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There’s no denying it – vast America is poorer than tiny Singapore. Writing in the National Review, Reihan Salam has the numbers:

“If we’re using GDP per capita (PPP) in constant 2005 dollars, Singapore surpassed the United States sometime between 2003 and 2004, and while the U.S. now has a GDP per capita of $43,063, Singapore has a GDP per capita of $53,266. Not only has Singapore pulled ahead — it has pulled far ahead during a period in which growth in U.S. GDP per capita has essentially flatlined — U.S. GDP per capita (PPP) in constant 2005 dollars actually peaked in 2007 at $43,635.”

Hong Kong has also pulled ahead:

“The Hong Kong Special Administrative Region surpassed the U.S. between 2009 and 2010, and its GDP per capita is now $44,770.”

Salam quotes Milton Friedman, who in 1998 had this to say about Hong Kong’s near parity (as it was then) with the USA:

“Here we are—a country of 260 million people that stretches from sea to shining sea, with enormous resources, and a two-hundred-year background of more or less steady growth, supposedly the strongest and richest country in the world, and yet six million people living on a tiny spit of land with negligible resources manage to produce as high a per capita income. How come?”

For Friedman, the answer to the mystery was to be found in Hong Kong’s low taxes and minimal regulation – and, up to a point, you could say the same about Singapore. Reihan Salam, however, opts for an even more basic explanation.

Hong Kong and Singapore are city states and “cities are generally more productive than other regions.” Therefore we shouldn’t assume “that a country with ‘tons of natural resources and abundant land’ would necessarily have an edge over small entrepôt economies.”

By way of evidence he cites the Global Metro Monitor survey produced by the Brookings Institution and quotes from a commentary on it by the geographer Wendell Cox:

“Among the 10 metropolitan areas with the highest GDP per capita, nine are in the United States… The US accounts for 36 of the top 50 metropolitan economies, and 67 of the top 100.

“Europe is also strongly represented, with 23 of the most affluent 100 economies as rated by Brookings. Yet for the most part European metropolitan regions were concentrated between 50th and 100th. Only seven European metropolitan areas made the top 50…

“East Asia placed 3 metropolitan areas in the top 100. Singapore ($62,500) did best at 14th. Singapore’s ranking behind so many US metropolitan areas may be surprising, since Singapore has a higher GDP per capita than the United States. However, the most affluent US metropolitan areas are more affluent than Singapore, which is both a city and a country…”

Salam also reminds us that the US is “far and away the richest country with over 10 million people.” For this America has its cities to thank, while it is the rest of the country that drags the national average down below Singapore.

If cities are the key to prosperity then Britain, as one of the most urban countries in the world, should surely be doing very well. Yet if you look at the eight biggest English cities outside London, seven of them do worse than the national average across a range of economic indicators. If we’re serious about reviving and rebalancing the British economy then recovering the lost potential of our cities must become a national priority.

34 comments for: Why is Singapore richer than America? A good question with an interesting answer

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