Companies supported by EDB yield annual spillovers of S$48.5 million each

[SINGAPORE] From 2012 to 2019, companies supported by the Economic Development Board (EDB) each brought net spillover benefits of S$48.5 million annually to other companies.

This was driven largely by improvements in workforce quality, with EDB-supported firms also causing wages to rise for workers in non-EDB firms.

The spillover figure, which refers to the rise in value-added (VA) for firms not supported by the EDB, was highlighted in the Economic Survey of Singapore Third Quarter 2025 report released on Friday (Nov 21).

The S$48.5 million figure represents 41 per cent of EDB-supported firms’ total economic contributions to Singapore, a study by economists from the Ministry of Trade and Industry and the Ministry of Manpower indicated.

EDB attracts both foreign multinational corporations and develops high-potential companies. 

“While the direct economic contributions of EDB-supported firms (or EDB firms for short) are clear, their indirect impact on the broader economy (non-EDB firms) has not been quantified previously,” the study’s authors noted.

The study found that exposure to EDB firms improved the performance of non-EDB firms in four outcome areas: VA, VA per worker, local employment and local wages.

For every 10 per cent increase in exposure to EDB firms, non-EDB firms’ VA rose 8.3 per cent on average; VA for each worker climbed 6.2 per cent.

Local employment in non-EDB firms was up 1.5 per cent, while local wages rose 1.6 per cent.

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Labour leads, suppliers suffer

Labour market spillovers were one of five types of spillovers in the study, and had a positive effect on all four outcomes.

This suggests that workforce quality improvements outweighed the increased competition for talent, said the authors.

But another category, “backward spillovers”, was consistently negative for local suppliers of EDB-supported firms.

The negative result suggests that non-EDB firms in upstream industries closer to EDB firms may suffer lower margins when selling to EDB firms, due to their weaker market power.

These more than offset the gains from higher demand generated by EDB firms.

This could reflect constraints on non-EDB firms’ ability to be suppliers, “including their inability to meet required specifications, relative lack of competitiveness compared to overseas suppliers, and mismatches in resource profiles for manufacturing activities”, the authors said.

Mixed effects

The remaining three spillover channels had mixed or limited impacts, with no statistically significant impact on VA and VA per worker.

These channels were technology, horizontal spillovers (referring to competitiveness within the same industry as EDB firms), and forward spillovers, referring to companies being supplied by EDB firms.

The limited impact of horizontal and forward spillovers may reflect EDB firms’ orientation towards foreign markets, which reduces competition with local firms and makes them less likely to be suppliers, said the study.

However, forward spillovers had a positive impact on local employment. This suggests that non-EDB firms benefited from higher-quality inputs supplied by EDB firms.

Technology spillovers had a positive effect on both local employment and local wages. This means that exposure to EDB firms enabled non-EDB firms to improve their production and organisational processes, which outweighed the negative competition effects.

In contrast, horizontal spillovers hurt both local employment and local wages, which suggests that non-EDB companies suffered from losing market share to EDB firms.

Taking complementary approaches

The results suggest that EDB’s strategy has led to substantial economy-wide benefits, concluded the authors.

“Nevertheless, significant opportunities remain to enhance these benefits and address the weaker spillover channels,” they said.

They suggested that policymakers support capability-building programmes for non-EDB firms and their employees. This could enhance their ability to attract skilled labour and benefit from knowledge spillovers through the labour market.

“This targeted approach would amplify the positive labour market spillover effects and strengthen Singapore’s broader business ecosystem,” they said.

To address negative backward spillovers – which result in non-EDB suppliers not seeming to benefit from increased demand – they suggested targeted supplier-development initiatives.

This could enhance their capabilities and competitive position, so they can better capitalise on the increased demand.

“These complementary approaches would ensure that Singapore captures the maximum economic value from its strategic investments in attracting high-quality firms, and transform the current spillover patterns to benefit the entire economy.”