Comparing Singapore & Hong

Kong

Singapore & Hong Kong

Area
Singapore: 697 km2
Hong Kong: 1,104 km2

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
Singapores relationship with Malaysia has
been volatile
brief merge in 1963-1965
disputes about water delivery, islands, etc.

Hong Kong benefits from mainland

Chinas 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:
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

GDP Growth Rates (% ) of Singapore (red bars) and Hong Kong (blue bars)
18

12

-6

Singapore and Hong Kong

Both are newly industrialized economies

GDP composition:
Sector
Singapore
Hong Kong
agriculture 0%
0%
industry
27%
7%
service
73%
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 Yews Peoples 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

Singapores Peoples 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

Singapores 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

Singapores 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

Singapores 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 Kongs 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 Kongs development

governments 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?