2.7. Concluding assessment

Figure 10: Evaluation evidence assessment framework (Matthews and White, 2013)

Overall, some of existing industrial policy reviews would conclude, there are three important aspects to keep in mind for industrial policy design and implementation (Rodrik, D. 2008):

- It must be well embedded locally, therefore cooperation with private and non-profit sector actors is critical; - It must make full use, as necessary of both sticks and carrots, to avoid capture; - It must ensure strong accountability, including transparency, openness and high degree of discussion.

2.7.Concluding assessment

Following the review of literature and experiences in other countries, a number of lessons and insights are drawn as regards Singapore industrial policy in general and the ITP in particular. In a sequential order, in the following section a discussion will be provided as regards implications for Singapore

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arising from the discussions on different analytical frameworks and comparison with other countries, the coverage of skills aspects, policy implications as regards investment in intangible assets and aligning industrial policy with the global value chains perspective on international trade as well as, finally, the insights from industrial policy evaluation literature for Singapore’s industrial policy in general and the ITP in particular.

However before going further into details, several major limitations need to be kept in mind, warranting caution as regards the interpretation of these initial conclusions:

- Most of the discussion here is built on a comparative perspective, i.e. comparison between the presence or the absence of a particular aspect in Singapore industrial policy framework.

Such perspective, while indicating some missing elements, does not automatically mean that those elements are necessary or useful in Singapore (or for that matter – any other country) context. - Furthermore, many of the assessments done are based on a limited amount of information as regards industrial policy frameworks, in particular when concerning policies adopted in such broad jurisdictions as the EU, US or China. Therefore it is quite likely that some of the elements are not covered in the sources and thus not reported in the conclusions below. - In addition, each of the perspectives and frameworks, used for comparative review, when being designed had a separate purpose (i.e. classification, evaluation), specific underlying philosophy (growth accounting framework; intervention logic) as well as different sources of evidence (academic literature, case studies, project data), providing a multi-perspective view on this complex topic, as detailed below.

First of all, as already has been discussed in the literature, the varieties of capitalism framework indicates the potential importance of a coherent institutional framework governing the industrialinnovation system in a country. In this respect, an important aspect for industrial policy in Singapore is the perceived presence of elements from both of the two ideal innovation system types – radical (exemplary case US) and incremental (exemplary case Germany). Some authors argue, that due to absence of prevailing innovation system (or alternatively presence of conflicting innovation styles), a sustainable innovation activity of either type would not take hold (Carney, 2013) resulting in fragmented and subdued innovation activities and outcomes. This would imply that for Singapore to retain competitiveness it is critical to make its innovation system work.

Secondly, the industrial policy in Singapore, as announced in ITP, can be assessed in terms of its comprehensiveness, using industrial policy classification by domain developed by Warwick, 2013. From the discussions under ITP, it would seem that the promotion of R&D in terms of research and technology adoption would take the primary role (having two of the four ITP pillars focusing on this aspect, as well as the majority of financing initiatives announced – such as, revolving R&D tax credit facility, programmes to finance research as well as the adoption of automation and robotisation technologies). Efforts to address any bottlenecks in the skills and labour markets are also evident, but not as pronounced as those targeted at R&D. As regards product markets, some effort is programme as regards trade promotion, but seems to be, at least in the scope of IPT, focus primarily on company-specific support for internationalisation. Also some action as regards the functioning of systems/institutions some forward-looking analysis is carried out as part of planning individual ITMs, but it is unclear how does it link with broader competitiveness framework in the country. The last two aspects –land markets and capital markets are the least pronounced in the IPT. This is telling, as it would seem that most of public sector support to implement ITP is distributed as government grants, with limited role of private capital markets – the banking sector or financial markets.

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When comparing the latest industrial policy initiatives in Singapore with those present in other major world economies, like US, China, Germany, France or the United Kingdom using industrial policy classification by focus, three different approaches emerges. For China, at least as far as policy communication is concerned, an aggressive selective policy, with a strategic focus for a number of frontier sectors is being pursued (recently most notable being aerospace industry) using the comparative advantage development orientation. For Singapore, there is overall a comprehensive combination of horizontal approach, covering most of economic sectors but within at least some ITMs (i.e. precision engineering) there seems to be a substantial expectation also for the development of some frontier sectors, which are not necessarily fully based on existing comparative advantage (a good example would be additive manufacturing). For the United States, the overall limited industrial policy is focused on a number of sectors through the advanced manufacturing institutes’ initiative. In Germany, industrial policy would overall seem to be mostly horizontal, while in France and the UK sectoral industrial policy might be defensive, rather than strategic. Still, classification of overall industrial policy in horizontal v/s vertical terms is problematic as countries often have a mixture of both, with little data to judge which of the two orientations is more important, which is even likely to be the case in China. This type of analysis is likely an over-simplification, of low reliability and thus must be referred-to with due caution.

As regards the use of skills-related interventions as part of overall industrial policy, it must be acknowledged that often skills policies go beyond or at least in parallel to industrial policy. Education and training systems in many cases have broader functions beyond the support for industrial transformation, including employment and social aspects. Still, in Singapore it could be argued that skills policy frameworks are quite elaborate, with substantial effort both to provide framework conditions (like qualification framework), promoting sector-specific career pathways, dedicated workforce training programmes for emerging industries as well as broader support for lifelong learning. It also reserves a substantial role for the demand side, most notable in the ITP as forecasting and planning high-quality (PMET) job creation, indicating intention to stimulate demand for skills.

As regards the links between ITP and the global value chains perspective, it could be stated that Singapore ITP seem to address some, but not all of the challenges identified within the literature on the implications of GVC perspective on industrial policy. The issues which seem to be addressed substantially include social upgrading, with clearly vision of what type of jobs are aimed to be created as well as disaggregating industries to understand their dynamics – at least in the analytical phase. Some issues are addressed somewhat, but with less emphasis, including emphasis on regional trade through the support for Singapore companies to develop regional supply chains and overall importexport promotion. What seems to receive less explicit attention is cooperation with lead firms in the international supply chains to support local SMEs linkages to those chains and the overall effort to improve understanding of the role Singapore companies play in global value chains.

The role of intangible capital investment in Singapore’s ITP seems to be mostly limited to public financing of R&D and aggressive promotion of the adoption of advanced technologies. Workforce training investment seems to be less pronounced, particularly firm-specific training while other investment types, like brand development, market research, product development are likely promoted only on a case-by-case basis within the broader package of firm-specific support measures. There is an impression that the promotion of technological modernisation by companies is very much supply driven (initiated by public policy push), with the risks that such efforts for many SME’s might be misplaced, misused or simply fail, resulting in large deadweight losses of such investment. Such conclusion is inferred from the pronounced duality of Singapore’s economy, with large section of lowproductivity SMEs, facing constraints as regards their capacity to absorb technology and its fit with their underlying low-cost business models, strategies and mindsets. To change those, support for

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investment in technology might not be a fully effective approach, trying to deal with symptoms rather than underlying causes.

Finally, if evaluating the overall state of industrial policy design in Singapore using the three synthetic factors from industrial policy evaluation review, it is interesting to note that the assessment would be rather pessimistic. Industrial policy is embedded in local economy only to the extent of its coordination with large companies, while the link with SMEs is very much top-down. It would also seem that industrial policy while having plentiful of carrots might be lacking sticks to provide stronger incentives for transformation. Finally, as regards accountability, this would seem, at least from a foreigner point of view, to be an area facing largest weaknesses having a lower degree of openness, transparency or discussion.

Overall, given the variety of perspectives used for this comparative assessment of the situation in Singapore as compared to other major economies and current debates in the literature, it should provide a rich and comprehensive overview form multiple points of view. Even if in many cases somewhat superfluous and inconclusive it could be a useful reference in generating debate, raising new ideas and initiating collection of further evidence, particularly where specific aspects reported here are found to be relevant for the perspective of national expects who possess an in-depth tacit knowledge of industrial policy framework in Singapore and can quickly assess these tentative conclusions through their own experience.

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