ENG-1992 — Page 60

THE ECONOMY

Structure and Development of the Economy

Because of limited natural resources, Hong Kong has to depend on imports for virtually all its needs, including food and other consumer goods, raw materials, capital goods, fuel and even water. It must therefore export on a sufficient scale to generate foreign exchange earnings to pay for these imports, and the volume of exports must continue to grow if the population is to enjoy a rising standard of living.

The externally-orientated nature of the economy can be seen from the fact that in 1992 the total value of visible trade (comprising domestic exports, re-exports and imports) amounted to 254 per cent of the GDP. If the value of imports and exports of services is also included, this ratio becomes 288 per cent. Between 1982 and 1992, Hong Kong's total exports grew at an average annual rate of 17 per cent in real terms, which was roughly twice the growth rate of world trade. The corresponding average annual increase was 16 per cent for imports. With a gross value of $1,880 billion in overall visible trade in 1992, Hong Kong ranks high among the world's trading economies.

Contributions of the Various Economic Sectors

The relative importance of the various economic sectors can be assessed in terms of their contributions to the GDP and to total employment.

Primary production (comprising agriculture and fishery, mining and quarrying) is small in terms of its contributions to both the GDP and employment.

Within secondary production (comprising manufacturing; the supply of electricity, gas and water; and construction), manufacturing still accounts for the largest share in terms of both the GDP and employment. The contribution of the manufacturing sector to the GDP declined steadily from 31 per cent in 1970 to 21 per cent in 1982. It then increased to 23 per cent in 1983 and to 24 per cent in 1984, before stabilising at around 22 per cent during the period 1985 to 1987. It fell again thereafter to about 16 per cent in 1991, reflecting partly the slow-down in domestic exports and partly the continued expansion of the service sectors. The share of the construction sector in the GDP increased from four per cent in 1970 to eight per cent in 1981. It then declined to seven per cent in 1982 and six per cent in 1983, before settling at about five per cent during the period 1984 to 1991.

The contribution of the tertiary service sectors as a whole (comprising the wholesale, retail and import/export trades; restaurants and hotels; transport, storage and com- munications; finance, insurance, real estate and business services; and community, social and personal services) to the GDP increased from 60 per cent in 1970 to 65 per cent in 1982. It fell to around 62 to 64 per cent during the period 1983 to 1986, before rising steadily to 73 per cent in 1991.

With regard to employment, the most notable change since the early 1970s was the continuous decline in the share of the manufacturing sector in total employment, from 47 per cent in 1971 to 41 per cent in 1981, and further to 24 per cent in 1992. On the other hand, the share of the tertiary service sectors as a whole in total employment increased from 41 per cent in 1971 to 47 per cent in 1981, and further to 66 per cent in 1992.

The Manufacturing Sector

Although Hong Kong's domestic exports are still concentrated in a number of major product groups, there has been continuous upgrading of quality and diversification of items within these groups. The pressure of protectionism and growing competition from

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