It sat at 326% in 2015, boosted by electronics, chemicals, and services.

The term globalisation has been used to focus on the more economic side of the world including trade, communications, foreign investment and international capital flows.

More recently, the term has been expanded to include other elements such as culture, media, politics and even biological factors.

How is Singapore affected by globalisation?

The trade to GDP ratio in Singapore is the highest in the world. The ratio, also known as the trade openness ratio is a ratio that is calculated by dividing the total trade of a country by the total GDP and may been seen as a measurement of globalisation.

The total trade refers to the sum of all imports and exports in a country.

Having a high trade to GDP ratio means that the country’s GDP consists mainly revenue generated from exports and imports.

Singapore’s ratio is sitting at 326% (as recorded in 2015) which includes exports of mainly electronics, chemicals and services.

This globalisation has left a positive impact on Singapore. It has seen great economic growth.

The upside of globalisation on the nation

The increased trade with the rest of the world world has increased the nation’s GDP and created jobs for the unemployed in Singapore, making the nation’s unemployment rate low.

The country has also benefited from foreign direct investment (FDI). Globalisation increases the amount of FDI in Singapore as investors will spot more opportunities for investment and growth, which also increases the potential economic growth.

Another positive impact left on the nation through globalisation is lower inflation. It has helped to keep inflation low by providing Singapore with the opportunity to import material and other finished products from other countries where it is cheaper.

The cheaper inventory will prevent massive price increases for consumer goods in Singapore. Singapore is also put in a positive net export position, affording the country a current account surplus.

But there are downsides too

1. Vulnerability to economic factors The dependence on exports makes Singapore vulnerable to any negative economic conditions realised in other parts of the world that they trade with. Take a recession, for example – this would decrease the demand for some of Singapore’s exports as the country or region involved would not be able to afford it anymore.

2. Higher competition Other developing countries are catching up and could possibly take away some of the business from Singapore in terms of its exports. Singapore needs to make sure that it broadens its product and service offering to include higher valued products like financial services.