ENG-1999 — Page 75

THE ECONOMY

Between 1989 and 1999, labour productivity in the local manufacturing sector, as measured by the ratio of industrial production index to the manufacturing employment index, increased by an average of around 10 per cent per annum. This was notwithstanding the markedly decelerated growth in 1999, attributable to a contraction in manufacturing output signifying reduced capacity utilisation, as well as a marked shrinkage in investment in industrial machinery along with the economic downturn.

Chart 6:

Output per person engaged in the local manufacturing sector

(March 1991=100)

Index

300

250

200

150

100

50

0

1988 1989 1990 1991

1992

1993 1994 1995

1996

1997

1998 1999*

Labour productivity in the local manufacturing sector has been on a general uptrend over the years.

*Average of Q1 to Q3 1999.

The United States and the Mainland were the two largest markets for Hong Kong's domestic exports, each accounting for about 30 per cent of the total value in 1999. The other major markets were the United Kingdom (with a share of 6 per cent), Germany (5 per cent), Japan (3 per cent), and Taiwan (also 3 per cent). In the more recent years, new markets were developed for Hong Kong's exports, including markets in the Middle East, Eastern Europe, Latin America and Africa.

Increasing Economic Links between the Hong Kong SAR

and the Mainland

Since the Mainland adopted its economic reform and open-door policy in 1978, economic links between Hong Kong and the Mainland have gone from strength to strength. This has brought about substantial economic benefits for both places.

Specifically, visible trade between Hong Kong and the Mainland has grown strongly since 1978, at an average annual rate of 24 per cent in value terms. However, reflecting the increasing trend of direct shipment of goods into and out of the Mainland and also the enhanced port facilities and simplified customs procedures in

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