Comparing Singapore & Hong Kong

Singapore & Hong Kong Area –Singapore:697 km 2 –Hong Kong:1,104 km 2 Population –Singapore:5.5 million –median age 34 –Hong Kong:7.2 million –median age 45

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 –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: –Hong Kong: both were occupied by Japan –

GDP (purchasing power parity) Singapore: –Around US$332 billion –Ranked 40th in the world –per capita 7th in the world Hong Kong: –Around US$376 billion –Ranked 35th in the world –per capita 13th in the world

Singapore and Hong Kong Both are newly industrialized economies GDP composition: SectorSingaporeHong Kong agriculture0%0% industry27%7% service73%93%

Singapore and Hong Kong Exports: –Singapore:13th in the world –Hong Kong: 11th in the world 54% to mainland China Imports: –Singapore:13th in the world –Hong Kong:9th in the world 47% from mainland China

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

Divergent paths after WWII Hong Kong restructured its economy –population quadrupled –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

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

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?