Foreign direct investment in producer services: The role and impact upon the economic growth and development of Singapore

In the past twenty-five years Singapore has evolved from an entrepot trading port to a producer of sophisticated goods and services. The argument commonly put forth is that the economic transition of Singapore is the result of its strategic location, a restructuring of the world economy, and a judicious government policy that encourages foreign direct investment.;While it is generally acknowledged that foreign direct investment in manufacturing activity has played a large, if not central role, in the economic growth and development of Singapore, many studies have overlooked the contribution of foreign direct investment in services. However, in 1986 the government of Singapore recognized the service sector as one of the key areas for potential future economic growth, and established a services-promotion division within the Economic Development Board with the specific task of identifying and promoting new service investment. An important component of this broad sector is producer services: those business and professional services that primarily provide inputs for other businesses. This dissertation examines the foreign component of producer service activity in Singapore and evaluates the impact that this activity is having upon the growth and development of that newly industrialized economy.;The importance of this activity for the Singapore economy is examined using government data and information obtained through a questionnaire survey of U.S.-affiliated business enterprises operating in Singapore. Furthermore, the data are supplemented with information obtained from interviews with both government officials and executives of foreign establishments in Singapore.;In the context of the Singapore economy evidence indicates that the benefits of foreign direct investment in producer services are more closely associated with the qualitative aspects of human-skills transfer through occupational up-grading and indirect linkage effects than direct employment or linkage effects. Moreover, the presence of a sophisticated producer service industry in Singapore has contributed to the emergence of that newly industrialized country as a regional economic growth center.