in (not because of the capital they bring in domestic savings have never constrained investment). But a skilled labour force usually needs a fair amount of capital. Although the capital/labour ratio doubled between 1966 and 1976 (und the labour force increased 38) at US$ 8,500 per worker this ratio is low by world standards, and the rate of investment, compared with the non-agricultural sectors of other economies with per capita GDP's above US$ 2000, is not high either. (To increase the transfer of technology and the rate of investment by foreign and domestic firms the Government should:)
19. R. (i) (Short term)
fluctuations.
(ii) (onger term)
Remove big macroeconomic
Reassure potential investors
(the business community) about the security of assets after 1997*.
(iii) Investigate the possibilities of starting
research and development institutes.
ECONOMIC STATISTICS
20. these.
21.
C.
(Due tribute is paid to recent efforts at developing Important pockets of ignorance are:)
R. (i) External capital flows (where there has been
a deterioration since 1974) and the capital account of the Balance of Payments.
(ii) Many domestic sectors (we know what they export but
not what the underlying trends in production are).
(iii) The financial sector.
(iv) More staff dealing with economic policy analysis.
(v)
Establish a non-profit institution of economic and social research and policy analysis.
Mark Hull
Mark Hull
7 November 1977
+
Economists Department
At present market rates of interest what happens to your assets after 1997 is starting to affect businessmen's decisions on whether or not to invest in Hong Kong, and will become much more important after about 1980. Serious market distortions (firms simple won't invest in long term projects) will start to occur soon if fears are not allayed.
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CONFIDENTIAL