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. Moderately 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, revolutionary, and entrepreneurial society than Singapore’s developmental state.
To know why Hong Kong outperformed Singapore in key areas of long-term growth, 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—notably 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 have 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 growth.
Nonetheless, because the ebook progresses, it turns into clear that these liberal origins have been preserved and expanded in Hong Kong much more constantly than in Singapore. The colonial administration in Hong Kong underneath 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 underneath very completely different circumstances. In Hong Kong, Chinese language enterprise individuals—a lot of them migrants from Shanghai—have 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 assistance from 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 companies (GLCs) and international multinationals, believing these to be extra environment friendly and controllable. The consequence, 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 constantly 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 % greater 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” reasonably 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 growth, frequently outpacing Hong Kong by way of R&D as a share of GDP. Nonetheless, this funding has failed to provide proportional outcomes. Cheang exhibits that within the 2013–2015 interval, Singapore ranked exterior the worldwide high 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 occasions as many R&D-oriented corporations in 2013 and carried out higher on patents filed by native assignees. These figures recommend that Hong Kong’s innovation ecosystem is extra organically entrepreneurial, whereas Singapore’s is overly engineered and bureaucratic.
The explanation, 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 might fund the humanities, it concurrently constrains them by bureaucratic management, thereby dampening inventive spontaneity.
Furthermore, Cheang is especially crucial of the externalized nature of Singapore’s innovation financial system. Though the federal government has invested closely in R&D and innovation coverage by the Nationwide Analysis Basis and different entities, a lot of Singapore’s innovation exercise is carried out by international corporations or international nationals. The vast majority of patents filed in Singapore are by international entities. Native corporations, in the meantime, stay closely reliant on authorities grants and risk-averse institutional constructions.
This reliance on international innovation distorts the image painted by headline statistics. Singapore might 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 inventive financial system. Utilizing commerce statistics, employment information, and cultural surveys, he compares the inventive sectors of each cities. As soon as once more, Hong Kong leads. It boasts greater ranges of exports and imports in inventive industries, a bigger share of the labor power engaged within the arts, and larger international visibility in movie, music, and publishing.
Singapore—regardless of vital authorities help by companies just like the Nationwide Arts Council—lags behind. Cheang attributes this to a central contradiction: the try to foster creativity in an authoritarian setting. State-managed artwork, he suggests, is inherently restricted. It might produce content material, however not often tradition. In the meantime, Singapore’s academic and employment cultures reinforce risk-aversion, making it tough for younger individuals to check careers in inventive fields.
To make clear the underlying financial constructions, 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 financial 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 financial system. Cheang notes that whereas the town has confronted challenges from property monopolies and political instability lately, 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 concerning the limits of technocratic planning and the enduring energy of freedom. Cheang doesn’t deny that Singapore achieved outstanding 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 business 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 growth.
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.
