Originally a fishing village, Singapore became a trading hub in the 14th century. In 1819, Sir Stamford Raffles established a British trading post. Under British colonial rule, Singapore thrived as a major port. During World War II, it endured Japanese occupation and suffered greatly. After the war, it joined the Malayan Federation in 1963 but later became an independent republic in 1965. Led by Prime Minister Lee Kuan Yew, Singapore rapidly transformed into a modern, prosperous nation. Its strategic location and pro-business policies attracted global investments, propelling it to economic success.

Singapore's political system is a parliamentary republic with a dominant-party framework. The People's Action Party (PAP) has been in power since independence in 1965, led by strong leaders like Lee Kuan Yew and his successors. The government's policies focus on economic development, meritocracy, and maintaining social stability.

Upon gaining independence in 1965, the nation faced daunting challenges, including a lack of natural resources, high unemployment, and widespread poverty. However, under the leadership of Prime Minister Lee Kuan Yew, Singapore swiftly embarked on a path of economic transformation. Lee Kuan Yew's government adopted a pro-business approach, attracting foreign investments and promoting export-oriented industries. The development of world-class infrastructure, such as the Port of Singapore and Changi Airport, bolstered the city-state's position as a global trading and logistics hub. Additionally, the establishment of the Economic Development Board (EDB) played a pivotal role in attracting multinational corporations to set up their regional bases in Singapore. In the late 20th century, Singapore made significant strides in the financial services sector, becoming a leading wealth management and banking center. The country's sound economic policies, stable political environment, and strict rule of law have consistently earned it top rankings in global competitiveness indices.

However, Singapore's export-oriented economy also faces challenges such as external demand fluctuations, global trade tensions, and intense competition from neighboring countries. Relying heavily on exports exposes the nation to economic volatility and requires constant adaptation to changing market conditions to sustain growth and ensure economic stability. Singapore's unique monetary policy is based on managing the exchange rate as opposed to relying solely on interest rates like most other countries. This approach is in place to safeguard Singapore's export-oriented economy and maintain price stability, as it provides flexibility to respond to external economic shocks while ensuring a competitive advantage in the global market.