Entrepreneurs are the ones who sense the changes on the ground, assess the risk and then act on them, and governments must enable such adjustments to changing economic circumstances, so countries can pull out of the "middle-income trap", former minister for foreign affairs George Yeo said on Wednesday.
When entrepreneurs succeed, the entire nation's productivity will be increased, for they are the proverbial canary in a mineshaft, he said at a forum titled "Asia and the Middle Income Trap".
Defined as the slowdown in growth countries experience upon reaching middle-income levels, when they lapse in their transition from being labour-intensive to skill-intensive economies, the middle-income trap has become a recent concern of rapidly expanding Asia.
Dr Yeo, now the chairman of Kerry Logistics, said that, in a tight labour market, it was crucial to be able to read the environment, to get a handle on the trends: "If all we're doing is repetitive - and we may do it well - but if that's all we do, we're competing against a machine."
The forum was hosted by the Pacific Trade and Development Conference (PAFTAD) and the Institute of Southeast Asian Studies (Iseas).
As guest of honour, Mr Yeo also delivered a keynote address titled "The New Silk Road and its Ramifications on the Global Economy".
The New Silk Road, proposed by Chinese President Xi Jinping in late 2013, aims to link countries, open up business opportunities across Eurasia and connect an estimated 4.4 billion people.
Mr Yeo described this push to integrate China's economy with that of its neighbours as "something that will change the geo-economics and geo-politics of Eurasia".
Change is painful, and politically dangerous, he said. It is thus the duty of government and regulatory systems to create that an environment that would enable entrepreneurs to roll with the changes to economic circumstances.
Maintaining solidarity amid change would also have to be a foremost goal of policy-makers, he said.
"Even though we expose (our economy) to the world, and it's uncomfortable, Singaporeans must feel that it's good for all of us, not just some of us," he said.
Mr Yeo said that the New Silk Road, or the "One Belt, One Road" initiative, was indicative of a trend diverging from western trade relations, in the sense that China's combined trade with its neighbours in East, Central and South-east Asia was overtaking its dealings with the United States and the European Union.
Although still in its planning stages, the initiative has already secured support from almost 60 countries worldwide.
"Connectivity on such a scale changes economic patterns," he said, citing as examples the drastic change in property values wrought by the construction of Singapore's Pan-Island Expressway and Malaysia's North-South Highway.
"We have to adjust to the world, the world can't adjust to us. Maintaining internal flexibility is critical."
This article was first published on June 4, 2015.
Get The Business Times for more stories.