ENG-2007 — Page 79

The Economy 43

Contributions of the Various Economic Sectors

Primary production (including agriculture, fisheries, mining and quarrying) has been insignificant in Hong Kong, in terms of either its value-added contribution to GDP or share in total employment. This reflects Hong Kong's situation as a predominantly urban economy.

Secondary production (comprising manufacturing, construction, and supply of electricity, gas and water), which contributed sizably in the value-added component of the total economy in the earlier years of 1980s, has since diminished in importance. Within this

broad sector, the value-added contribution from manufacturing shrank from 22 per cent in 1986 to 7 per cent in 1996 and to only 3 per cent in 2006 as a result of the relocation of the more labour-intensive production processes to the Mainland. The construction sector's contribution to GDP stayed at around 5 per cent between 1986 and 2000, before climbing down in the following years to 3 per cent in 2006. 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.

Hong Kong's economy has become increasingly service-oriented since the 1980s. 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. providers. Hong Kong has continued to re-orient itself towards service activities, prompted by the changing regional and global economic environment and also by closer integration with the Mainland. In particular, while the thriving Mainland economy has provided ample business opportunities for Hong Kong's services sector, the availability of cheaper land and labour on the Mainland side and the rising productivity there have also propelled Hong Kong to move up the value chain.

In line with this, the share of the tertiary sector (comprising the wholesale, retail and import/export trades; restaurants and hotels; transport, storage and communications; finance, insurance, real estate and business services; community, social and personal services and ownership of premises) in GDP rose visibly, from 70 per cent in 1986 to 85 per cent in 1996 and 91 per cent in 2006 (Chart 2). In terms of employment creation, the trend has also been similar. Over the past two decades the tertiary sector had employed significantly more workers while the share of total employment in the secondary production continued to shrink (Chart 3).

The Services Sector

The services sector's robust performance has been across-the-board during the economy's structural transformation in the past two decades. Services related to trading and tourism; community, social and personal services; and finance and business services such as banking, insurance, real estate and a host of professional services, have all grown significantly.

Being a highly service-oriented economy, the services sector has been the dominant driving force behind the current round of economic growth. Over the past