August 05, 2019

Opening Speech by Guest-Of-Honour, Minister for Education Mr Ong Ye Kung, at the Singapore Economic Review Conference 2019, at Mandarin Orchard Hotel

Professor Euston Quah, Editor of the Singapore Economic Review and President of the Economic Society of Singapore

Distinguished speakers and guests

Ladies and gentlemen

1. It is my pleasure to speak to you this morning. To the many speakers and guests from all over the world, a very warm welcome to Singapore. For an economist, this must be exciting times, because the global economy is in a state of flux.

Government in Partnership with Academia

2. For example, the US-China trade dispute and technological contest threaten to bifurcate international supply chains. This could undermine the global division of labour, specialisation of production, and productivity convergence around the world.

3. We are also in the middle of an unprecedented period of low interest rates and rising asset price valuation. This is a peculiar situation. Some economies are slowing down, yet there is no threat of inflation. Economists are once again asking when and how big will the correction be, or if it will really be different this time?

4. In Europe, Britain appears to be heading towards a possible, dramatic exit from the European Union. In Asia, the region remains the fastest growing in the world, with a rising middle class and presenting many business opportunities. China’s continued growth notwithstanding its internal and external challenges will profoundly shape the region’s economic future.

5. Amidst all this, the advancement of technology - from Artificial Intelligence, renewable energy, material science, to genomics - promises to disrupt almost all industries with a lot of significant implications on the workforce.

6. I surmised that it is therefore a great time to be an academic in economics, for there are so many research questions to ponder and dive deep into. It is like an archaeologist who suddenly discovered an ancient underground city, with an endless reservoir of knowledge waiting to be uncovered that can last you a few lifetimes of work.

7. But from the point of view of Governments, it is a time of big headaches, major dilemmas, and stark trade-offs and choices. Democratic governance will be put to the test, made more difficult by falsehoods that cloud pertinent information and data, thus hampering collective decision making.

8. So more than ever now, we need the academia to step up and be heard. Your questions, hypothesis, evidence, and considered views in the options that you present to the public are important to help us navigate this period of economic and social volatility. This is an opportune time for a closer Government-academia partnership, to tackle the biggest economic issues of the day.

9. Today, let me suggest three major economic questions which I believe Governments all over the world are most concerned about. But please bear in mind this is the view of an Education Minister. I will end my speech with my thoughts on how the Singapore Economic Review, or SER, can contribute to this effort.

Three Economic Questions

10. The first major question is: what drives a country’s competitiveness in the future? In the agricultural economy, it was the ability to domesticate crops and animals, and harness maximum value of the land. In the industrial economy, it was mastering production techniques and securing global supply of raw materials. In the knowledge-based economy, it must be about innovation.

11. In the 1980s, there was a contest of innovation models. Kaizen, represented by the Japanese economy, is a democracy of incremental and continuous improvements contributed by all workers, bottom to the top, and that led to superior performance, consistent quality, and cost efficiency.

12. But there was also the model championed by the US economy, which has consistently delivered breakthroughs and new inventions that redefined industries and changed lives. It fuelled start-ups, unicorns, venture capitalism, and the AI revolution. Today, the verdict favours the latter, but I think we should not discount the value of the former.

13. If the ability to deliver and participate in innovative breakthroughs drives competitiveness, what in turn drives an economy’s ability to innovate in the first place? What are the policies that Governments can adopt to nurture this competitiveness? And what are the trade-offs in pursuing these policies?

14. The second question is: how can countries ensure that innovation-led growth does not benefit only a few tech-savvy and well-connected individuals, but also lifts all in society? By many measures, Singapore has managed to achieve inclusive growth through our industrialisation effort. We attracted foreign investments, educated and trained our workers to contribute and earn a better living, while ensuring that Tripartite relations – i.e. unions, employers and Government – were co-operative and on an even keel. That formula helped lift the entire workforce.

15. But we have also witnessed many examples of jobless growth, in both developed and developing countries, over the decades. It could be because countries have just emerged from a recession and companies continued to remain cautious about hiring, or because growth was driven by asset inflation without adding to substantive economic activity.

16. Therefore, we should ask ourselves – is it possible for the masses to participate and benefit in innovation-led growth? Even if they do, will job creation be negated by job displacement by technology? What is the implication for the way we educate and train our people? How should employment laws and human resource practices evolve in tandem? How do we incentivise the right kinds of technology and innovation activities for broader welfare gains?

17. The third question deals with other major trends which might have their origins in other fields but would most certainly have a major economic impact.

18. For example, climate change will affect every country in the world. As temperatures and weather patterns change, so will crop varietals in each geography, and tourist traveling patterns. What is the impact of climate change on each economy, how can we adapt to the new normal? How do we set up a more carbon conscientious economy? What will the transition process be like? What kind of international cooperation is required?

19. Another major trend is the silver tsunami. Japan is already in the thick of it, and has developed many effective strategies. Many other countries, including Singapore, are starting to have to come to terms with it. It involves significant adjustments to social policies, which we are doing, and active steps to tap on this reservoir of older workers. What are the most effective strategies?

20. On a related issue, what is really behind falling birth rates in developed economies, is there a possibility of reversing it or is it hard coded in our societal genome?

21. There are also a number of pressing macroeconomic and international finance issues that remain unresolved. They range from the apparent overdependence on monetary policy for short-term stimulus, the new risks to financial stability from cyber threats, and the perennial issue of how to tame volatile capital flows.

Singapore Economic Review

22. These are questions and issues that we hope can be addressed and discussed in the Conference today. I don’t think we can come up with solutions but at least let them be heard and let different views be discussed. The SER was established in 1956, and was formerly known as the Malayan Economic Review. It is one of the oldest economic journals in our region – in fact older than independent Singapore – and is today one of the leading economic journals based in Asia. It is subscribed to by many top universities in the world – including Harvard, Stanford, and Oxford – and almost all of its editors are based in universities all over Asia.

23. As a journal, SER may not rank amongst the top in the world today, which I believe is due in part to its regional focus on Asia. However, being a leading journal in the fastest growing region in the world, it is a significant journal that contributes to our understanding of the world and the challenges it is facing.

24. The papers that the SER published in recent years covered a wide range of issues – from examining the benefits and challenges of regional integration in Asia, how Singapore can move towards a more productive economy, to the political economy of environmental damages in the region.

25. I am confident that the SER will continue to produce relevant knowledge on Asia, and that the world will gain interest in it. I am therefore pleased to note that many distinguished economists around the world are in the audience. Over the next two days, you will share your insights into some of the pressing questions I mentioned. Your presence underscores the continuous support given to the SER by eminent economists since its earliest days, with luminaries such as Harry Johnson, Gregory Chow, Ronald Jones and Ronald McKinnon and many others.

26. So I hope younger academics in economics, perhaps still vying for tenure or full professorship, can step forth and research into the questions that I posed earlier in my speech. And the SER can help bring this good work to a larger audience.

27. Some may worry about whether publication in the SER sufficiently contributes to tenure and promotion. I hope our universities, at least our Singapore universities, can put this concern to rest. Tenure in the National University of Singapore, NUS, and Nanyang Technological University, NTU, depends on research impact, and that is the broad policy. We must work hard to make sure that broad policy translates into practices in deciding promotion and tenure. We must make sure that the evaluation of research impact is indeed a research impact assessment, and not merely a publication measurement. It should also be multi-dimensional and holistic, taking into account citations, peer reviews, awards, invitations to speak at conferences, publications in well-regarded journals such as the SER, and impact on public policy and Government and various ministries are prepared to write testimonies if a piece of work affected the way we think about public policy and led to a change or rethink of public policy. We must be prepared to write a testimony to support the promotion and tenure process.

28. So on that note, I look forward to the continued contributions of our academics, young and old, experienced and those who are still charting their career. All the best in the discussion. I wish you a fruitful and constructive conference. Thank you.