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THE ECONOMY
roughly twice the growth rate of world trade. As a result, Hong Kong ranks high among the world's trading economies.
Contributions of the Various Economic Sectors
The relative importance of the various economic sectors can be assessed in terms of their contributions to the GDP and to total employment.
Primary production (comprising agriculture and fishery, and mining and quarrying) is small in terms of its contributions to employment and to the GDP.
Within secondary production (comprising manufacturing; the supply of electricity, gas and water; and construction), manufacturing accounts for the largest shares of the GDP and of employment. The contribution of the manufacturing sector to the GDP declined steadily from 31 per cent in 1970 to 21 per cent in 1982. It was 23 per cent in 1983, 24 per cent in 1984, and stabilised at about 22 per cent during the period 1985 to 1987. The share of the construction sector in the GDP increased from four per cent in 1970 to eight per cent in 1981. It then declined to seven per cent in 1982 and six per cent in 1983, before settling at about five per cent during the period 1984 to 1987.
The contribution of the tertiary service sectors as a whole (comprising the wholesale, retail and import/export trades, restaurants and hotels; transport, storage and communica- tion; financing, insurance, real estate and business services; and community, social and personal services) to the GDP increased from 61 per cent in 1970 to 65 per cent in 1982. It fell to around 62 to 64 per cent during the period 1983 to 1986, before rising to 65 per cent in 1987.
The tertiary service sectors are highly diversified. The contribution of the wholesale, retail and import/export trades, restaurants and hotels to the GDP varied between 19 and 23 per cent during the past 15 years. The contribution of the transport, storage and communication sector to the GDP was stable at around seven to nine per cent. The con- tribution of the financing, insurance, real estate and business services sector to the GDP, however, experienced considerable fluctuations. It rose gradually from 15 per cent in 1970 to 24 per cent in 1981, but fell to 16 per cent in 1984, mainly reflecting the slump in the property market. In 1987, the contribution of this sector to the GDP stood at 18 per cent. With regard to employment, the most notable change since the early 1970s was that, whereas employment in the manufacturing sector still accounts for the largest proportion of the employed workforce, its share has been on a continuous decline, from 47 per cent in 1971 to 41 per cent in 1981, and further to 32 per cent in 1988. On the other hand, the share of the tertiary service sectors as a whole in the total employment increased from 41 per cent in 1971 to 47 per cent in 1981, and further to 57 per cent in 1988.
Nature and Relative Importance of Manufacturing
Although the 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 pressure of protectionism and growing competition from other economies have led to local manufacturers intensifying their efforts to diversify, not only in respect of products but also in respect of markets. It is estimated that up to 90 per cent of Hong Kong's manufacturing output is eventually exported.
Manufacturing firms in Hong Kong must be flexible and adaptable in order to cope with the frequent changes in demand patterns and to maintain their external competitiveness. The existence of many small establishments supporting an extensive local sub-contracting system has greatly facilitated the necessary shifts in production and has helped to increase