THE ECONOMY
The Services Sector
The services sector has not only flourished but also diversified in types of activities, concomitant with the structural transformation of the economy. Amongst the various service industries, community, social and personal services, and finance and business services, such as banking, insurance, real estate and a host of related professional services, have grown distinctly over the past two decades. Strong expansion was also observed in telecommunications services in the more recent years, especially those pertaining to information technology and Internet applications, in line with the shift in economic structure more towards knowledge-based activities.
On trade in services, exports and imports of services both went up by an annual average of 7 per cent in real terms over the past two decades. In 2000, civil aviation, travel and tourism, trade-related services, and various financial and banking services were the largest components of trade in services. Within exports of services, transportation was the most important component, accounting for 36 per cent of the total value in 2000. This was followed by offshore trading and purchasing/merchandising services (with a share of 30 per cent), travel and tourism (18 per cent), and financial and banking services (9 per cent). As to imports of services, travel and tourism were the largest component, accounting for 54 per cent of the total value in 2000. Transportation was in the second place (with a share of 21 per cent), followed by offshore trading and purchasing/merchandising services (8 per cent), and financial and banking services (6 per cent).
Between 1990 and 2000, the net output or value-added of the services sector rose appreciably, by an annual average of 9 per cent in value terms. Amongst the major constituent sectors, the net output of community, social and personal services had the fastest growth (at an average annual rate of 12 per cent). This was followed by financing, insurance, real estate and business services (9 per cent), transport, storage and communications (9 per cent), and the wholesale, retail and import/export trades, restaurants and hotels (8 per cent).
In 2000, the wholesale, retail and import/export trades, restaurants and hotels were still the largest contributor to GDP, accounting for 26 per cent of the total value- added contribution. This largely reflected the robust performance of external trade and inbound tourism in that year. Financing, insurance, real estate and business. services came next (with a share of 23 per cent), aided by the buoyant stock market and continued expansion in fund management and insurance services. Further down. in ranking were community, social and personal services (21 per cent), and transport, storage and communications (10 per cent) (Chart 4).
Measured in terms of employment, the wholesale, retail and import/export trades, restaurants and hotels again topped the list, accounting for 32 per cent of the total employment in the first three quarters of 2001. This was followed by community, social and personal services (with a share of 25 per cent), financing, insurance, real estate and business services (15 per cent), and transport, storage and communications (11 per cent) (Chart 5).
The Manufacturing Sector
Manufacturing firms in Hong Kong are renowned for their versatility and flexibility. The existence of many small establishments, connected under an extensive local sub- contracting network, has greatly facilitated producers in coping with changing
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