Prime Minister Lee (2016) correctly remarked, old economic and production models are not working, while new models are coming thick and fast. Singapore has to adjust and to keep up with these important trends, because of rising technology and globalisation. He is right. And technological disruption will happen over and over again, relentlessly. Both Singapore government and business leaders must not only know what’s new on the horizon, but also start preparing strategically for its impacts.
We could learn from economic history, which has already shown us clearly that earlier disruptive technologies, such as the personal computer for example, had the ability to sink technological market leaders, who were focused on their existing and most profitable markets and did not see or understand the threat looming upon them. Many examples readily come to mind, for example, Finland’s now-extinct Nokia phones, which once were prevalent consumer goods. And economic history already showed us that once new technological disruption takes hold, it typically enables a larger population of less-skilled or less affluent people to do more at lower cost, which previously could only be accomplished by specialists, who were oftentimes essentially technological gatekeepers. Personal Computers, for example, brought incredible computing power to individuals at a fraction of the cost of minicomputers, replacing the technological specialist and centralised data centers in the process.
Let’s examine the Singapore economy. Nearly every key sector in Singapore's economy is likely to face technological disruption in the next few years. Among the economic sectors likely to experience significant disruption in the near future are retail, Infocomm Technology (IT), financial and insurance sectors, administration and support sectors, and the accommodation and food sectors. In the longer term, up till 2020, economic sectors such as manufacturing, health, social services, and transportation and storage are also likely to be disrupted by technology. One example highlighted by Prime Minister Lee had illuminated the phenomenon of economic disruption in the taxi business in Singapore, which had been seeing greater competition from private car hire services such as Uber and Grab. All over the world, Uber and Grab are disrupting the taxi industry, but commuters are benefiting from better and more responsive service, but taxi companies and drivers find their business negatively impacted.
In responding to these technological changes, PM Lee noted that one possibility was to close Singapore off from technological disruption and try to stop people from using the new technology, and the other possibility was to embrace technological change and let the technological disruption happen, but help the incumbents, especially the taxi drivers who would be negatively impacted, adapt to the changes. And PM Lee noted that taxi drivers had been level-headed about the competition, and had in fact made useful economic recommendations to the government on ameliorating the impacts of these technologies and adapting to their economic consequences.
And the Singapore government can play an even larger role in many areas to counter disruptive technology. It must ensure a deep pool of talent by investing in education, and developing and re-training and up-skilling people and raising human capital. In fact, Singapore's schools are giving students a lot of exposure to start-ups areas worldwide, and sending them to intern with venture capitalists and big tech companies. This is a useful and relevant development. Since a strong economy is built on a skilled workforce after all, SkillsFuture – Singapore’s funding programme for retraining and upgrading skills – is important. It has to be said that Singapore's schools are preparing its students well for the new economy of the future, and training them in values and skills to be future-ready for the 21st century, where the skills and competencies needed are different, and where the new jobs will be different from the jobs of today. And in addition to upgrading workers in their current careers, the Singapore government is also helping retrenched workers to transition into new jobs.
And Singapore’s legislation and technological regulation must also catch up with changing and ever-evolving business processes. The Singapore government could also be an early adopter of some of these high technologies, setting an example for local businesses and giving them an opportunity to test some of these processes and establish a track record. For example, Fintech (financial technology) is at the centre of many of these processes, and another related big piece is data, data regulation, and IP (intellectual property) protection.
Beyond building up deeper capabilities and talents, investing in Singapore's legislation and regulation, Singapore should also promote a culture of entrepreneurship as well. Entrepreneurs play an important role in any economy, not just because they do business for themselves and create new jobs and prosperity, but also because they are resourceful and optimistic, and give Singaporeans the quiet confidence that anything is possible. They are often early technological adopters. Maybe, if Singaporeans are more entrepreneurial, we can not only survive technological changes, but also ride the wave of innovation and creativity to a brighter economic future. In other words, the future is not set - and we should start preparing for it now.
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