In economic news today:
Singapore’s economy expanded at a record 14.7 percent in 2010, Prime Minister Lee Hsien Loong said Friday, in a sharp recovery from last year’s recession for the city-state.
It was the best performance ever for Singapore’s trade-led economy, surpassing the previous record 13.8 percent growth achieved in 1970.
The annual 14.7 percent surge announced by Lee is also at the top end of the government’s growth forecast of 13-15 percent.
For next year, growth will moderate to 4.0-6.0 percent, Lee said.
How does Singapore do it? According to Heritage’s Freedom Index, Singapore is the second most economically free nation in the world behind Hong Kong and well ahead of the United States.
According to Wikipedia, Singapore’s government spending is just 10 percent of GDP, compared to 44 percent in the United States. Their debt level is a high 118 percent of GDP, but they have foreign reserves of 80 percent of GDP offsetting that.
Singapore‘s corporate tax rate maxes out at 17 percent of profit and personal tax rates top out at 20 percent of income for incomes over 320,000 SGD (308,000 US Dollars). In fact, they pay no tax on income up to 20,000 SGD (26,000 US Dollars) and only 8.5 percent on income above 40,000 SGD (51,000 US Dollars) but below 80,000 SGD (102,000 US Dollars). While the average American pays an income tax rate of more than 30 percent, the average worker in Singapore pays about 10 percent.
Small government, low taxes, and economic freedom has turned Singapore into an economic powerhouse. Singapore’s economy is now 12 times larger than it was 30 years ago. Compared to the United States, Singapore per capita income has more than doubled in the last 30 years.
We should learn from foreign countries. We can avoid their mistakes and copy their successes. While we cannot copy everything Singapore has done, nor would we want to, we can copy the success they’ve had with small government, low taxes, and economic freedom.