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8
TWO DECADES OF ECONOMIC ACHIEVEMENT
rate of 43 per cent. The United Kingdom market for Hong Kong exports started recovering in 1952 and grew for the rest of the decade at an average annual rate of 28 per cent. This rapid growth was of course partly a result of Commonwealth preference that gave Hong Kong a virtually duty free market in Britain.
By 1960-the year after Hong Kong's statistics first distinguished between domestic exports and re-exports-domestic exports formed 73 per cent of total exports. And domestic exports to the United States and Britain represented 26 per cent and 20 per cent respectively of total domestic exports.
This high rate of growth continued into the sixties. Table 3 (between pages 10 and 11) gives growth rates in the value of imports and exports for different periods since 1950. These growth rates reflect changes in quantity and price, with some of the acceleration in the value of trade in the sixties being due to growing rates of inflation in the world which were reflected in Hong Kong's price level.
Tariff Reductions
The post-war liberalisation of trade up to the Dillon round of tariff reductions implemented in 1962 contributed to an average annual growth of 14.7 per cent in the value of domestic exports between 1961 and 1967. The Kennedy round, which was implemented in 1968, stimulated an average annual growth rate of 19.5 per cent between 1967 and 1973, but about nine percentage points were accounted for by price increases. These rates compare favourably with corresponding rates of growth for world exports—an average of 8.2 per cent a year from 1961-7 and 17.9 per cent from 1967-73. Also, during the period 1967-73, the Hong Kong dollar strengthened con- siderably, which will have had the effect of understating the growth rate of exports when these totals are expressed in Hong Kong dollars.
Inflationary pressure in the late sixties and early seventies was strong. The export unit value index which started in 1968 showed that Hong Kong export prices between 1968 and 1973 were increasing at an annual rate of 9.2 per cent. This was higher than world export prices, which increased by an average of 8.7 per cent a year between 1968 and 1973. From 1961-7 world export prices rose by an average of about one per cent a year. It is unlikely that under a fixed exchange rate Hong Kong could have had an increase markedly different from this. This means that the quantity of Hong Kong's exports probably grew at about 10 per cent in the early sixties. The value of domestic exports grew by 11.9 per cent a year between 1960 and 1965.
From 1968-73, the volume of Hong Kong's exports was increasing at an average annual rate of 8.3 per cent. This trend was temporarily displaced by the 1974-5 recession, but the recovery which started in the second half of 1975 brought a volume of exports for 1976 which fully recovered the lost ground.
Restrictions
The statistics suggest that the export sector, having taken off in the first half of the sixties, was towards the end of the decade levelling off to a trend rate of growth