Bryan Cheang’s Financial Liberalism and the Developmental State is a well timed and intellectually daring ebook that enters the long-standing debate over the East Asian financial miracle with readability, rigor, and a revisionist sensibility. Relatively than selecting sides between neoliberal reward of market freedom and statist popularity of technocratic planning, Cheang proposes a extra cautious studying of the historic and institutional variations between Hong Kong and Singapore. His conclusion is arresting: Hong Kong’s comparatively laissez-faire colonial legacy fostered a extra productive, progressive, and entrepreneurial society than Singapore’s developmental state.
To know why Hong Kong outperformed Singapore in key areas of long-term improvement, Cheang begins by reexamining the colonial origins of each city-states. In distinction to post-colonial narratives that deal with imperialism as a purely extractive enterprise, Cheang emphasizes the institutional advantages left behind by British rule—significantly the enforcement of personal property rights, authorized impartiality, and financial openness.
One pivotal determine on this historic account is Sir Stamford Raffles. Raffles—influenced by liberal Enlightenment beliefs—established Singapore as a free port in 1819. His insurance policies had been explicitly anti-monopolistic, pro-free commerce, and designed to draw a various inhabitants of retailers and settlers. As Cheang notes, these reforms weren’t arbitrary however grounded in a imaginative and prescient of financial liberty—a legacy that, for a time, gave Singapore the foundations of market-led improvement.
Nevertheless, because the ebook progresses, it turns into clear that these liberal origins had been preserved and expanded in Hong Kong much more persistently than in Singapore. The colonial administration in Hong Kong below figures like Sir John Cowperthwaite actively resisted financial planning, believing the market to be a greater allocator of sources. This principled non-interventionism would later outline Hong Kong’s financial mannequin.
Constructing on this institutional basis, Cheang turns to the position of the Chinese language entrepreneurial elite, who flourished in each cities however below very totally different situations. In Hong Kong, Chinese language enterprise folks—lots of them migrants from Shanghai—had been welcomed by a permissive authorities that imposed few restrictions on enterprise. These entrepreneurs revitalized Hong Kong’s manufacturing and finance sectors, contributing to fast industrial progress within the Nineteen Fifties and 60s with out the help of state planning.
In stark distinction, the developmental state in Singapore actively sidelined this similar class. As Cheang meticulously paperwork, Singaporean authorities dismantled Chinese language clan associations and enterprise networks, viewing them as outdated and politically suspect. As an alternative of fostering indigenous entrepreneurship, the state favored massive government-linked firms (GLCs) and overseas multinationals, believing these to be extra environment friendly and controllable. The end result, Cheang argues, was a dependency tradition amongst native corporations and a weakening of home entrepreneurial capability.
This divergence in institutional orientation laid the groundwork for 2 sharply contrasting financial fashions. Cheang explores these in depth, rigorously tracing how Singapore embraced technocratic state planning whereas Hong Kong adhered to market liberalism. To many observers, Singapore’s excessive GDP progress and polished infrastructure appeared to vindicate its mannequin. But, as Cheang reminds us, uncooked GDP figures usually conceal deeper inefficiencies.
Certainly, when assessing Complete Issue Productiveness (TFP)—a extra complete measure of innovation and effectivity—Hong Kong persistently outperformed Singapore. Between 1964 and 1997, TFP in Hong Kong grew by 39.13 %, whereas Singapore’s really declined. Throughout this era, Hong Kong’s TFP was 46.9 % larger than Singapore’s. Even after 1997, the hole remained: Hong Kong’s TFP fell by 18.66 %, however Singapore’s decline was nonetheless vital at 5.39 %.
This discrepancy is especially placing given Singapore’s substantial investments in training, infrastructure, and R&D. Regardless of these inputs, the output merely didn’t match. Cheang’s conclusion is that Singapore’s progress was “input-driven” quite than “efficiency-driven,” and thus inherently unsustainable with out ever-increasing ranges of state help.
Nowhere is that this inefficiency extra obvious than within the realm of innovation. Singapore spends closely on analysis and improvement, often outpacing Hong Kong by way of R&D as a share of GDP. Nevertheless, this funding has failed to provide proportional outcomes. Cheang exhibits that within the 2013–2015 interval, Singapore ranked exterior the worldwide prime 100 in innovation effectivity and was the lowest-performing Asian nation within the Inventive Productiveness Index.
In contrast, Hong Kong—regardless of decrease R&D spending—recorded considerably higher outcomes. It had six instances as many R&D-oriented corporations in 2013 and carried out higher on patents filed by native assignees. These figures counsel that Hong Kong’s innovation ecosystem is extra organically entrepreneurial, whereas Singapore’s is overly engineered and bureaucratic.
The rationale, Cheang argues, lies within the distinction between a permissive and a managed society. Innovation requires freedom—freedom to fail, to problem norms, and to think about options. In Singapore, that freedom is constrained by an intrusive regulatory tradition, together with censorship legal guidelines that restrict creative and mental expression. Whereas the state could fund the humanities, it concurrently constrains them by means of bureaucratic management, thereby dampening artistic spontaneity.
Furthermore, Cheang is especially crucial of the externalized nature of Singapore’s innovation economic system. Though the federal government has invested closely in R&D and innovation coverage by means of the Nationwide Analysis Basis and different entities, a lot of Singapore’s innovation exercise is performed by overseas firms or overseas nationals. Nearly all of patents filed in Singapore are by overseas entities. Native corporations, in the meantime, stay closely reliant on authorities grants and risk-averse institutional buildings.
This reliance on overseas innovation distorts the image painted by headline statistics. Singapore could seem globally aggressive in innovation rankings, however when examined extra carefully, its capability to generate indigenous innovation is low. As Cheang paperwork, the home share of patents, R&D commercialization, and start-up formation stays disproportionately low.
Cheang’s evaluation deepens in his dialogue of the artistic economic system. Utilizing commerce statistics, employment knowledge, and cultural surveys, he compares the artistic sectors of each cities. As soon as once more, Hong Kong leads. It boasts larger ranges of exports and imports in artistic industries, a bigger share of the labor power engaged within the arts, and higher international visibility in movie, music, and publishing.
Singapore—regardless of vital authorities help by means of businesses just like the Nationwide Arts Council—lags behind. Cheang attributes this to a central contradiction: the try and foster creativity in an authoritarian setting. State-managed artwork, he suggests, is inherently restricted. It could produce content material, however hardly ever tradition. In the meantime, Singapore’s instructional and employment cultures reinforce risk-aversion, making it troublesome for younger folks to check careers in artistic fields.
To make clear the underlying financial buildings, Cheang introduces the helpful distinction between entrepreneurial capitalism and state capitalism. Singapore falls squarely into the latter class. Authorities-linked entities dominate main sectors of the economic system, from banking to transportation. SMEs, although numerically vital, contribute solely 44 % to business value-added—effectively under the OECD common.
In Hong Kong, the state performs a extra restricted position within the economic system. Cheang notes that whereas town has confronted challenges from property monopolies and political instability in recent times, its entrepreneurial tradition stays strong. SMEs contribute extra meaningfully to value-added, and the financial setting stays extra contestable for brand spanking new entrants. The philosophical distinction is profound: in Singapore, financial life is orchestrated; in Hong Kong, it’s allowed to emerge.
In the end, Financial Liberalism and the Developmental State isn’t just a comparability between two city-states—it’s a philosophical argument in regards to the limits of technocratic planning and the enduring energy of freedom. Cheang doesn’t deny that Singapore achieved exceptional success, however he warns that this success got here at a price: diminished creativity, restricted innovation, and a citizenry conditioned to look to the state for initiative.
In distinction, Hong Kong’s mannequin—rooted in British liberal establishments and empowered by a dynamic Chinese language industrial class—produced a society extra attuned to danger, innovation, and long-term effectivity. Even amid current political challenges, this mannequin holds necessary classes for the way forward for financial improvement.
For policymakers, students, and defenders of liberal capitalism, this ebook is each a corrective and a beacon. Cheang reminds us that actual prosperity comes, not from orchestration, however from freedom—freedom to commerce, to create, to fail, and to attempt once more.