Communication Infrastructure and Economic Development:
Comparative Analysis of Singapore and Venice

 Younei Soe
Georgetown University

soeyounei@hotmail.com

Singapore has sought to be an "intelligent island, a global center of excellence for science and technology and a critical strategic node in global networks of commerce, communication and information." (Economic Development Board quoted in Knoop 1995, p. 1) Recent economic indicators suggest that it has largely succeeded in its efforts. Its economy was reported as the world’s second freest by the Heritage Foundation in 1996, 1997, 1998 and as the most competitive by the World Economic Forums’ Global Competitiveness Report (Economic Development Board 1998).

Singapore is the center of international trade bridging the West and Asia. It is a base for headquarters activities of the leading multinational corporations and hosts 5,000 international companies, which makes Singapore a "home away from home" for many foreign businessmen. What enabled this small country to become the trade and communication hub of Asia when there are so many other Asian countries around it? What is special about Singapore?

The success of an economy is a complex phenomenon that involves a whole host of factors ranging from governance to educational system to culture. This paper focuses on one critical factor: communication and transportation infrastructure. It seeks to understand the role Singapore’s communication and transportation infrastructure has played in its success. The analysis employs a comparative study of Singapore and its historical analog—Venice.

Thirteenth century Venice and present day Singapore, in spite of technological differences, have many striking features in common. They both were at the center of trade and commerce in the world economies of their times. Furthermore, they both employed very effective infrastructure strategies to enhance business and economic opportunities. As we will see, the comparative analysis provides useful insights into the strategic importance of infrastructure deployment for a commercial hub.

This analysis starts with brief overviews of the economies of Singapore and thirteenth century Venice. Thereafter the two cases are compared along a number of different dimensions. Finally, the role of transportation and communication infrastructure in the formation of a commercial hub is examined.

Singapore’s economic policy has evolved through different phases since it became an independent country in 1959. In the early period, Singapore had a policy of import-substitution, which served Singapore well until it was separated from the Federation of Malaysia in 1969. After the separation, Singapore adopted an export-oriented strategy. On the one hand, it actively recruited multinational companies to invest in Singapore. On the other hand, it focused on exploiting the export potential of labor-intensive products. In 1970s when the cost of labor increased, Singapore’s Economic Development Board decided to promote investments in high value products such as electronics and chemicals. In the early 1990s, economic policy moved towards promoting the development of Singapore as the international business hub and international financial center in Southeast Asia and Asia-Pacific as a whole. Singapore’s Economic Development Board launched Industry 21, with the vision of developing Singapore into a vibrant and robust global hub of knowledge-driven industries. [i]

Since 1980s, financial and business services have been the major sector of Singapore economy, accounting for 27 percent of GDP. The heavy reliance of the economy on foreign direct investment is evident in the fact that 69.6 percent of the net investment committed to manufacturing in 1997 was from foreign resources (Ministry of Trade and Industry 1998). Foreign firms dominated manufacturing in Singapore by the mid-1990s, accounting for four fifth of value-added, two thirds of employment, and three-quarters of fixed investment in manufacturing (Economic Development Board 1995).

In sum, Singapore is a location par excellence for conducting business. Consider the accolades it has won from different quarters:[ii]  

• High quality of life (Third Best Asian City)[iii]

• World’s best for overall infrastructure[iv]

• Least corrupted country in Asia[v]

• Attractiveness in location for industry (World’s second location attractiveness)[vi]

• World-renowned transparency (World’s Number 1 for transparency)[vii]

• Technological sophistication (Ninth of the world)[viii]

• Immigration laws (World’s best)[ix]

Singapore is renowned for its sophisticated communication infrastructure and world-class airport and port facilities. The former Ministry of Communications and Information Technology (MCIT) of Singapore explicitly described its mission as bringing about cost-effective world-class transportation and info-communications services and gateways to enhance Singapore’s economic competitiveness and quality of life in a knowledge-based society. In 2001, MCIT was renamed as the Ministry of Transport (MOT).[x] Its portfolio of information technology, telecommunications, and postal services was transferred to the Ministry of Information and the Arts (MITA).[xi]

Singapore is Asia’s main transshipment hub and is described as the world's busiest port in terms of shipping tonnage. Its port handles 145,383 vessel calls with a shipping tonnage of 910.18 million gross tons. MOT reports that at any one time, there are more than 800 ships in port. In recognition of its excellent infrastructure and services, Singapore port has received several international awards, including the "Best Seaport in Asia" for the 12th time at the Asian Freight Industry Awards 2000 (AFIA 2000). The United Nations Commission on Trade and Development (UNCTAD) ranked Singapore as the 11th most important maritime nation in 1999.

Singapore is proud to have a modern telecommunication system based on what it calls perfect digitization. The Infocomm Development Authority (IDA) of Singapore regulates the telecommunications industry, trying to provide an open telecommunications market for both Singapore and foreign companies. Quite clearly, the government is well aware of the importance of telecommunication infrastructure for Singapore’s economic development. It also initiates and coordinates efforts to create a cutting edge eGovernment, and to position Singapore as a trusted e-commerce hub.[xii]

Venice was built in AD 452 when invading Teutonic tribes forced the inhabitants of northern Italian cities to take refuge on the island. There is little recorded history of Venice before 12^th century. Venice was since its creation an island city-state without any territory on the Italian mainland that adjoined her lagoon. Venice started to grow and prosper in the 12^th century when people started to trade with East. The harbor of Venice was marked by many warehouses called ‘foundaci’ which stored products such as boxes, wines, and perfumes carried by the merchants.

During the Renaissance, Venice became the great commercial center of Europe. When Venetians conquered Constantinople and Cyprus in 1204, Venice’s rise as a commercial powerhouse was evident to one and all.[xiii] Venice ended its competition and war with Genoa in 1353 and with Syria and Egypt in 1343 and unquestionably became the most powerful city-state of Europe. Venice’s power and prosperity started to decline after the Ottoman Turks captured Constantinople in the 15^th century.[xiv]

In this section, I will briefly discuss the creation of Venice and focus on how Venice evolved as a commercial hub of Europe during the Renaissance period, what role communication played in its rise.

Venice had the geo-strategic potential to be a commerce hub. Venetian merchants had control over the major trade routes throughout the Mediterranean. Trade benefited Venice greatly, and brought about socio-economic prosperity. The infrastructure of Venice, in terms of transportation, was well developed and at the cutting edge of that time. Fernand Braudel describes how in Venice the streets of beaten earth were paved and the old wooden bridges and piers of canals were replaced by stone bridges (Braudel 1984).

The merchant vessels were widely used for transportation and the chartering of state vessels was adjudicated by annual auction (Braudel 1984). The stock-exchange meetings and town meetings were held regularly, which fostered economic activity by providing opportunities for many small transactions.

Venice had an interesting economic policy for foreign merchants. ‘Fondaco de Tedecshi’ policy was applied to German merchants who wanted to do a business in Venice. They were forced to reside in a segregated place and were allowed to sell merchandise only in that place, under strict surveillance of Venetians. In contrast, Venetians were free to sell to merchants in other countries.

All these factors contributed towards making Venice the predominant hub of commerce in the pre-modern Europe.

The communication technologies available in the thirteenth century Venice and present day Singapore are very different. While merchant vessels were mainly used for transportation in thirteenth century Venice, communication and transportation technologies used in Singapore today are much more diverse and sophisticated. However, the technologies of Venice and Singapore, in spite of all their technical differences, perform essentially the same functions.

Linda Garcia’s conceptual framework for networks is helpful for analyzing the development of infrastructure in Venice and Singapore. She notes that networking technologies affect communication process, by changing the speed of communication, the cost of communication, the distance that information can travel, the amount of intelligence/functionality that can be transferred, the density and richness of information flows, the relationships and interdependencies among parties to an act of communication, and the perceptions of the parties communicating. Changes in the communication process in turn give rise to social and economic opportunities that change society (Garcia 2000).

With respect to how network technologies differ from each other, Garcia (2000) locates these differences in components, capabilities / functions, and architecture. Garcia’s tripartite framework provides a very useful conceptual foil for performing a comparative analysis of communication infrastructures of Venice and Singapore. Table 1 provides an overview of the comparison.

Singapore and Venice are very similar and yet very different. It all depends on the level of abstraction at which we view the two commercial hubs. If we look at the specific technologies they employed, we see a vast difference. Today’s Singapore is loaded with high-tech gadgetry ranging from supercomputers to fiber-optic loops that our forebears could not even imagine. Thirteenth century Venice, on the other hand, was a city without even electricity and its transportation and communications systems moved at animal pace. However, on the other hand, if we look at Singapore and Venice at a structural level, we see that the two cities were remarkably similar in how their transportation and communications systems maintained their central role in commercial circuits. They both had cutting edge networks that simultaneously connected them with trading partners and gave them a competitive advantage over them. Their success, in different times, underscores the centrality of transportation and communication infrastructure in the development of a commercial hub.

Braudel, Fernand (1984). Civilization and capitalism 15^th-18^th century. Volume III. The perspective of the world. New York: Harper & Row.

Economic Development Board (1995). Annual Report 1995. Singapore: Economic Development Board

Economic Development Board (1998). Annual Report 1998. Singapore: Economic Development Board

Garcia, Linda (2001). The architecture of global networking technologies. In Saskia Sassen (Ed.), Global networks, linked cities (pp. 39-70). London: Routledge.

Jacobs, Jane (1985). Cities and the wealth of nations: Principles of economic life. New York: Vintage Books.

Knoop, Carin-Isabel (1995). Singapore unlimited: Building the national information infrastructure (Harvard Business School case study). Boston, MA: Harvard Business School.

Ministry of Trade and Industry (1998). Economic survey of Singapore1997. Singapore: Ministry of Trade and Industry

[i] Economic Development Board. URL: http://www.sedb.com/edbcorp/programmeindustry21.jsp 

[ii] Singapore: Your compelling Global hub for Business and Investment. http://www.sedb.com/edbcorp/whysingaporecomparelocation.jsp 

[iii] More details in URL: http://www.pathfinder.com/asiaweek/features/asiacities2000/index.html 

[iv] Survey by World Economic Forum in 1999 (Answered by 4,000 executives in 59 countries

[v] Survey by the Asian Intelligence, Political & Economic Risk Consultancy.

[vi] Survey by the International Institute of Management Development in 2000 This ranking was tabulated after assessing 86 criteria, including a combination of tax incentives, access to manpower, low cost and fairness of treatment of a foreign operator. A different set of 68 criteria was used to rank the countries.

[vii] Survey by Price Water House Coopers (PWHC) in January 2001. Singapore ranked as the most transparent country amongst 35 studied.

[viii] Survey by World Economic Forum in 1999.

[ix] Study undertaken by the International Institute of Management Development in 2000.

[x] Ministry of Transport. URL: http://www.mot.gov.sg/about_nav/about_MOT.htm 

[xi] Ministry of Information, Communications, and the Arts URL: http://www.mita.gov.sg/ 

[xii] IDA of Singapore. http://www.ida.gov.sg/Website/IDAhome.nsf/Home?OpenForm 

[xiii] In 1204, Constantinople and Cyprus were conquered by Venice. Venice received as spoils cessions of eastern shore of the Adriatic, the Cyclade and Sporade islands, and the shores of Thessaly, the Sea of Marmara and Black Sea, achieving control of the trade routes from Europe to both Constantinople and Asia Minor. Crete acquired by treaty and arms. Timeline of Venice. http://www.republicofvenice.com/history.html 

[xiv] History of Venice. http://www.venice-honeymoons.com/history_venice.htm 

[xv] Braudel (1984) described the role of kinship groups in facilitating trade in 13^th-16^th centuries.