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Hong Kong had gone through significant transformation in the period before 1997. This substantial growth has fostered constant expansion and development of the country to sustenance of economy and political prowess. For this paper, the main focus is on presenting the different facets which assisted in bringing about the current economical state of Hong Kongs economy. Such facets as government role, incentives, policies, human resources, technological inputs, political facets as well as education form the basis of this discussion.
Factors That Contributed to the Economic Prosperity of Hong Kong
The facets which are considered to have influenced positive economic growth in Hong Kong are discussed as below:
First, Hong Kongs favorable geographical position perfectly suits for immense trade activities (Hungdah, Jao and Wu, 1987). This location has furnished the flourishing of tourism sector, as tourists arrived to the country through both the sea- and air-ways; hence, benefitting the economy as a whole. The country is a trading port for most of the activities affecting the economy directly. Moreover, Hong Kongs strategic position has granted the immense growth and development in infrastructure in terms of communication facilities and transportation services. This, in turn, facilitated easier movement of goods and services both locally and on the international level. Another crucial feature attributed to Hong Kongs infrastructure is the uniqueness of its container wharfs, which are considered to be the largest ones and provide the fairest services across the globe. This feature attracted most of the export as well as import trading activities, which are intrinsic benefits to positive growth of the countrys economy as a whole.
Second, there is a high quantity of professionals as well as substantial number of entrepreneurs in Hong Kong who injected capital into the market. Thus, they were not only creating jobs, but also providing taxes to the government of Hong Kong which were later used in developing roads and other significant trading facilities. In 1987, more than 8,000 professionals were perceived as having held foreign passports and returned to Hong Kong to invest money and skills (Hungdah, Jao and Wu, 1987). In terms of education, the third university has been constructed in Hong Kong; so that immediately communities were provided with the affordable high-level education: specifically, in science technology. This has been perceived as having an influential role onto the growth of the economy; given the fact that university provides a formidable training base for which even more professionals pioneered.
Third, regarding capital investment, there is substantial rationale behind immediate investments into China by the majority of Hong Kong business communities. This Foreign Direct Investment is perceived as having been conducted by the Hong Kong business communities into Chinas four special economic zones. In fact, in the half-period of 1987, it is accounted that both Hong Kong and Macao contributed to more than 80 % of foreign investment schemes, which had been approved countrywide in China. Thus, it is safe to assume that Hong Kong improved its economic index as a result of foreign capital inflows (Hungdah, Jao and Wu, 1987).
Fourth, the political base in Hong Kong is also considered to be a catapulting facet towards the development of its economy, given the fact that the country enjoyed immense protection from the British government. The fact that the British Government provided protection to the people of Hong Kong allowed them to concentrate on conducting activities, which improved the growth and development of the economy. This favorable form of environment was considered to be the key factor which led to the emergence of numerous business communities in the country. It should be noted that these business communities formed a substantial group which made sure that foreign inflows provided return on investments to the country in terms of revenue. In addition to this, the British government had led the country for a substantial period of time; and was, thus, involved into a smooth transition process of Hong Kong to join the Peoples Republic of China; a process that ended in 1997 in a successful manner (Hungdah, Jao and Wu, 1987).
Fifth, in the course of transition into the Republic of China, the British government ensured that the country maintained a stable political base. It was done through provision of leadership trainings to the local residents, who were depicted as having positive qualities of leadership. For instance, in 1985 the British government, for the first time, has indirectly elected some local residents into the Hong Kongs Legislative Council. These ensured that the country was placed at a fair position upon which it could conduct its daily routine of building of the economy.
Sixth, the prospective positive relationship between China and Hong Kong is apparent. The union of these two countries into one-country is considered to be a significant factor which led to the economic growth of the country. In this agreement, the British Government handed the country to the People Republic of China upon which a two-system model was formulated. It was done in order to catapult activities involved with socio-economic structures in the market systems which exist in both Hong Kong and China. In the agreement, the People Republic of China agreed to accommodate proposals which were aimed at maintaining both stability and investors confidence in Hong Kong after 1997. This was made possible by the fact that Hong Kong remained cooperative by accepting sovereignty over China. Some of the contributions made by China to Hong Kong involved setting-up of a political system for the people of Hong Kong after the agreement of 1997 came to pass; as well as formulating basic law which dictated the form of relationship between the two countries. Economically, China and Hong Kong are considered to be in a partnership form of relationship where China is portrayed as a senior partner, while Hong Kong a junior partner. Furthermore, the fact that China agreed to engage in the activities of the partnership is a clear indication of its desire for Hong Kongs to grow economically under the watch of its rule (Hungdah, Jao and Wu, 1987).
Seventh, government policies in Hong Kong have also enhanced the prosperity of its economy. In terms of policies, the Hong Kongs legislature lessened trade barriers which were attributed to the diminishing of trade activities; hence, attracting a substantial volume of investors interest into the economy as a whole. It should be noted that these policies were established in order to provide multiple business opportunities in respect to exports and imports.
Eighth, government incentives were provided to potential investors who, in turn, took the initiative to invest more on the economy. Their trading activities were facilitated with the introduction of such benefits as subsidies as well as lessening of the taxes paid by these investors. For instance, the Hong Kongs legislature passed a bill which allowed investors to pay fewer taxes in the course of starting-up of their businesses (Hungdah, Jao and Wu, 1987).
Ninth, with the advent of technology, the Hong Kong business community was allowed to access the external market. The internet made it easier for this community of businessmen to attract large investments from the foreign countries. Communication channels were created and developed for the purpose of expanding business networks throughout the globe. It should be noted that Hong Kong made significant investments in terms of fiber-cabling, which was an initial step into accessing fast and reliable internet services.
Tenth, the decision by the government of China to assign special administrative functions to Hong Kong has opened business platforms and opportunities, given the fact that the security matters were tightened and made sufficient in this issue. It is important to note that international business communities consider security as the number one priority in the course of making investments. In case of insecurity, investors are deterred from participating in the growth and development of the economy at hand (Lau, 1987).