AS A small country with no natural resources, Singapore has long known that we have no choice but to make the mastery of knowledge our competitive advantage. We have been implicitly building a knowledge economy long before this became a buzzword.

From the late 1970s, we realised we could not differentiate ourselves from our competitors or raise our standards of living by competing on cost alone. Hence we pursued several strategies to build up this knowledge edge.

First, we have invested heavily in our people through education. Our aim is to give every child a top-rate education. Therefore our emphasis is on the quality of all our schools, and not just a few elite schools. The goal is to teach students how to think, to be creative in problem-solving, and to keep on absorbing new knowledge and skills all their life, rather than to squeeze more facts and data into an already full curriculum. Hence our slogan: 'Teach Less, Learn More.'

We acknowledge that not every student has the same ability and talent. So we are creating diverse and flexible options for students to choose a path which suits them, instead of trying to cast everyone within a few moulds. These heavy investments in human capital are equipping our people to compete in a knowledge economy.

Second, we have encouraged the free flow of information. This is the way to keep ourselves fully abreast of new developments and ideas. Singapore is fully plugged into the world, and wide open to the cross-currents of global interactions.

As an air and sea hub, we are linked up physically to the rest of the world, and as a telecommunications hub, we are fully hooked up. We still need to filter the flow of information, to maintain basic standards of decency, and preserve racial and religious harmony, but it is confined to a very minimum. All this is essential to nurture knowledge industries, whether it is financial services, interactive and digital media, or just-in-time manufacturing.

Third, we are stepping up our R&D efforts. We are setting up research centres and programmes in our universities to study focused areas where our modest efforts can make an impact - such as cancers and infectious diseases that are common in Asia, and natural disasters and climate change in our region.

We are creating an integrated environment for collaboration across disciplines and institutions, thus maximising opportunities for cross-fertilisation of ideas and expertise.

Fourth, the whole tenor of our society is geared towards welcoming new ideas and adapting to change. Our ethos is cosmopolitan and pragmatic. Our society is meritocratic and egalitarian - everyone has a chance to learn and excel. We strive to operate rationally and flexibly, and to keep our sense of identity as an Asian society without being constrained by rigid social hierarchy or stifling political correctness.

We respect the rule of law and intellectual property rights. We reward effort and work, encourage risk-taking, and embrace diversity.

This broader social and political context helps us to create an environment which attracts talent and entrepreneurs from around the world. They come because here they can access information, markets and global services, operate within a reliable, efficient and honest business environment, and do well for themselves and thus for Singapore.

Click here for the final part: Challenges ahead

This article was first published in The Straits Times on Apr 12, 2008.