3
The Economy
throughput, as well as one of the world's busiest airports in terms of the number of international passengers and volume of international air cargo handled.
Hong Kong was also the world's sixth largest banking centre in terms of external positions as at end-2017, and the fourth largest foreign exchange trading centre according to a triennial survey conducted by the Bank for International Settlements in 2016. Its stock market is the third largest in Asia in terms of market capitalisation as at end-2017 and ranks second in Asia in terms of initial public offering equity funds raised during the same year.
As an international business hub, Hong Kong has a business-friendly environment with the rule of law, free trade and free flow of information, open and fair competition, a well-established and comprehensive financial network, superb transport and communications infrastructure, sophisticated support services, and a flexible labour market with a well-educated workforce and a pool of efficient and innovative entrepreneurs. In addition, Hong Kong has sizeable foreign. exchange reserves, a fully convertible and stable currency, prudent fiscal management and a simple tax system with low tax rates. Thanks to these virtues, Hong Kong has been ranked persistently by the Heritage Foundation and the Fraser Institute as the world's freest economy.
As for competitiveness, Hong Kong was ranked the world's most competitive economy for the second consecutive year by the International Institute for Management Development in 2017, and the fifth easiest place to do business globally according to the World Bank's Doing Business 2018 report, published in October 2017.
The Hong Kong economy nearly doubled in size over the past two decades, expanding at an average annual rate of 3.3 per cent in real terms, faster than most high-income economies. Over the same period, per capita GDP rose about 67 per cent in real terms, posting an average annual growth rate of 2.6 per cent. Hong Kong's per capita GDP at current market prices reached US$46,200 in 2017 (chart 2), comparable to many advanced economies.
Trade links with other parts of the world have grown appreciably. Trade in goods and services almost tripled in real terms over the past two decades. The total value of goods trade, compiled under the GDP accounting framework based on the change of ownership principle and comprising re-exports, domestic exports and imports of goods, reached $8,567 billion in 2017, equivalent to 322 per cent of GDP. This was higher than the ratio of 192 per cent in 1997 and 299 per cent in 2007. Including the value of exports and imports of services, the ratio of total trade to GDP was even higher, at 375 per cent in 2017, up from 233 per cent in 1997 and 362 per cent in 2007.
The stock of direct investment liabilities in Hong Kong was enormous, at $14,142 billion in market value at the end of 2016, equivalent to 568 per cent of GDP. It served as another vivid manifestation of Hong Kong being one of the most preferred destinations for inward direct investment, ranked fourth in the world by the United Nations' World Investment Report 2017.
The corresponding figures for Hong Kong's stock of direct investment assets were likewise huge, at $13,527 billion, or 543 per cent of GDP. As an international financial centre with huge cross-territory fund flows, Hong Kong's external financial assets and liabilities were also
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