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"But in a service economy, the physical infrastructure is a necessary but not a sufficient condition for success. We have to go beyond these investments in what might be called the 'hardware' of our drive for greater competitiveness. We must also invest in the 'software' of success.
"Only a commitment to higher productivity, competitive markets and rapid economic growth can achieve what I know the community wants: a job for every man and woman who needs one and more stable prices."
The Government's role must be to promote the efficiency, flexibility and competitiveness of Hong Kong's economy, he said, adding that this the only way to find the remedies for unemployment and inflation.
Mr Patten said three things were involved in the 'software of success':
* An infrastructure of skills appropriate to Hong Kong's technology-based
economy.
The regulatory balance had to be sorted out to remove red tape which deterred initiative and enterprise.
* The fiscal and budgetary policies which had given Hong Kong the best
business environment in the region must be reinforced.
Hong Kong's most important resource was its outstanding labour force, Mr Patten said.
It was disciplined, efficient and flexible, which had let the workforce raise its productivity by an annual average of 4.5 per cent since 1985 and to reduce the average number of days lost through industrial disputes by 75 per cent.
In the same period. 460,000 factory jobs had been shed and replaced by 800,000 brand-new jobs in service industries.
"This readiness to change careers, to switch employment in response to shifts in overseas demand for our goods and services, is at the heart of our economic efficiency," Mr Patten said.
"It is also crucial for our continued ability both to compete on world markets and to serve the needs of China's rapid modernisation."
Hong Kong had offered decent wages and professional education, he said. The average worker's earnings had risen by more than four per cent in real terms each year for a decade.