The Rise of Singapore As International Financial Centre: Political Will, Industrial Policy, and Rule of Law

Abstract

Singapore is now one of the leading financial centres in the world, although the city-state started as a Third World country when independence was imposed on it in 1965. Although some natural conditions such as geographic location which possessed by other international financial centres are also vivid in Singapore’s case, some factors that contributed to Singapore’s financial rise are probably unique. This chapter argues that three key factors underpin Singapore’s success as a financial centre, which are the political will of the Singapore government, the government’s skillful use of industry policy, and the uncompromised practice of the rule of law in Singapore. These factors, taken together, made a state-led development model in the formation and maintenance of an international financial centre, Singapore style. From the perspective of law and development, Singapore’s path to the status of an international financial centre raises the question about the relationship between state and finance.

Keywords: law and finance; law and development; financial centre; rule of law; Singapore

JEL Classification: K00; K22; K33; E42; F38; F63; L52