Comparing Singapore Hong Kong Singapore

Comparing Singapore & Hong Kong

Singapore & Hong Kong • Area – Singapore: 697 km 2 – Hong Kong: 1, 108 km 2 • 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 40 th in the world – per capita 7 th in the world • Hong Kong: – US$401 billion (2014) – Ranked 45 th in the world – per capita 17 th in the world

Singapore and Hong Kong • • • 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: 13 th in the world – Hong Kong: 8 th in the world • 54% to mainland China • Imports: – Singapore: 14 th in the world – Hong Kong: 7 th 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 1960 s

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 1820 s – 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 1950 s – 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 1960 s – PAP became a elitist and paternalistic party – neo-Confucianism? • government intervention in the economy – drew up a state development plan

Singapore’s development 1960 s • 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 1960 s • 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 1960 s • produced phenomenal economic growth • achieved full employment by early 1970 s • ventured into high-tech, capital-intensive industries and high value-added services

Hong Kong’s development • Hong Kong also enjoyed phenomenal economic success – rapid expansion in manufacturing in 1960 s – industrial diversification in 1970 s

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 1980 s? • 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 1980 s? • 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?