THE ECONOMY
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sector) to the GDP increased from 61 per cent in 1970 to 65 per cent in 1982 before declining to about 62 per cent in 1983 and 1984. However, the contribution of the financial and related services sector increased significantly, from 15 per cent in 1970 to 24 per cent in 1981. It fell to 16 per cent in 1984, mainly reflecting the depressing effects of the slump in the property market.
In terms of employment, the most noticeable change in recent years is that employ- ment 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 per cent in 1981 and to 37 per cent in 1985, while the share of the tertiary services sectors increased from 44 per cent in 1971 to 50 per cent in 1981 and further to 53 in 1985.
per cent
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, there has been considerable upgrading of quality and diversification within these product groups. The increasing pressure of protectionism and growing competition from other economies 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 1985, manufactured goods accounted for about 95 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 have 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 1983, the average annual growth rate of the value of net output by the manufacturing sector was 16 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 net output by manufacturing, from 27 per cent to 14 per cent, and in manu- facturing employment, from 21 per cent to 12 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 net output in- creased from 20 per cent to 25 per cent, from nine per cent to 17 per cent, and from one per cent to five per cent respectively; and their shares of employment increased from 26 per cent to 30 per cent, from 11 per cent to 14 per cent and from two per cent to five per cent respec- tively. Domestic exports in 1985 consisted principally of articles of apparel and clothing accessories (35 per cent of the total value), electronics (21 per cent), plastic products (eight per cent), textiles (six per cent), watches and clocks (seven per cent), electrical household appliances (four per cent) and metal products (three per cent). In terms of domestic export shares, the most significant changes in the past 10 years relate to the decline in the relative importance of clothing (from 45 per cent in 1975 to 35 per cent in 1985) and textiles (from nine per cent in 1975 to six per cent in 1985), and the increase in the relative importance of