ARI Working Paper Series

In an era of rapid economic globalization, many national governments have been actively attracting foreign direct investment (FDI), ostensibly for purposes of encouraging local economic and social development. The proliferation of these strategies has generated intense inter-governmental competition for FDI. This paper examines the case of Singapore, a country that was relatively successful in attracting FDI between 1965 and 2005, to illustrate the processes that underpin the competition.

It finds that beneath the country’s success in attracting FDI, the Singapore government has been continuously struggling to compete for this FDI by regularly introducing ‘innovative’ strategies to stay ahead of the competition. This suggests that it will be harder to compete for FDI as Singapore becomes ever more developed. This paper concludes with some policy insights on FDI-oriented development strategies, particularly as this competition is a zero-sum game, where there are fewer ‘winners’ than ‘losers.’