Over the decades, the city-state achieved its success by encouraging foreign investment, avoiding corruption and emphasizing discipline, efficiency and interracial harmony. In order to reduce Singapore's reliance on exports, successive governments encouraged the growth of new industries through business-friendly taxes and a minimum of red tape.
The Singaporean economy has grown mostly without interruption since 1986. The exceptions are a 2.1 percent contraction during the Asian financial crisis in 1998, a 1.2 percent decline in 2001 after the dot-com bubble burst and a 0.8 percent decrease during the 2009 global financial crisis.
Casino Gambling
While Macau, China, has been the world's biggest player in casino gambling since it overtook Las Vegas in 2006, Singapore will move into second place by the end of this year, forecasts Frank Fahrenkopf, president of the American Gaming Association.
In 2005, as part of an effort to further diversify the economy, the government lifted a four-decade ban on casinos. Singapore moved with lightning speed: The island's two huge gaming resorts opened last year. The casinos say they employ about 21,600 people and had attracted almost 35 million people as of recently.
Immigration has driven Singapore's development. Smaller than New York City in area, the city-state has few natural resources. It has one of the lowest fertility rates in the world: 1.2 births per woman compared with 2.1 in the U.S., according to 2009 World Bank data.
'An Invasion'
To fuel its ambitions, Singapore attracted globe-trotting professionals and entrepreneurs from places such as North America, Europe and India, as well as lower-paid laborers from countries including China, the Philippines and Bangladesh.
"It feels like an invasion because one day you wake up and there seem to be foreigners wherever you go," says Dixon Chew, 34, a Singaporean maintenance engineer. "It used to be that most of the foreign workers were maids or laborers, but now they're driving the buses, they're taking your orders at McDonald's, they're the cashiers at the supermarkets."
Unaccustomed as it is to opposition, the ruling PAP may have underestimated popular discontent, says Vishnu Varathan, an economist at Capital Economics (Asia) Pte in Singapore. "The government has missed some clues, and there are very legitimate reasons why people are unhappy," he says. "The onus is on the PAP to show that it is not old wine in a new bottle or it will continue to lose votes."
After the election, Lee Hsien Loong moved quickly to show he had heard the voters. He reshuffled his cabinet. The government announced plans to release more land for homebuilding.