International Production and Industrial Transformation: The Singapore Story

Prema‐Chandra Athukorala and Asanthe Ekanayake

The World Economy, 2025, vol. 48, issue 4, 831-846

Abstract: The expansion of global manufacturing value chains (GMVCs) as a major mode of economic globalisation opens opportunities for latecomer countries to industrialise by carving out niches to specialise within the value chain, instead of producing a good from start to finish within their national boundaries. However, whether this provides a pathway for self‐sustained industrialisation remains a debatable issue. Sceptics argue that, since multinational enterprises (MNEs) dominate upper‐end activities of the value chain, a country located in the lower rungs has little room for industrial upgrading. This paper aims to contribute to this debate through a case study of Singapore, the first country to embark on an MNE‐led export‐oriented industrialisation strategy based on the prophetic foresight of unfolding opportunities for global economic integration within GMVCs. The findings suggest that, while Singapore had some country‐specific advantages, it was hardheaded national development policy that was instrumental in transforming the country from ‘the third world to the first’ within a generation. The key general lesson from the Singaporean experience is that industrialisation success within GMVCs requires embedding foreign direct investment (FDI) promotion in a comprehensive national development strategy and recalibrating the development strategy in line with evolving patterns of international production.

Date: 2025
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