ENG-2005 — Page 72

46 The Economy

both contributing to and gaining substantially from the Mainland's new phase of economic development.

The success of the Hong Kong economy in meeting the challenges and seizing the opportunities arising from structural changes has always depended, and will continue to depend, on its people. A better-educated and more highly skilled workforce is the key to the flexibility and resilience of the economy. Over the past decade, Hong Kong's labour force has been growing at an average annual rate of 1.6 per cent, but the higher-skilled, professional and managerial component of the labour force has been growing at a much faster average annual rate of 4 per cent. Today, one out of three people in Hong Kong's labour force belongs to this vibrant group of workers.

Contributions of the Various Economic Sectors

Primary production (including agriculture, fisheries, mining and quarrying) is insignificant in Hong Kong, in terms of both its value-added contribution to GDP and share in total employment. This reflects the predominantly urban economy.

Secondary production (comprising manufacturing, construction, and supply of electricity, gas and water), which made a significant contribution to GDP up to the early 1980s, has since diminished in importance. Within this broad sector, the value- added contribution from manufacturing shrank from 23 per cent in 1984 to 9 per cent in 1994 and to only 4 per cent in 2004 as a result of the ongoing relocation of the more labour-intensive production processes to the Mainland. The contribution of the construction sector to GDP stayed at around 5 per cent between 1984 and 2000, before edging down to 3 per cent in 2004. The supply of electricity, gas and water held relatively stable, with a share of around 2-3 per cent of GDP over the past two decades.

The Mainland's open-door policy and economic reform have not only provided an enormous production hinterland and market outlet for Hong Kong's manufacturers, they have also created abundant business opportunities for a wide range of services.

These include freight

freight and passenger transport, travel and tourism, telecommunications, banking, insurance, real estate, and professional services such as financial, legal, accounting and consultancy services. As a result, the Hong Kong economy has become increasingly service-oriented since the 1980s. This is also indicative of the ongoing restructuring of the economy towards more knowledge- based and higher value-added activities amid the challenges of globalisation.

Reflecting this, the share of the tertiary services sector (comprising the wholesale, retail and import/export trades; restaurants and hotels; transport, storage and communications; finance, insurance, real

insurance, real estate and business services; community, social and personal services and ownership of premises) in GDP went up visibly, from 68 per cent in 1984 to 84 per cent in 1994 and 90 per cent in 2004 (Chart 2).