THE ECONOMY
and business services sector increased significantly from 18 per cent in 1974 to 24 per in 1981, roughly the same as manufacturing.
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cent
In terms of employment, the most significant change in recent years is that employment in the manufacturing sector, though still accounting for the largest share of the total employed labour force, has declined in relative terms from 47 per cent in 1971 to 41.2 per cent in 1981 and to 36.2 per cent in 1983, while the share of the tertiary services sectors increased from 43.7 per cent in 1971 to 49.7 per cent in 1981 and to 53.7 per cent in 1983.
Nature and Relative Importance of Manufacturing
Though trade statistics indicate that Hong Kong's domestic exports are still dominated by a few major product groups, much has been developed to upgrade quality and to diversify within existing product groups. The increasing pressure of protectionism and growing competition from other developing countries have resulted in efforts to diversify, not only in respect of products but also markets. It is estimated that up to 90 per cent of Hong Kong's manufacturing output is eventually exported. In 1983, manufactured goods accounted for 99 per cent of total domestic exports by value.
Hong Kong firms must be flexible and adaptable to cope with the frequent changes in demand patterns and to maintain their external competitiveness. The existence of many small establishments and an extensive sub-contracting system has greatly facilitated the necessary shifts in production and increased the flexibility of the economy. Because of the limited amount of usable land, manufacturing industries in Hong Kong are generally those which can operate successfully in multi-storey factory buildings. In practice this has meant a concentration on the production of light manufactures.
Since the post-war years, many new industries have emerged and grown, the more prominent being plastics and electronics. Other new industries include fabricated metal products, watches and clocks, toys, precision and optical instruments, and genuine and imitation jewellery.
Between 1973 and 1981, the average annual growth rate of value-added for the manufac- turing sector was 15 per cent, while the growth rate of employment was four per cent. During this period, the most significant change was the textiles industry's declining share in the value-added by manufacturing, from 27 per cent to 13 per cent, and in manufacturing employment, from 21 per cent to 13 per cent. The decline was largely matched by the relative expansion of the clothing, electrical and electronics, and professional and scientific equipment (including watches and clocks) industries. Their shares of value-added increased from 20 per cent to 25 per cent, from nine per cent to 16 per cent, and from one per cent to five per cent respectively; and their shares of employment increased from 26 per cent to 29 per cent, from 11 per cent to 14 per cent and from two per cent to six per cent respectively. Domestic exports in 1983 consisted principally of articles of apparel and clothing accessories (33 per cent of the total value), electronics (18 per cent), watches and clocks (eight per cent), plastic products (eight per cent), textiles (seven per cent), electrical household appliances (four per cent) and metal products (two per cent). In terms of domestic export shares, the most significant changes in recent years relate to the decline in relative importance of clothing (from 45 per cent in 1974 to 33 per cent in 1983) and textiles (from nine per cent in 1974 to seven per cent in 1983), and the increase in relative importance of electronics (from 13 per cent in 1974 to 18 per cent in 1983), and watches and clocks (from two per cent in 1974 to eight per cent in 1983). Interestingly, the share of value-added for the clothing industry has been increasing while its share of domestic exports has been decreasing, which suggests that an increasing proportion of the output of the clothing industry has been absorbed by the domestic market.