11
1
(7)
17.
However, it should not be assumed that the
automatic corrective mechanism involves violent fluctuations
in the level of economic activity during the course of the
adjustment process. The reasons for this are that money
wage rates adjust rapidly in response to shifts in demand
and the labour force is relatively mobile and adaptable.
This follows from the determination of the Hong Kong
labour force to provide for a more prosperous future and
has led to a rapid rate of growth of productivity and
hence of real wage rates (which does not, of course, mean
that unit labour costs have risen too rapidly). At the
same time, the maintenance of full employment has been
assured.
18.
This
The economy has, therefore, over the years, and without formal intervention, consistently and simultaneously
maintained: a rapid rate of growth in terms of both
real income per capita and of public sector spending;
balance of payments equilibrium; full-employment without inflation (1.e. internal equilibrium); and there is
evidence of a more equal distribution of incomes. At the
same time, there has been exchange rate stability.
is, of course, essential for the smooth working of an
economy in which external transactions loom so large.
In fact, Hong Kong could adjust to just about any pattern
of exchange rates in the longer term, but changes in rates
would do little to correct any fundamental disequilibrium
on external account since the resultant changes in import
costs would, in Hong Kong's case, rapidly bring about
corresponding changes in export prices. However, the
automatic corrective mechanism built into the economy
/means.....