ENG-1986 — Page 17

HONG KONG AS A PARTNER IN WORLD TRADE

A Miracle of Economic Growth

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Yet from this highly unpromising situation a complete transformation of the economy and society was accomplished in less than 35 years. The driving force was economic growth at a speed, sustained over a generation, that had not previously been seen in the history of the world.

By 1985, for instance, the GDP was more than four times larger in real terms, that is after allowing for price rises, than it was in 1966. And in this period, real GDP per head of the population grew by almost three times. This implied an average compound rate of growth in the GDP of almost eight per cent per annum in the 19-year period (Table 1). Very roughly, the economy is probably now over 10 times bigger than it was in the early 1950s, and GDP per head in real terms almost five times higher.

Table 1

=

Growth of Real GDP 1966-85

1966 1971

1976

1981

1985

1966-85

// /

GDP at 1980 Prices

($ million)

(1966

43,417

59.921

89,887

150,139

181,282

=

Index

100)

100

138

207

346

418

Average compound rate of growth

per annum (per cent)

6.6

8.4

10.8

4.8

7.8

Source: Compiled from Estimates of Gross Domestic Product 1966 to 1985, Census and Statistics Department 1986.

The major impetus to economic growth in Hong Kong over this period was the equally rapid expansion of trade. At current prices, total trade in goods in 1951, before the blow fell on the entrepôt trade, was $9.3 billion (thousand million). In 1985 it was $466.6 billion or 50 times as much. Of course, there was a very considerable rise in prices over the intervening years, but in 1966 total trade was still only $17.7 billion, less than twice the 1951 level. Between 1966 and 1985, trade in real terms (at constant 1980 prices) grew by almost seven times, so in 1985 it was probably about 12 times higher than in 1951. In 1951, however, most exports were re-exports, or entrepôt trade, while in 1985 well over a half consisted of Hong Kong's own manufactured products, which proportionately make a significantly bigger contribution to the GDP. The crude figures, therefore, tend to underestimate the contribution made by the growth in trade to the expansion of the economy.

Early Stages of Industrialisation

Certainly, the going was, at first, not easy. Total exports, which had recovered to $4.4 billion in 1951, dropped to a low of $2.4 billion in 1954, and only slowly recovered thereafter. Imports also fell in line. Even by 1960, total exports were still less than $4 billion and they only exceeded their 1951 level for the first time in 1963. Thereafter, they rose rapidly to, for instance, $17.2 billion in 1971 or almost four times the 1951 level.

The stagnant overall figures in the fifties and early sixties, however, belied the ferment that was going on behind them. This was the period when the territory was transforming itself from a predominantly entrepôt economy to one which relied mainly on its own exports of manufactured goods to provide the driving force of economic growth. In 1951,