Socio-Econ. Plann. Sci. Vol. 29, No. 3, pp.

227-243, 1995
~ Pergamon 0038-0121(95)00011-9
Copyright© 1995ElsevierScienceLtd
Printed in Great Britain. All rights reserved
0038-0121/95 $9.50+ 0.00

Spatial Economic Impacts of New Town

Development in Hong Kong: A GIS-based
Shift-share Analysis
D A N I E L Z. SUI
Department of Geography, Texas A&M University, College Station, TX 77843-3147, U.S.A.

Abstract--This paper models the impacts of public decision making through a new analytic framework
based on the integration of geographic information systems (GIS) and an extended shift-share analysis.
The research is set within the context of Erickson's new model on the suburban economy, allowing study
of the spatial economic impacts of new town development in Hong Kong for the period 1966-86.
Development patterns for the period 1986-2006 are analyzed using the same approach with three different
development scenarios. It was found that Hong Kong's public housing-led new town development strategy
has stimulated occurrence of the first spillover/specialization stage in the Erickson model, although the
second dispersal~diversification stage has yet to be achieved. In the absence of a concomitant policy to
disperse employment, new town development in Hong Kong has resulted in a mismatch between place
of residence and place of work, leading to a polarization between white-collar jobs concentrated in the
older urban areas and blue-collar jobs in the newer towns. Results indicate that the second stage of
Erickson's model may be achieved if Hong Kong maintains its current growth momentum. However,
the current concentrated development strategy of the Hong Kong government may jeopardize the
development of self-contained/self-balanced new towns, possibly leading to further overcrowding in
central urban areas. Such a concentrated strategy may also deter the further integration of Hong Kong
with the Shenzhen Special Economic Zone in China.

INTRODUCTION

H o n g K o n g , a British crown colony located on the southeast coast o f China (Fig. 1), is renowned
as a capitalist's paradise, where traditional Chinese Confucianism has been artfully combined
with western laissez-faire capitalism [36]. H o n g K o n g ' s e c o n o m y has long been orchestrated by
A d a m Smith's "invisible h a n d . " The role o f the market has been guaranteed by the government's
philosophy o f minimal intervention in economic affairs, i.e., its laissez-faire policy. The spectacular
growth o f H o n g K o n g ' s e c o n o m y in the last several decades has proved the effectiveness
o f such a positive noninterventionist policy, particularly during the export-led manufacturing
development stage. However, as H o n g K o n g has increasingly shifted from a manufacturing-based
to a service-oriented economy, the "invisible h a n d " o f the market has gradually been replaced by
the "visible h a n d " o f government in order to meet people's social needs and expectations for a
better quality o f life.
One o f the most significant government interventions in H o n g K o n g in recent years has been
t h r o u g h the u r b a n planning process (or " t o w n p l a n n i n g " - - a s it is called there). With a population
o f 5.6 million in 1991 and an area o f only 1076km 2, two-thirds of which is hilly, H o n g
K o n g ' s development has always been constrained by the availability o f developable land.
Overcrowding in the central urban areas under the inner part o f Victoria H a r b o r has long been
a problem for urban planning. Since 1960, the H o n g K o n g government has pursued the
development o f new towns to disperse population from the central urban areas. Eight new towns
have thus far been developed (Table 1). While the original objective o f new town development was
to disperse the population from central urban areas to the outlying periphery, town planners
have strived to achieve balanced social development and self-contained employment in the
process. While H o n g K o n g ' s new town p r o g r a m has been evaluated by scholars from m a n y
different perspectives [8, 31, 39], the spatial economic effects o f this development have barely been
discussed in the literature. In contrast to previous research, we contend that the spatial impacts

227
228 Daniel Z. Sui

CHINA ,~*-/ ....

%
÷ x Mirs Bay
+J ~ Fanling/
_ ~Sheung Shui ~7

Tai Po
~ Tin1 ~$huiYuenWai
Long

N Sha Tin
Tsuen Wan
( Including Tsing Yi )
Mun Sai
Sham Kun{

#
0

~.,Peng ~
x'~Chau ,.. KEY
Mui Wo,
0 ")" o~.~,,a

~ Cheung
f~nau
• FlumlT ~
O 2 4 6 8 1Okra ~'~. New Tmen
I I I l, I I

Fig. 1. L o c a t i o n o f the study area and m a j o r new t o w n s in H o n g K o n g .

of Hong Kong's new town development should be understood as manifestations of spatial

restructuring and structural transformation in the colony's metropolitan economy. With the
anticipated return of Hong Kong to China on 1 July 1997, to become a Special Administrative
Region (SAR) of the People's Republic of China, the colony is currently experiencing a painful
transitional peiod. Whether or not Hong Kong will maintain its momentum of growth after
1997 and keep its status as a world financial center remains to be seen. It may thus be instructive
to look back at the spatial impacts of the new town development strategy in Hong Kong. By doing
so, we can likely gain additional insights into how development planning might better be practiced
in the future.
The primary objectives of this paper are two-fold. The first is to examine the spatial economic
impacts of new town development in Hong Kong within the context of Erickson's new model of
suburban economic development [17]. The second is to develop a new analytic framework to
conduct such analyses through the integration of geographic information systems (GIS) and an

Table 1. Hong Kong's new towns: areas and populations

Year Area Population at Population
New Town designated" (ha) ~ designation ~ in 1986b
TsuenWan 1961 3165 80 131
Sha Tin 1965 3006 24 355
TuenMun 1965 2113 20 262
Yue Long 1978 398 42 75
Tai Po 1979 3458 48 119
Sheung Shui/Fan Ling 1979 782 44 87
Junk Bay 1982 1430 7 21
Tin Shui Wai 1982 225 0 13
~From Bristow [8].
bFrom "'Hong Kong 1986 By Census."
 Spatial economic impacts 229

Spillover and Dispersal and Infilling and

Specialization Diversification Multinucleation
• •

• A gila
• AO
nstage One [ - ' ~ Stage Two p-- -~Stage ThreeI

[~] Spe~alized Diversified Major

CentralCity • Employment • Employment • Suburban
Structure Structure Nucleation

Fig. 2. The Erickson model.

extended version of shift-share analysis. Specifically, by setting this research within the context of
Erickson's model on the suburban economy, an extended shift-share model has been integrated
with a vector-based GIS to model the spatial impacts of new town development in Hong Kong.
Potential development patterns are also simulated based on three different development scenarios.
The paper subsequently addresses policy implications of the modeling results.

THE CONCEPTUAL FRAMEWORK

In order to put Hong Kong's development problems into perspective, theoretical considerations
regarding urban spatial structure and new urban forms are necessary. Although an understanding
of urban form and spatial structure has been pursued for several centuries, there is, unfortunately,
no unified set of concepts or theories available to explain these entities. Instead, the relevant
literature presents a plethora of partial, and largely untested, theories and hypotheses. Each of the
diversified approaches to urban structure and forms has some validity within its own terms of
reference, but none has won universal acceptance [6].
The emergence of the information society has rendered three classic urban models obsolete--
concentric zonation [37], sectoral radiation [27] and multiple nucleation [23], as the massive
suburbanization and sectoral transformation of metropolitan economies in Western societies
have unfolded since World War II. Drawn from several previous efforts to modify these
three classic models [45, 34,46,20], Erickson [17] was able to construct a new model to
reconceptualize the spatial restructuring and structural transformation of the new metropolitan
economy. The conceptual framework of our study is set within the context of Erickson's
model of suburban space economy. This model, as later extended by Hartshorn and Muller
[25], articulated the evolving patterns of the suburban metropolitan economy in three temporal
stages (Fig. 2):

1. Spillover and specialization

During this stage, major employment was predominantly concentrated in the central urban
areas, but some sectors began to spill beyond the boundaries of the traditional central city. The
spillover of employment tended to become highly specialized in limited blue-collar, labor-intensive
sectors.

2. Dispersal and diversification

Employment patterns during this stage are characterized by extensive spatial dispersal and
sectoral diversification, reflecting a wider range of activities and greater balance among their
component sectors.
SEPS 29/3 E
230 Daniel Z. Sui

3. Infilling/multinucleation
During this stage, employment patterns reflect continued dispersal, but with substantial infilling
of jobs in the inner rings of suburbs close to circumferential freeways. An increasing share of
employment tends to concentrate in a small number of suburbs with high-rise, high-tech business
centers. The entire metropolis tends to become reorganized into a set of independent urban realms.
Metropolitan business landscapes are characterized not just by the traditional Central Business
District (CBD) but by the development of suburban downtowns as well [25]. Such an evolutionary
pattern in the development of the suburban economy has been widely substantiated since World
War II [2, 24, 16, 18, 35].
With these considerations in mind, the current paper aims to address the following questions
using GIS-based shift-share analysis for the city of Hong Kong:
i. Into which stage of the Erickson model does Hong Kong's new town development fit?
2. To which stage will Hong Kong's growth pattern take it in the future?
3. What policy implications might be drawn for Hong Kong in the realm of urban planning?

METHODOLOGY
A GIS is an organized collection of computer hardware, software, data and trained personnel
designed to efficiently capture, store, manipulate and display spatially referenced data. Although
the first GIS for planning purposes appeared in the early 1960s [12], the explosive growth of GIS
applications in urban planning did not occur until the 1980s when there was a sharp increase
in the performance/cost ratio of computer hardware [7, 14, 38, 42]. The wide applications of
GIS technology have greatly facilitated the information management, retrieval and automatic
mapping of various spatially referenced data in different stages of urban planning [47, 48]. Although
the benefits and advantages of using GIS in urban planning are well documented [32, 33], urban
planners have increasingly recognized the limitations of current GIS technology in the urban
planning process [13, 21, 29]. In essence, most, if not all, current GIS functions are cartographically
oriented. They usually do not reflect what planners actually do in the planning process [21].
The general consensus is that GIS will be successful only if appropriate interfaces between GIS
and various planning models and techniques are established [50]. However, such a consensus
has not yet resulted in the appropriate studies being carried out [22]. The methodological
objective of this paper is thus to demonstrate how GIS can be integrated with analytical techniques
for policy impact analysis. While shift-share analysis offers an analytic tool for modeling the impact
of new town development, GIS provides the integrated technical environment for the implemen-
tation.

Shift-share analysis and its extension

Originally developed as a tool to describe the differential responses of regions and states to
national economic change, shift-share analysis can be regarded as a technique that uses pro-
portional measures of change to examine the interdependencies of a subarea with the parent
area in terms of the major components of growth. The theoretical assumption behind shift-share
analysis is that small economies change in some definable relationships to a larger benchmark or
parent economy. Original specification of shift-share analysis decomposed growth into three major
components--national growth effect (N0), industrial mix effect (S0) and regional competitive effect
(Ro):
AE~j= N~j+ So+ R o (I)
[See Nomenclature for definitions and explanations of terms in eqns (I)-(4).]
One serious drawback of the original shift-share analysis has been its inability to account for
the strength of the local market and the effect of local industry mixes [4, 5, 9, 28]. Therefore, one
of its extended versions--Arcelus's extension [l]--is employed in this paper. In order to account
for the strength of the local market and the effect of local industry mixes, Arcelus [I] decomposed
the regional shift Rij into two components: RN o (regional growth effect) and RS o (regional
 Spatial economic impacts 231

Table 2. Interpretations of the extended shift-share analysis

[(e,j - e.l) (e,~
- - P.~)] > o [(&, P,/)
- - 0',~ - e.~)] < o

(E,j - e~) >o Higher Dependence/Lead Area: Higher Dependence/Lag Area:

higher dependence in region j ' s
growth on sector i and an
accelerated growth of sector i in
region j vs the national average
(E,,- E~) < o Lower Dependence/Lead Area:
lower dependence in region j ' s
growth on sector i and an
accelerated growth of sector i in
region j vs the national average
higher dependence in region j ' s
growth on sector i and a failure of
sector i in region j to keep pace with
the national average
Lower Dependence/Lag Area:
lower dependence in region j ' s
growth on sector i and a failure of
sector i in region j to keep pace with
the national average

industrial mix effect). The resulting model is given by (2):

A E o. = N U+ S~ + RN~ + R S U. (2)
By incorporating Esteban-Marquillas's concept of homothetic employment [19], RN~ and RSo are
further extended as:
RN~ = Eo(P,j
H _ P,N) + ( E i j - Eij)(P,j
H -- P,N) (3)
R S ° = EoH[(P0 - P,j) - (PiN -- P,N)] + (Eo.- EijH )[(P0" - - PnJ) - ( P i N - - PnN)]. (4)

(See Nomenclature for explanations of symbols.)

By making such extensions, the specialization and growth differentials in major economic sectors
within a metropolitan area can be identified. The meanings and interpretations of equations (3)
and (4) are outlined in Table 2. For more technical details, see Refs [3, 26, 44].

Implementation
The integration of shift-share analysis with GIS was effected here via the following steps (see
Fig. 3):
I. Construction o f the database. Atlas*GIS, developed by Strategic Mapping, Inc., was used
to create both the spatial and attribute databases. The spatial unit adopted here is the secondary
planning unit; Hong Kong's equivalent to the census tract. The sectoral aggregation used for
major industrial sectors corresponds approximately to the two-digit Standard Industrial Classifi-
cation Code (SIC) in the U.S. (see Appendix for definitions). A CalComp Drawing Board II
digitizer was used to digitize the census district boundaries. Employment data in three major
industries were input through the spreadsheet module within Atlas*GIS. The data are exclusively
from the 1966, 1976 and 1986 Census of Hong Kong.
2. Extended shift-share analysis. Employment in major industrial sectors was extracted and
saved as a separate file. The structure of the new attribute file containing each individual industrial
sector was modified to include the items shown in equations (3) and (4). The macro math functions
in the Atlas*GIS database were used to calculate the extended shift-share indices.
3. Mapping the results. The thematic mapping module of Atlas*GIS was used for mapping the
results and cartographic design.

RESULTS AND DISCUSSION

Specialization and differential growth, 1966-86
As proposed earlier, GIS-based shift-share analysis was used here to examine the spatial
specialization and differential growth of three major employment sectors in Hong Kong for the
period 1966-86.
Manufacturing sector. For 1966 and 1976, four clustered areas were identified as High
Dependence/Lead areas: Tsuen Wan, Tuen Mun and Sai Kung in the New Territories, and Hung
Horn on the east coast of the Kowloon Peninsula (Fig. 4a). High Dependence/Lag areas were found
in Tai Po and Sheung Shui/Fanling new towns, a very limited area on the northern part (North
Point) of Hong Kong Island, as well as Cheung Sha Wan and Kai Tak districts in Kowloon.
232 Daniel Z. Sui

I
sl s2 s3

sl s2 s3
1976
sl s2 s3
986

J.
Veriableto be Mapped
T Extended Shift-Share Analysis
Geographic
Index
New Data File
File
for Each Sector

s l , s2, s3 represent manufacturing, commerce, and service employment

Fig. 3. The implementation of GIS-based shift-share analysis.

Low Dependence/Lead areas were identified in the rural areas adjacent to the new towns of
Tuen Mun, Sheung Shui/Fanling and Tai Po. Low Dependence/Lead areas were also found on
the Kowloon Peninsula and in the northern coastal strip of Hong Kong Island; in other words,
most central urban areas. In contrast, the Central district, the southern part of Hong Kong Island,
the northwestern New Territories, the Sha Tin area and Lantau Island were predominantly
Low Dependence/Lag areas, which indicates that they neither specialized in manufacturing nor
took a lead in manufacturing growth.
During the second study period (1976-86), a clear spatial shift occurred in the High
Dependence/Lead area (Fig. 4b). Tuen Mun new town, identified in the previous period as a
High Dependence/Lead area, had expanded to its adjacent districts. The more peripheral new
towns of Sheung Shui/Fanling and Tai Po, as well as eastern Kowloon (an area opposite Kai Tak
Airport) and Shaw Kei Wan and Chai Wan districts in the eastern end of Hong Kong Island, had
become more specialized in the manufacturing sector and had also taken the lead in the growth
of manufacturing jobs. Sha Tin, and a district outside Tai Po new town in the New Territories,
as well as Shek Kip Mei in northern Kowloon and the Mid-Levels/Peak district on Hong Kong
Island, had become High Dependence/Lag areas. The two High Dependence/Lead areas of the
previous decade--Tsuen Wan and Sai K u n g - - h a d retreated to become Low Dependence/Lead
areas, which suggests that although they no longer specialized in the manufacturing sector, they
still took a lead in the growth of manufacturing jobs. Low Dependence/Lead areas in this period
also included Pokfulam and North Point on Hong Kong Island, eastern Kowloon Peninsula, and
the rural districts in eastern and northwestern New Territories. The Central District-Tsim
Sha Tsui area, the traditional core of Hong Kong, had become firmly established as a Low
Dependence/Lag area in the manufacturing sector.
When the extended shift-share analysis was executed for the entire period (1966-86), we observed
a continual spatial relocation trajectory of manufacturing employment in Hong Kong (Fig. 4c).
A new manufacturing corridor had formed from Tuen Mun and Tsuen Wan new towns all the
way to the Jordan Valley and Yau Tong in an east-west direction, and from Tsuen Wan new town
 Spatial economic impacts 233

(b) 1976-1986

~ High Dependence/Lead

~ High Dependence/Lag

~Low Dependence/Lead

~ LowDependence/Lag

0~ 1 0 tom

1966-1986

Fig. 4. Spatial specialization and differential growth of manufacturing employment: (a) 1966-76;
(b) 1976-86; and (c) 1966-86.

and Sha Tin other areas to Tai Po new town in a north-south direction. Other districts in the New
Territories, such as Yuen Long and Sha Tin, also took a lead in the growth of manufacturing jobs,
although these areas did not specialize in the manufacturing sector. In contrast, manufacturing
employment in the central urban areas (i.e. areas surrounding the harbor) were characterized either
by Low Dependence/Lag in growth or by High Dependence/Lag in growth (such as the districts
of Sham Shui Po, Wong Tai Sin and Kwun Tong). This reflects a spillover of manufacturing jobs
to some of the new towns, and a decline in the importance of manufacturing in the central urban
areas.
Commerce sector. During the first study period (1966-76), High Dependence/Lead areas were
predominantly concentrated in the central urban areas (Fig. 5a). The neighboring urban areas of
Hong Kong Island and Kowloon, as well as the Tuen Mun and Sha Tin new towns showed High
Dependence/Lag in commerce. In contrast, the majority of the New Territories were dominated
by Low Dependence/Lag in commercial employment. Urban peripheral areas were characterized
by an intermixture of Low Dependence/Lead and High Dependence/Lag sites.
During the second study period (1976-86), High Dependence/Lead areas shifted to the Peak,
Mid-Levels and Wai Chai on Hong Kong Island, and urban districts in East and West Kowloon.
Adjoining them were High Dependence/Lag areas (Fig. 5b). Sha Tin and Tuen Mun new towns
retreated to become Low Dependence/Lead areas, which may have been a result of a dramatic
change in the economic specialization of these new towns. As in the previous decade, the districts
of the New Territories were overwhelmingly dominated by Low Dependence/Lag areas.
When the entire study period (1966-86) is considered, it is abundantly clear that the High
Dependence/Lead areas during the last two decades have tended to agglomerate in the central
urban areas, particularly in the western part of Hong Kong Island and northwestern and eastern
part of Kowloon (Fig. 5c). Some dispersal of offices occurred, although most employment in
commerce concentrated in the main urban areas in order to take advantage of the agglomeration
effect and economies of scale. The new towns of Sha Tin, Tsuen Wan, Tuen Mun and Yuen Long
234 Daniel Z. Sui

~ High Dependence/Lead

~ High Dependence/Lag
..' il
~Low Dependence/Lead

~ LowDependence/Lag

0 i ~ _ . . _ _ 1 1 0 km

I
1966-1986

Fig. 5. Spatial specialization and differential growth of commerce employment: (a) 1966-76; (b) 1976-86;
and (c) 1966-86.

have become Low Dependence/Lead areas, while the New Territories are now mostly Low
Dependence/Lag areas. In contrast to the manufacturing sector, the spatial dispersal of the
commerce sector was far more restricted.
Service sector. During the first study period (1966-76), we can observe a clear polarization
between central urban areas and the New Territories: the central urban areas were predominantly
High Dependence/Lead areas (with some limited High Dependence/Lag sections), while the
New Territories districts (with the exception of the new towns) were predominantly Low
Dependence/Lag areas (Fig. 6a). The spatial specialization and differential growth during
the second study period 0976-86) show that while both High Dependence/Lead and High
Dependence/Lag areas were still confined to the central urban areas, the High Dependence/Lead
areas shifted to Pokfulam in the West and Tai Hang (Caseway Bay) and Shau Kei Wan in eastern
Hong Kong Island (Fig. 6b). In Kowioon, only the urban districts on the east and west coasts
became High Dependence/Lead areas. In the New Territories, only Sha Tin new town shifted to
become a High Dependence/Lead area in the service sector.
When shift-share analysis was executed for the entire period 0966-86), only two kinds of areas
were identified: High Dependence/Lead in the central urban areas and Sha Tin new town, and
Low Dependence/Lag in the New Territories and the peripheral areas of Hong Kong Island
(Fig. 6c). Although only these two types were identified for service employment, it is clear that the
central urban areas remain highly specialized in the service sector, taking a commanding lead
in growth during the entire study period. In contrast, the New Territories, with the exception of
Sha Tin new town, exhibited lower dependence on the service sector while lagging behind the
urban areas in growth. The spatial polarization in the service sector between the central urban
areas and the New Towns has thus become even more pronounced than that in the commerce
sector. Obviously, service employment has not played an important role in the growth of the
New Territories.
 Spatial economic impacts 235

Ckb~

!.~?.;::?i;i:i~ii~.:i:.,iJ

1966-1976
f
1976-1986
China

~ High Dependence/Lead

~ High Dependence/Lag

~Low Dependence/Lead

~ Low Dependence/Lag

T
(c) 1966-1986

Fig. 6. Spatial specialization and differential growth of service employment: (a) 1966-76; (b) 1976-86; and
(c) 1966-86.

FUTURE DEVELOPMENT PATTERNS

The future of Hong Kong is of concern to many citizens as 1997 draws near. Three viewpoints
appear to dominate predictions about economic development in the colony: optimistic, pessimistic
and differential growth. Optimists believe that the restoration of Hong Kong's sovereignty to China
will not substantially affect its development as Beijing's reforms toward a market economy
penetrate more deeply into the Chinese economy [10, 11]. Pessimists take the opposite view,
suggesting that the growth of Hong Kong is likely to stagnate in the short run because its people
distrust the Communist Chinese government, and because of the continuing emigration of many
of Hong Kong's professional and skilled workers to such destinations as Canada, Australia and
Singapore [15]. A third group believes that the overall economic growth of Hong Kong will
continue, but that there will be great spatial variations in terms of development potential. Both
centrifugal and centripetal forces exist within the development process of Hong Kong. Although
several scholars have argued for the continuation of a balanced development strategy [8, 49], some
urban planners there strongly favor the view that centripetal forces should dominate the colony's
future development pattern [40, 41]. Presently, discussions concerning the future of Hong Kong's
spatial structure are confined to intuitive speculations. Using GIS-based shift-share analysis, the
spatial patterns of these three development scenarios can be simulated, as follows:
Scenario One--"constant growth"
This scenario assumes that the economic trends of 1966-86 will continue through the year 2006.
Accordingly, the national growth effect Nu, industry mix effect So., regional growth effect RNo, and
regional industrial mix effect RS u, as calculated for 1966-86, are summed and then extrapolated
into the future by multiplying the 1986 employment levels. As Fig. 7a shows, central urban areas
will apparently continue to lose manufacturing employment or experience only minor increases.
In contrast, most new towns will likely have substantial growth in manufacturing employment.
Under this scenario, commerce and service employment will experience substantial increases in both
236 Daniel Z. Sui

.!iiiiii!iiiiiiiiiiiiiii...........
' if:::!
0nmr.--~jl okm

Change in Manufacturing
Employment (in 1,000)
] -24.5 to -10.4

[] -10.5 to 0.0

] 0.1 to 21.4

[] 21.3 to 50.7
.+
[] 50.8 to 77.1

~ N

0 ~ 10km

Change in Commerce
Employment (in 1,000)
[] 1.4 to 8.6

[] 8.7 to 19.4

] 19.5 to 36.9

[] 37.0 to 73.1
[] 73.2 to 182.1

~ N

0 ~n.~..,.llO km

Change in Service
Employment (in 1,000)
] -4,8 to 0.O

] 0.1 to 3.4

] 3.5 to 16.4

[] 16.5 to 30.7

[] 30.8 to 89.5

Fig. 7. Future development trends under Scenario One: (a) manufacturing employment; (b) commerce
employment; and (c) service employment.

central urban areas and new towns (Fig. 7b,c). However, such an increase in commerce and service
jobs will not occur in the more distant periphery areas, which may reflect the trend of the dispersal
of white-collar jobs from central urban areas; these jobs will concentrate in the new towns.

Scenario Two--"stagnant economic growth"

This scenario assumes that the growth of Hong Kong's economy will be stagnant between 1986
and 2006, but employment trends within individual sectors will remain constant. In shift-share
 Spatial economic impacts 237

analysis terms, N o. is set to zero. Therefore, Sij, R N U and R S o are summed and multiplied by
the 1986 employment level to predict future growth. Under this scenario, the growth of
manufacturing employment will concentrate in three new towns. Other areas, including the central
urban area, will experience a marginal increase (Fig. 8a). However, the commerce and service
sectors will be severely hurt. New towns will lose employment opportunities in these two sectors,
particularly for various service jobs, while only minor growth will occur in the central urban areas
(Fig. 8b,c).

ILN

0n_.._._llo km

•
Changein Manufacuring
Employment(in 1,000l
[] -19.5 to -9.6

[] -9.5to 0.0
] 0.1 to 21.1

~ ~ (a)~ ~l'~ [] 21.2to 45.9

[] 46.0to 57.6

--~ china ~ ~ ~¢,

~ N

o~ ] 1 o km

Changein Commerce
Employment(in 1,000)
[] -18,5 to -9.4

[] -9.3to 0.0
] 0.1 to 15.3
[] 15.4to 29.4
[] 29.5to 68.0

Employmentlin 1,0001
[] -27.0 to -10.4
[] -10.3 to -6.0

~~JP~Q ~ (C)
1~! ~

J'
[] -5.9to0.0
n 0.1to10.3
[] 10.4to 25.2

Fig. 8. Future development trends under Scenario Two: (a) manufacturing employment; (b) commerce
employment; and (c) service employment.
238 Daniel Z. Sui

Scenario Three--"different&l economic growth"

This forecast is based on the assumption that Hong Kong's overall economy will constantly
grow, but economic performance in the central urban areas and new towns will vary, with the
former enjoying growth and the latter suffering stagnation. In shift-share terms, RNij is set to zero
for all the new towns but remains the same for the central urban districts. Accordingly, N,~, S o and
RS o are summed and multiplied by the 1986 employment level to simulate future growth. Under
this scenario, growth in manufacturing jobs will be more dispersed spatially while growth in service
and commerce jobs will be predominantly concentrated in the urban core areas (Fig. 9a-c).

I " I [] 14.9to 235

J %
I==
~ ~ ~ • ~ [] 35.6 to 467
~ a ) ~ ~:~ °~/~ ' . = 46.8to5716

li;i...
j•N
0~ 1 0 km

Change in Commerce
Employment (in 1,000)
[] 42 to 32.1
[] 32.2to 43.7
] 43.8 to 54.7

b
[] 54.8 to 103.7

[] 103.8to 209.7

~ N

0 ~ - - . ~ 1 1 0 km

Change in Service
Employment (in 1,000)
] 5.5 to 15.7

] 15.8to 25.5
] 25.6 to 38.1
n 38.2 to 49.6
[] 49.7 to 60.6

Fig. 9. Future development trends under Scenario Three: (a) manufacturin employment; (b) commerce
employment; and (c) service employment.
 Spatial economic impacts 239

POLICY IMPLICATIONS
The development of new towns in Hong Kong has dramatically changed the spatial structure
of the city, as evidenced by the emergence of a multicentered ecological structure [30]. How-
ever, the modeling results of this paper indicate that such a structure is not accompanied by
multinucleation in the space-economy of Hong Kong, as suggested by the Erickson model. Yet,
the results confirm that Hong Kong's suburban space economy has reached the Spillover/
Specialization stage, while the dispersal/diversification stage has not yet been achieved. Considering
the fact that Hong Kong's manufacturing sector has declined during the past two decades as its
economy becomes more service-oriented [31], the spillover of manufacturing jobs to new towns will
likely not provide sufficient opportunities for residents of these areas. Many people will thus need
to commute to central urban areas for employment, particularly for higher paid white-collar jobs.
Such a mismatch between place of residence and place of work has caused the already congested
transportation network in Hong Kong to deteriorate further. A natural and logical step for the
government would be to decentralize tertiary-sector jobs in the central urban areas to the peripheral
new towns. This could help the new towns diversify their economies, and elevating them from their
present bedroom community status to self-contained, self-sufficient new towns. This would also
tend to bring about catalytic growth in other major economic sectors. Although it may take some
time for Hong Kong to develop suburban downtowns with high-rise, high-tech business establish-
ments as described by Hartshorn and Muller [25], it should, nonetheless, be a long-term
development goal given conditions of extreme land shortage and tremendous population pressure
in the central urban areas.
To be sure, the future development of Hong Kong is an exceedingly complex issue with many
uncertainties. Nevertheless, based on our findings, we may infer that if the colony maintains its
current economic growth momentum during the next two decades (scenario one), it is possible that
the second stage of the Erickson model--dispersal~diversification--will occur. Hong Kong's new
towns would then overcome the bedroom community stage and experience catalytic growth in
white-collar jobs resulting from a surplus of labor, better living environments, and cheaper land
in the new towns. Dispersal/diversification will eventually lead to multinucleation in Hong Kong's
metropolitan economy. However, if its economy follows a stagnant growth pattern, as simulated
in Scenario Two, it is unlikely that new town development will develop beyond the first stage
of the Erickson model. At best, there would be some further dispersal of manufacturing jobs.
Such a gloomy future should not be ruled out if the "brain drain" process continues and political
stability in China cannot be guaranteed. The bold reforms advocated by the new, but last, Hong
Kong governor, Christopher Patten, further "clouds" political stability in the colony for the
remaining transitional period.
The third scenario--"differential economic growth"--seems to be closer to the govern-
ment's development agenda, which is reflected in several current plans (TDS, PADS, and
METROPLAN). t According to these plans, more development in Hong Kong by the year 2000
will concentrate in areas surrounding Victoria Harbor, especially around the new container ports
and airports. Under the third scenario, employment growth in commerce and services will
concentrate in the central urban areas while manufacturing employment will be spatially more
dispersed. Because the percentage of manufacturing jobs has been declining in Hong Kong, it is
likely that dispersal of the manufacturing sector to the new towns will stimulate the suburban
economy. The government's current development strategy will thus not likely help the new towns
to enter the dispersal/diversification stage; and, in fact, may put further economic development of
the new towns in jeopardy. This is not what the mainland Chinese government seeks as the
sovereignty of Hong Kong reverts to China.
As an important part of Deng Xiaoping's open door policy, China designated Shenzhen, an
area of 327.5 km 2 on the China side of the border across from the New Territories, as the first
Special Economic Zone (SEZ) in 1980. After the initial success of Shenzhen in luring foreign and
overseas Chinese investments, two additional SEZ areas surrounding the Pearl River Delta were

tTDS--Territorial Development Strategy; PADS--Port and Air Port Development Strategy; M ETROPLAN--Metropolitan
Development Plan. These three plans are currently under implementation and will shape the urban form of Hong Kong
after 1997.
240 Daniel Z. Sui

created: Zhuhai and Xiamen. In 1984, China further opened its 14 coastal cities to expedite
its modernization process. All these efforts, especially the development of the Shenzhen SEZ,
clearly indicated the Chinese government's intention to integrate the development of China with
that of Hong Kong and to allow foreign investors to use Hong Kong as a gateway to China. The
Chinese government apparently wishes to see Hong Kong and the Shenzhen SEZ amalgamate
both geographically and economically into an extended autonomous zone. Developments in the
late 1980s have indicated a growing economic interdependence between Hong Kong and Shenzhen.
However, the Hong Kong government's strategy seems to obstruct, rather than stimulate, further
development of new towns in the colony.
Hong Kong's spatial development strategy has alternated between dispersal and concentration
in the last half-century. Although further decentralization development, as implied by the results
of this research, seems to be natural and logical, the pendulum has now swung back to more
concentrated development. Although Hong Kong claims that such a strategy will strengthen its
international status as an entrep6t, adoption seems to have more practical reasons: that is,
to distance Hong Kong's development from that of the Shenzhen SEZ in order to maintain a
high-level of autonomy. The people of Hong Kong believe that judicial, legislative and ideological
autonomy is instrumental for maintaining the colony's economic growth momentum. Such a belief
is clearly reflected in the spatial development strategy adopted by the Hong Kong government
during the current transitional period. The hidden hope behind such a spatial agenda seems clear:
just in case China breaks up into chaos or dissolves into several independent states, as happened
to the former Soviet Union, Hong Kong could still be on its own. This may justify the government's
reluctance to integrate further with Shenzhen and other SEZs between now and 1997. The
high-concentration development policy in Hong Kong is of great concern in light of the results of
this paper. As a booming international city specializing in banking and other advanced service
sector activities, Hong Kong cannot function properly as a monocentric city, and thus the further
development of new towns should be given a high priority.

CONCLUSIONS

Urban planning has played, and will continue to play, an important role in the development of
Hong Kong. The impacts of various planning decisions on its urban development trajectory are
exceedingly complex and full of uncertainty. This paper has sought to model the impacts of public
decision-making through a new analytical framework based on the integration of GIS and extended
shift-share analysis for this very dynamic part of the world. Extended shift-share analysis empowers
GIS users to perform more detailed spatial economic development analysis and simulation at a
relatively low cost with less stringent requirements on data. GIS offers the technical platform
for the full implementation of shift-share analysis, from database construction and database
management (including both spatial and nonspatial information) to automatic mapping and results
presentation.
Our research found that the suburban space-economy in Hong Kong is immature in the context
of the Erickson model [17]. Most new towns are still predominantly bedroom communities,
and their economies are essentially manufacturing-based. Residents in the new towns must
commute to central urban areas to seek employment opportunities, particularly for higher-paid
white-collar jobs. The public housing-led new town development strategy has not yet brought
extensive dispersal/diversification--the second stage in Erickson's model--to Hong Kong's space
economy.
In the absence of concomitant policies to disperse employment, the development of new towns
in Hong Kong has resulted in a mismatch between place of residence and place of work, thus
stimulating the polarization between white-collar jobs concentrated in old urban areas and
blue-collar jobs in the new towns. This is an important lesson for other developing countries that
are pursuing new towns as a solution to overcrowding in primate cities. We believe the Hong Kong
government should design explicit policies to decentralize jobs that exist in the central urban areas
to new towns, thereby relieving congestion without giving up the benefits of metropolitan-wide
agglomeration economies. With the maturity of a polycentric spatial structure, Hong Kong would
be better prepared to compete in the new global economy. New towns could then develop beyond
 Spatial economic impacts 241

their current bedroom-community stage, while the suburban economy could become more fully
developed by maintaining its growth momentum over the next two decades.
If the concentrated development strategy currently espoused by the Hong Kong government is
not supported by the results of this research. We suggest that such a strategy will lead to further
overcrowding in the central urban areas, and thus detrimental to its economy in the future.
It will also deter the further integration of Hong Kong with the Shenzhen Special Economic
Zone. Simulation results also indicate that Hong Kong's current policy might jeopardize the
further development of new towns, and thus the emerging suburban economy. A megacity like
Hong Kong cannot function properly as a monocentric city. Congestion costs will become
progressively worse if most jobs remain concentrated in the city's central core. The government
should therefore promote a more efficient polycentric structure rather than impede it.

Acknowledgements--The author wishes to thank the two anonymous referees and the Editor-in-Chief for their perceptive
comments and recommendations, which have greatly improved the quality of this paper. I also want to thank Daniel
Overton, Elizabeth J. Leppman, C. P. Lo, Jean-Claude Thill, James O. Wheeler and Sarah W. Bednarz for their constructive
comments on earlier versions of this paper.

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NOMENCLATURE
Definitions of symbols in equations (1-4)
i=
Individual industrial sector
j =
Region
n =
All industrial sectors
N =
Nation (or the benchmark economy in shift-share analysis)
E~ =
Employment in sector i of region j
P,N =
Percentage change in total employment in all industrial sectors of the nation
P,u =
Percentage change in total employment in sector i of the nation
Pn; =
Percentage change in total employment in all industrial sectors of region j
P,j =
Percentage change of total employment in industrial sector i of region j
N~i=
National growth effect; that part of AE0 attributable to the growth of the national effect: N~i= E~j x P,N
Sij =
Industry mix effect; that part of AE~ attributable to differences between the industrial composition of region j and
that of the nation: S,j = E~ x (PiN - P,N)
R,j = Regional competitive effect; that part of AE,j attributable to differences in the growth rate of sector i at regional
and national levels: R,j = E~ x (P,:i-- P~N)
AE,j = Change in employment sector i of region j within a period of time. In this paper, the temporal span is 1966-86:
AE,j = N,j + S,j + R,j
E~ = Homothetic employment in sector i of region j, which is defined as the employment that sector i of region j would
have if the structure of the employment in such a region were equal to the national structure: E~ = E,j x (E,N/EoN)
where Enj is the total employment in all industrial sectors of region j. EiN is the total employment in sector i of
the nation. E,N is the total employment in all industrial sectors of the nation
RN,j=Regional growth effect; that part of AE,~ which is attributable to the growth of region j: RNo=
E,jH (P,v- P,,N) + ( E ~ - E,jH )(P,,j- P,,N)
RS~j= Regional industrial mix effect; that part of zXE~ that is attributable to industrial composition: RS,~ = E~
J[(Po- P,,) - (PiN- e,,~)] + ( E,j - E ,ju )[(P,j - P,j ) - (P ~N-- PoN)]

APPENDIX
Definitions of Industrial Sectors
1. M a n u f a c t u r i n g
Including manufacturing of food, beverages, tobacco, footwear, leather products, rubber
products, plastic products, wood products, printed matter and paper products, metal products,
m a c h i n e r y , c h e m i c a l p r o d u c t s , glass, p o t t e r y ; s p i n n i n g o f c o t t o n a n d y a r n , w e a v i n g a n d k n i t t i n g
of cotton and other fabrics; bleaching, dying, finishing; manufacturing of wearing apparel, knitwear
a n d o t h e r m a k e - u p textile g o o d s ; m a n u f a c t u r i n g o f c a r p e t s , c o r d a g e s , r o p e s a n d t w i n e s .
 Spatial economic impacts 243

2. Commerce
Including employment in wholesale and retail trade, restaurants and hotels, import and export
trade, hawkers, peddlers, Chinese general brokers, other commercial agents; restaurants, cafes,
hotels, rooming houses; financing, insurance, real estate; offices of lawyers, accountants, auditors,
architects, surveyors, advertising agents; data processing services; chambers of commerce and trade
unions.
3. Services
Including government services, the armed forces; education services, medical, dental and other
health services, sanitary services; welfare institutions, religious organizations; cinemas, theaters,
radio and television broadcasting, libraries, museums; electrical repair shops, automobile repair
garages; other household and personal services.