Transcript Comparing Singapore & Hong Kong

Comparing Singapore & Hong
Kong
Singapore & Hong Kong
• Area
– Singapore: 697 km2
– Hong Kong: 1,108 km2
• Population
– Singapore: 5.7 million
– annual growth 1.9%
– Hong Kong: 7.1 million
– annual growth 0.4%
Singapore and Hong Kong
• Each is separated from the mainland by a
narrow waterway
• Singapore’s relationship with Malaysia has
been volatile
– brief merge in 1963-1965
– disputes about water delivery, islands, etc.
• Hong Kong benefits from mainland
China’s cheap labor and market
Singapore and Hong Kong
• Both are mostly ethnic Chinese societies
– Singapore: 77%
– Hong Kong: 94%
• both had over 100 years of British rule
– Singapore: 1819 - 1959
– Hong Kong: 1841 - 1997
• both were occupied by Japan
– 1942 - 1945
GDP (purchasing power parity)
• Singapore:
– US$445 billion (2014)
– Ranked 40th in the world
– per capita 7th in the world
• Hong Kong:
– US$401 billion (2014)
– Ranked 45th in the world
– per capita 17th in the world
-6
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65
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63
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61
GDP Growth Rates (% ) of Singapore (red bars) and Hong Kong (blue bars)
18
12
6
0
Singapore and Hong Kong
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•
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Both are newly industrialized economies
GDP composition:
Sector
Singapore
Hong Kong
agriculture 0%
0%
industry
25%
7%
service
75%
93%
Singapore and Hong Kong
• Exports:
– Singapore: 13th in the world
– Hong Kong: 8th in the world
• 54% to mainland China
• Imports:
– Singapore: 14th in the world
– Hong Kong: 7th in the world
• 47% from mainland China
Exports of G.&S. (% of GDP)
Economic development
• Singapore and Hong Kong
– have achieved similar economic success
– through very different economic approaches
• path of economic development diverged
after World War II
– similar experience under British colonial rule
– divergent political development after WWII
– divergent economic models after 1960s
Colonial legacies
• Both became entry ports to mainland
• both benefited from British management
and technological expertise
• both attracted inflow of Chinese emigrants
– Chinese population in Singapore doubled in
1820s
– Chinese population in Hong Kong quadrupled
between the two World Wars
Divergent paths after WWII
• Singapore gained independence (1959)
– Lee Kuan Yew’s People’s Action Party
• economy grew at a slow pace in 1950s
– still based on intermediary trade
– boosted by the Korean War of 1950 - 1953
Divergent paths after WWII
• Hong Kong restructured its economy
– population quadrupled 1945 - 1955
– large-scale relocation of capital,
entrepreneurs, and assets from mainland
China
– trade embargo against mainland China after
Korean War broke out actually benefited HK
• relative political stability
– popular political apathy
Divergent development model
• Singapore’s People’s Action Party
– faced severe internal and external conflicts in
1960s
– PAP became a elitist and paternalistic party
– neo-Confucianism?
• government intervention in the economy
– drew up a state development plan
Singapore’s development 1960s
• New institutions
– Economic Development Board
• promote industrial development
– Housing and Development Board
• develop industrial estates
– Development Bank of Singapore
• provide industrial financing
– Jurong Town Corporation
• acquire, develop, and manage development sites
Singapore’s development 1960s
• Restructured from trading port to
manufacturing base
• government intervention to attract foreign
investment
– in labor market
– in providing public housing
– in improving educational facilities
– in developing a social security system
Singapore’s development 1960s
• produced phenomenal economic growth
• achieved full employment by early 1970s
• ventured into high-tech, capital-intensive
industries and high value-added services
Singapore's GDP 1960-1984 (in constant local currency)
5.E+10
4.E+10
3.E+10
2.E+10
1.E+10
0.E+00
1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984
Hong Kong’s development
• Hong Kong also enjoyed phenomenal
economic success
– rapid expansion in manufacturing in 1960s
– industrial diversification in 1970s
Hong Kong's GDP 1960-1984 (in constant local currency)
8.E+10
7.E+10
6.E+10
5.E+10
4.E+10
3.E+10
2.E+10
1.E+10
0.E+00
1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984
Hong Kong’s development
• government’s laissez-faire principle
• reactive, selective, & reluctant intervention
– development of public housing
– provide lower-middle-income families with
access to home ownership
– social expenditure & community development
– development of human resources
• intervention to maintain competitiveness
Convergence since 1980s?
• Singapore reconsidered its development
strategy
– economy diversified from manufacturing to
financial and professional services
– aims to surpass Hong Kong as an
international center of finance & business HQ
– government relaxed intervention in economy
– free capital flows and foreign investment even
after Asian Financial Crisis of 1997
Convergence since 1980s?
• Hong Kong government moved in the
opposite direction
• became more interventionist
• to cope with the political uncertainty during
the negotiations between PRC and UK
• intervened in stock and currency market
– has linked HK$ to US$ since 1983
Convergence after crisis?