The headlines of 2010 and 2008 are an interesting contrast.
Singapore officially in recession, 21 Nov 2008, BBC
Singapore's economy shrank between July and September, confirming it was the first Asian country in recession in the current financial crisis.
Singapore May Pass China as Asia's Fastest-Growing Economy, 9 Jul 2010, Bloomberg
Singapore may overtake China as Asia’s fastest-growing economy this year
This post is part of my horizon scanning research project.
From the first country in Asia to enter recession to the fastest growing economy in the world. What is the significance of this?
1. Is this just an indicator of how reliant we are on international trade; are we merely a volatile indicator of the health of the world's economy?
2. Does the answer lie in PM Lee's national day message? "This exceptional performance is the fruit of Singaporeans’ united response during the crisis. This enabled us to take full advantage of improved global conditions." Have we improved the fundamentals of our economy, to fare better in the future regardless of fair or foul business conditions?
3. Or is this just the coincidental timing of the opening of our two new Integrated Resorts, and the flood of foreign investment and tourism they have brought with them. And if so, will this rush last, and how sensitive will it be to future business cycles?
I've been asking myself these questions because of a bigger question in my mind. How well will Singapore weather a double dip recession, if we get hit by one in the near future?
After several weeks of surfing the net in my spare time, I'm no closer to finding the answer to these questions. I have, however, made a few interesting observations, particularly about the third point.
Since I can't find any research on the sensitivity of casinos to the economic cycle, the next best thing was a dataset provided by the Bureau of Economic Analysis. This allows me to view GDP data by industry and metropolitan area over the last ten years. So for example, I can see how the GFC has affected the gambling and entertainment industries in Las Vegas and Atlantic City. I can also compare it to the growth of other core industries such as Finance in NYC and Chicago, or a mix of industries in Philadelphia as controls.
This table shows the absolute GPD figures for each metropolitan area and industry
This chart show normalised growth rates by dividing the GDP by the first year
The first observation is that Las Vegas did really well, in fact both its gaming and hospitality industries did the best over the eight-year period. Atlantic City was also growing in the later years. So maybe they really are immune to economic trends. But then again, the third best performer is the finance industry of New York. Is it possible that the global financial crisis - the worst recession since the great depression - missed Wall Street?
Singapore officially in recession, 21 Nov 2008, BBC
Singapore's economy shrank between July and September, confirming it was the first Asian country in recession in the current financial crisis.
Singapore May Pass China as Asia's Fastest-Growing Economy, 9 Jul 2010, Bloomberg
Singapore may overtake China as Asia’s fastest-growing economy this year
This post is part of my horizon scanning research project.
From the first country in Asia to enter recession to the fastest growing economy in the world. What is the significance of this?
1. Is this just an indicator of how reliant we are on international trade; are we merely a volatile indicator of the health of the world's economy?
2. Does the answer lie in PM Lee's national day message? "This exceptional performance is the fruit of Singaporeans’ united response during the crisis. This enabled us to take full advantage of improved global conditions." Have we improved the fundamentals of our economy, to fare better in the future regardless of fair or foul business conditions?
3. Or is this just the coincidental timing of the opening of our two new Integrated Resorts, and the flood of foreign investment and tourism they have brought with them. And if so, will this rush last, and how sensitive will it be to future business cycles?
I've been asking myself these questions because of a bigger question in my mind. How well will Singapore weather a double dip recession, if we get hit by one in the near future?
After several weeks of surfing the net in my spare time, I'm no closer to finding the answer to these questions. I have, however, made a few interesting observations, particularly about the third point.
The graph below from SingStat shows manufacturing is on the decline. The growth industries over the last few years are construction and business services, both of which are probably influenced greatly by casino-related activities in the past five years. So the casino definitely has had a positive impact, and the question remains whether this impact will be long-term, and how sensitive it will be to business cycles.
Since I can't find any research on the sensitivity of casinos to the economic cycle, the next best thing was a dataset provided by the Bureau of Economic Analysis. This allows me to view GDP data by industry and metropolitan area over the last ten years. So for example, I can see how the GFC has affected the gambling and entertainment industries in Las Vegas and Atlantic City. I can also compare it to the growth of other core industries such as Finance in NYC and Chicago, or a mix of industries in Philadelphia as controls.
This table shows the absolute GPD figures for each metropolitan area and industry
This chart show normalised growth rates by dividing the GDP by the first yearThe first observation is that Las Vegas did really well, in fact both its gaming and hospitality industries did the best over the eight-year period. Atlantic City was also growing in the later years. So maybe they really are immune to economic trends. But then again, the third best performer is the finance industry of New York. Is it possible that the global financial crisis - the worst recession since the great depression - missed Wall Street?
The Economics of Casino Gambling seems to be the most widely cited paper on the topic of the economics of the casino industry. And while it didn't answer my questions, I did learn quite a bit about casinos.
- Social resistance to the casinos will probably be a passing phase. Gambling and casinos were illegal and frowned upon in most U.S. states until the 1970's, because of concerns that introducing casinos would bring with them many social problems. Sounds familiar? And most of the policies introduced to mitigate these social concerns were more symbolic than effective. Having been to both Las Vegas and Atlantic City, and the surroundings, I don't recall much overt opposition to the casinos in the present day.
- The casino might lead to growth that is sustainable over a decent length of time. "Nevada was among the three fastest growing states in the United States for each of the last four decades of the 20th century. Nevada's major city, Las Vegas, was one of the five fastest growing metropolitan areas in the country in each decade over the same period."
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