Janice Lim

Global financial integration is a double edged sword that can be both beneficial and detrimental to the world economy, depending on the policies of each country.

Short-term capital flow

Short term capital flow has a destabilizing effect on an economy, as brought up by John Maynard Keynes. With reference to the Open Economy Trilemma, an economy cannot maintain all three of these: capital control, independent monetary policy and fixed exchange rate. Hence, global financial integration resulted in the undermining of a countries’ ability to maintain fixed exchange rates or to use monetary and fiscal policies to maintain full employment. Hence the financial instability occurs as the financial markets are subject to bouts of euphoria and pessimism.

Playing with fire

Firstly, free flow of short term capital flow makes financial products more exportable because they are accessible to foreign investors and the total assets held by foreigners increased over the years as financial borders evaporated. This happened as banks became global players, financing corporate and individual activities worldwide and operating on world financial markets. On its own, this is not such a bad thing. However, financial globalization occurred in parallel with the rise of risky financial practices. In order to sustain growth and to increase revenue, major banks expanded their activities to include all financial transactions, even the most speculative and risky ones, taking more risks while removing them from the balance sheets just because it was allowed by the banking regulations at that time. The banks created complex financial products and hedging instruments that allowed them to sell a portion of risky subprime securities.

What is the role of policies in this?

Along with national policies, one distinct example of global financial integration showing financial instability is the case of the 2008-2009 subprime crisis in the United States, where half of all U.S. individual loans were granted without income verification, as banks were increasingly deregulated, hence encouraging further speculation in the asset market and led to the eventual bursting of the bubble. People defaulted on their loans and banks soon went bankrupt. This not only affected the American economy, but that of the entire world as investors in multiple countries held identical assets. It affected international trade too as letters of credit did not get financing. As the US economy suffers, it affected those highly dependent on exports to US, hence further exporting the financial problem to other parts of the world, resulting in financial instability due to global financial integration.

Abrupt withdrawal of foreign financing

Secondly, the free flow of short term capital mobility could lead to a countries’ vulnerability to sudden withdrawal of foreign financing, which is detrimental to the country because of the drastic depreciation of the exchange rate that will result. For example, there was a false alarm in China about the prospect of an economic meltdown due to a poorly handles shift in currency policy and bursting of an equity bubble. As China tweaked the exchange rate peg with the dollar, making renminbi (RMB) float in a wider band, it resulted in market panic that China was entering in to a currency war, resulting in capital outflow and the stock market was affected. China then had to intervene to prop up the RMB through drawing from reserves to stop it from falling too fast.

Whether or not we like it, global financial integration is a fact of the 21st century. We can only hope for global leaders to have enough foresight to maneuver the tricky economic landscape and create effective policies that benefit as many people as possible, if not everyone. On that note, there are many things awaiting us as America elects her new president. Talk about global financial integration - we are not spared from this drama since our currencies and investments are at stake.

Impacts of globalization on Singapore

With the turn of the 21^st century, there is advancement of space shrinking technology that led to globalization, where all countries are interconnected and interdependent on each other.

As a result, it is almost impossible for countries to have a close-door policy and still have economic growth and development. Liberalization of our economy is important, and an open-door policy is the norm in order to improve the economy by encouraging trade among countries, such as through imports and exports. It is hence important that we help other countries grow and develop too since all economies are interconnected and interdependent through globalization, while fostering international relationships that are beneficial for trade. Singapore has to support China in its development too, since China has a large economy and has great influence over the global economy. Singapore can help by providing the China nationals with jobs, by liberalizing the migration policy, allowing foreign workers from China to take up jobs in Singapore.

National Library before it was demolished

Also, through the advancement of technology such as social media, Singapore’s open nature allowed for the transfer of ideas and cultures, and became modernized and westernized. Singapore also experienced greater economic growth, causing Singaporeans to lose interest in their culture and heritage as they became more career-oriented. There has been destruction of historical and cultural infrastructure to make way for others, be it for moneymaking purposes or for land planning, such as the demolition of the National Library at Stamford Road which created memories for generations of Singaporeans, to make way for the Fort Canning Tunnel so that ERP fares can be charged and so that there can be better land planning to offer motorists an alternative route. Also, it seems like economic benefits have been of greater priority than cultural and heritage conservation, since the construction of Universal Studios Singapore has stripped away some part of Sentosa which could have been part of a Sentosa heritage place, so that it can become a tourist attraction and generate revenue.

Universal Studios Singapore

Other implications of globalization include the low fertility rates in Singapore, due to career-minded Singaporeans that delay or even cancel out the idea of starting a family, leading to an ageing population. Thus, the government welcomed foreigners into Singapore to increase our workforce and talent pool so that Singapore can maintain its competitive edge in the global economy. Hence, foreigners now make up one-third of Singapore’s workforce. Furthermore, Singapore has set a goal to raise its population total to 6.5 million from 4.5 million within the next two decades, replenishing the workforce mainly through immigration, especially from China.

Low birth rates result in declining population base

How Singapore’s cultural identity is diluted

Although China national workers are just one part in Singapore’s fast growing foreign population, they are the largest group of expatriates in Singapore, and even crossed the 1 million mark, boosting the overall population to about 4.5 million in an otherwise ageing society. According to government statistics, Singapore citizens currently make up 63% of the population, down from 86% in 1990. With Singapore’s dynamic economy and rate of development and growth, there is no knowing if Singapore citizens will eventually become the minority, since low birth rates contribute to declining population of citizens. Since Singapore is a small country, with ever-changing demographics, the large influx of foreigners can easily be felt.

The influx of Chinese national foreign workers to Singapore, has contributed to the dilution of Singapore’s cultural identity, due to the use of their own language, mainly Chinese. Many of them are Chinese-speaking monolinguals. This makes our cultural identity less distinct through the transfer of foreign China cultures to Singapore through globalization.

A component of our distinct cultural identity is our good mix of languages and races, where our myriad of cultures blend together to form our unique colloquial “Singlish” slang, such as “lah” from the Chinese language, “goondu” which means “idiot” from the Tamil language, “makan” which means to eat in Malay, and “sabo” which is short for “sabotage” from the English language, but with an everyday usage to mean to play a trick on someone. These are examples of the unique Singlish usage in Singapore for several generations. It has since become their common language used for communication. This good mix is also a stimulus to creativity and portrays the racial harmony of Singaporeans. Marabelle Heng, 30, a Singapore citizen, believes that Singapore’s cultural identity is constructed with the racial mix and harmony, evident through the celebration of festivals of different races, as well as the Singlish way of speaking that she grew up with.

According to 30 year old Rock, a Singapore-born Indian, he finds that despite all these, they are also trying to break up our community and culture by insisting on speaking Chinese only, in order to make Singapore more like China. This is becoming more evident in some locations in Singapore. Recently, it is observed that almost all new shop signs in Geylang, a popular residential place for Chinese nationals, are in Chinese, and the sellers are mainly Chinese nationals too. From this, it is evident that these Chinese nationals that come to work in Singapore have the ability and means to dilute our cultural identity by over-adding Chinese elements to Singapore. Rock, who is a member of the minority race in Singapore, also raises the problem that he does feel like a stranger sometimes when he cannot understand what the Chinese nationals are saying. He also states that furthermore, there are a lot of them working in service-oriented industries, which requires them to be able to converse with the Singaporeans in order to serve them effectively, but since there is a language barrier between Chinese nationals and the minority races, Rock feels that he is not treated well because of his race.

Shop signs in Geylang in Chinese

To add on, the Chinese nationals work in many of Singapore’s common spaces too, such as in our unique and culture-rich hawker centers. When they work there, they may speak only Chinese, and this deters those of other races from eating there due to the language barrier. Singapore’s cultural identity of having a racial mix, especially in common spaces where people of all races can interact and foster mutual understanding, will then be diluted as a result.

Singapore's hawker centre

The emphasis of Singapore’s education system on the Chinese language also results in Chinese nationals not seeing the need to speak English in Singapore, and hence do not conform to Singaporean norms. This emphasis is evident in the presence of SAP schools, where the Chinese elites are given special treatment, which is inapplicable to Malays or Indians. SAP schools are given extra resources to nurture a generation of Chinese Singaporeans who are well versed in the Chinese language and culture. The purpose is to equip Singaporean Chinese with the ability to interact with their business counterparts in China, since their economy is growing quickly and can benefit Singapore’s economy, due to the interdependency globalization brings about.

Singapore's campaigns for Chinese language

Solutions to remedy the situation

Singapore can either reduce the number of foreign workers, especially those from China, or make them conform to Singaporean norms and culture.

In order to reduce the number of Chinese nationals coming to Singapore to work, Singapore has to maintain an ideal replacement rate of 2.1. There could be shorter working hours so that Singaporeans can have more time to find a mate and start a family. However this is not so feasible as the Singaporean workforce has to be productive in order for the country to experience economic growth. Also, the rate of globalization and influx of foreigners will be too fast for Singapore to implement policies and adapt.

Hence, a better solution would be one that can strike a balance between both the economic and social aspect of Singapore. The productivity of the workforce should be maintained if not increased. At the same time, there will be a continuous influx of foreigners. In order for Singapore’s cultural identity to be retained, the foreigners have to conform to Singaporean norms and culture by matching their attitudes, beliefs, and behaviors with that of Singaporeans when interacting them.

This is possible if Singapore adopts a melting-pot society, instead of promoting multiculturalism. Multiculturalism can be defined as a demographic make-up of a country where various cultural divisions are accepted for the sake of diversity. A melting-pot, on the other hand, is a society where all of the people blend together to form one basic cultural norm based on the dominant culture. The government should educate the foreigners about Singapore’s culture and encourage them to visit heritage sites to learn more. Multiculturalism will promote the distinctive cultural identity of every race, and will eventually dilute that of the host nation, Singapore. The effect of promoting diversity is that the foreigners, especially Chinese nationals, will try to bring their home country’s culture into Singapore. It also has the concept of division of cultures and may cause minorities to see themselves as separate and not having a part to play in constructing the nation’s cultural identity.

A melting-pot society can be formed by building relationships and uniting Singapore’s population based on their similarities such as of being Singaporean and all being essential members of society. If the foreigners see that Singaporeans are all united in their culture, they may feel excluded if they do not adopt the same cultures. Furthermore, the government can educate the Singapore citizens on the importance of the foreign workers. Hopefully, Singaporeans will accept them as part of society. When the foreigners feel the acceptance, they will have a greater sense of belonging for the period of time they are working in Singapore. This sense of belonging will drive them to realize that they too are essential members of the Singapore society and then conform to Singapore cultures and norms to have a sense of unity.

On top of that, more common spaces should be provided and the foreigners should be accepted into these spaces, since common spaces allow the interaction of different races in order to foster mutual understanding, and if foreigners observe and learn Singapore’s cultural practices, such as the wide usage of Singlish, they are able to assimilate more easily. A melting-pot society can allow the society to be stronger and more united, more peaceful and resilient.

Although some foreigners may refuse to conform to Singaporean norms, and modern-day practices are ever changing due to globalization and continuous transfer of ideas to Singapore, a melting-pot society can allow the society to be stronger and more united, more peaceful and resilient, and promote their unique Singaporean-ness in unity, retaining the cultural identity. Individual cultures may have to give up parts of their practices, and may result in unhappiness. For examples, schools are a common space and emphasize uniformity, hence Malay girls cannot wear their Tudung to school and the Tudung issue arose.

References

Little Speck: Singapore’s Chinese Immigrants. Chen, Jean http://www.littlespeck.com/content/people/CTrendsPeople-080516.htm (Retrieved 5th August 2012)

China History Forum: New China migrants to Singapore

http://www.chinahistoryforum.com/index.php?/topic/33547-new-china-migrants-to-singapore/ (Retrieved 5th August 2012)

The Online Citizen: Singapore: Multiculturalism or the melting pot?

http://theonlinecitizen.com/2009/07/singapore-multiculturalism-or-the-melting-pot/ (Retrieved 5th August 2012)

Wikipedia: Multiculturalism

http://en.wikipedia.org/wiki/Multiculturalism (Retrieved 6th August 2012)

Relax: Geylang The new Chinatown http://www.relax.com.sg/relax/news/252214/Geylang__The_new_Chinatown.html (Retrieved 6th August 2012)

Giam, Gerald: Need-less name calling by the Straits Times

http://geraldgiam.sg/2009/07/needless-name-calling-by-the-straits-times/ (Retrieved 6^th August 2012)

Lee, Martia: Is Singapore’s high GINI a reason for its low Total Fertility Rate? http://mathialee.wordpress.com/2012/05/20/is-singapores-high-gini-a-reason-for-its-low-total-fertility-rate/ (Retrieved 6^th August 2012)