GOVERNMENT FISCAL BEHAVIOR AND ECONOMIC GROWTH OF SINGAPORE IN THE TWENTIETH CENTURY

Abstract

This paper reviews the trends in the government fiscal structure and explores the possible relationships between government fiscal expenditure and economic growth in Singapore over the 20th century. It is a reasonable conjecture that the government fiscal behavior and in particular vis-à-vis economic growth had undergone a significant shift as Singapore switched from British colonial rule to self-government. The paper first traces out the characteristics of the colonial government fiscal behavior and compares them with those during the period of self-government in terms of sources and uses of revenue and fiscal balance. This is then followed by econometric exercises to ascertain whether the government fiscal expenditure responds to income movements broadly in the spirit of Wagner's law in 1900–1939 and 1966–2000. Generally, attention is focused upon inter-temporal similarities and differences.