THE ROLE OF THE STATE IN THE INCREASINGLY GLOBALIZED ECONOMY: IMPLICATIONS FOR SINGAPORE

Abstract

This paper argues that the role of the state becomes more important in some significant respects as the pace of globalization accelerates, contrary to the popular perception that it should be diminished. This is mainly because, as mobile factors obtain more freedom to choose locations across national borders, the role of the state as the ultimate provider of "complementary assets" in attracting mobile factors to a national economy becomes more important. The paper also argues that the very success of Singapore's complementing strategy in the era of globalization has necessitated the state to move to a two-pronged strategy, in which it needs to attempt seriously to acquire higher-end capabilities that are securely based on its territory, while trying to exploit ever-expanding complementary business areas as it has done previously.