Explain how economists can conclude that Singapore’s standard of living is ranked top in Asia.
Although Singapore is often ranked as the leading city in Asia for standard of living, it still faces several challenges. For example, technological disruptions and global developments like the US-China trade tensions have contributed to a gradual rise in unemployment since early 2018. Furthermore, broadening the scope of the Progressive Wage Model to cover more sectors could potentially increase unemployment, as it may raise business costs for employers.
a. Explain how economists can conclude that Singapore’s standard of living is ranked top in Asia. [10]
Introduction
To conclude that Singapore has the highest standard of living in Asia, economists must compare the country’s economic and social conditions with those of other nations using key metrics. These metrics assess both material and non-material aspects of the standard of living. Material well-being is typically measured by indicators such as real GDP per capita in purchasing power parity (PPP) terms and income distribution, while non-material aspects consider factors such as crime rates, healthcare quality, and access to education.
Material Standard of Living
Real GDP per capita in PPP terms
A key indicator for measuring the material standard of living is real GDP per capita in PPP terms, which adjusts for differences in purchasing power across countries. This metric provides a more accurate reflection of economic well-being than nominal GDP per capita, as it accounts for variations in the cost of living between nations.
A country with a higher real GDP per capita in PPP terms generally allows its citizens to purchase a greater quantity and variety of goods and services, contributing to a higher material standard of living. Singapore ranks among the top three countries in the world in terms of real GDP per capita in PPP terms, indicating that, on average, individuals in Singapore enjoy greater economic prosperity compared to those in other Asian nations.
Non-Material Standard of Living
Crime Rate
Non-material aspects of the standard of living refer to factors that affect overall well-being beyond income and consumption. One crucial indicator is the crime rate, which measures the number of crimes committed per 100,000 people. A lower crime rate contributes to a higher standard of living by ensuring safety and security for residents.
Singapore consistently ranks as one of the safest countries in the world, with one of the lowest crime rates globally. This high level of security enhances the overall quality of life for citizens, as people can live without fear of crime, contributing to greater personal freedom and well-being.
Quality of Healthcare & Accessibility to Healthcare / Education
Another important measure of non-material well-being is the quality and accessibility of healthcare and education. These factors contribute to human capital development, long-term productivity, and overall life satisfaction.
Healthcare: Indicators such as life expectancy, infant mortality rates, and healthcare expenditure per capita provide insight into the effectiveness of a country’s healthcare system. Singapore boasts one of the highest life expectancies in the world and low infant mortality rates, reflecting its high-quality healthcare system and strong public health initiatives. The availability of government subsidies through MediSave, MediShield, and MediFund ensures that healthcare remains accessible to the majority of the population.
Education: Similarly, the quality of education can be assessed using indicators such as literacy rates, Programme for International Student Assessment (PISA) scores, and government spending on education. Singapore ranks among the top in global PISA rankings, demonstrating a high standard of education and strong investment in human capital development. The government’s commitment to continuous learning through SkillsFuture initiatives further enhances workforce adaptability and lifelong learning opportunities.
Conclusion
Singapore’s top ranking in standard of living in Asia is supported by strong economic indicators, such as high real GDP per capita in PPP terms, which reflects a high material standard of living. While income inequality remains a challenge, government policies help to redistribute wealth and provide social support. Non-material factors further reinforce Singapore’s high standard of living, with exceptional safety, world-class healthcare, and a top-tier education system contributing to overall well-being. Despite some challenges, such as technological disruptions and wage model adjustments, Singapore’s economic policies and strong institutions ensure that it continues to offer one of the highest standards of living in Asia.
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