While Japan, South Korea and Taiwan are always cited as examples of the developmental state, Singapore also possesses many characteristics which fit well according to the theorem. Since the separation from Malaysia, Singapore government, under the leadership of Lee Kuan Yew, played an important role in economic development of this city state. The well crafted industrial policies and a powerful and stable government led this highly populated island with scarce resource into a newly industrialized country. The validity of the development state theorem is facing serious challenge especially after the Asian Financial crisis. Many even attributed strong government-business relations, one of the characteristics of developmental state, as major cause of the crisis. With the globalization of markets and democratization in many developing countries, governments in various countries are losing some of its power in dictating economic policy. As a result, government?s role in economic development is again declining. The purpose of this study is to examine whether the government can play a crucial role in directing industrial policy by analyzing investment strategies of Temasek Holdings, a government-linked corporation (GLC) in Singapore. Temasek Holdings is aggressively in expanding overseas through mergers and acquisitions, particularly in the financial sector and Telecommunications industry. This is coincident with the goal of Singapore government to enhance the island?s competency as one of the major financial centers and high technology hubs. Temasek case demonstrates how Singapore government is using its investment arm to actualize its industrial policy. This case study may revitalize the research and debate in developmental state theorem.
