TNAG-0381-FCO40-427-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 139

(5)

· (6)

4

(b) Competitiveness and Specialisati n

7.

As Hong Kong has virtually no natural resources,

it was vital from the outset to export goods and services

to the rest of the world, particularly as the entrepot trade

virtually collapsed overnight as a result of external

events. But Hong Kong's free port status, so essential

to its traditional entrepot trade, meant that industry

had to operate on a highly efficient and competitive basis

in order to survive, and this resulted in specialisation

in the production of those goods in which Hong Kong has a

comparative advantage over other countries and in

importing goods where its comparative advantage is less

great. Some 80 85% of the value of final output of

Hong Kong's manufacturing industry is exported, whilst

some 75% or more of the community's requirements of

consumption and investment goods is met by imports.

value of imports and exports taken together is about twice

the size of the gross domestic product, which clearly

illustrates the extent to which Hong Kong's economy is

externally oriented.

8.

The

Bearing in mind the need for specialisation and the

fact that, in the early 1950's, a significant proportion

of the population of working age had considerable knowledge

and experience of the textiles industry, it was not

surprising that production should have been heavily

concentrated in this field. Because of its dependence

on international trade, Hong Kong's gross domestic

product and its exports have tended to grow at much the

same rate; in turn, the rate of growth of domestic exports

/as a whole