ENG-2009 — Page 87

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 both value-added contribution to GDP and share in total employment, as the city is a predominantly urban economy.

Secondary production (comprising manufacturing, construction, and supply of electricity, gas and water), which contributed greatly to the value-added component of the total economy in the early 1980s, has since diminished in relative importance. Within this broad sector, the value-added contribution from manufacturing shrank from 20 per cent in 1988 to 6 per cent in 1998 and to only 3 per cent in 2008. The construction sector's contribution to GDP stayed at around 5 per cent between 1988 and 2000, before edging down in the following years to 3 per cent in 2008. 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, but also created abundant business opportunities for a wide range of service 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 giving rise to improved competitiveness and productivity there has also propelled Hong Kong up the value chain.

As a result, 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 73 per cent in 1988 to 86 per cent in 1998 and 92 per cent in 2008 (Chart 3). The development on the employment front was similar. Over the past two decades, the tertiary sector employed significantly more workers while the share of employment for secondary production continued to shrink (Chart 4).

The Services Sector

The services sector has fared strongly on a broad front, along with 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.