Growth Hong Kong and Singapore

Growth

Hong Kong and Singapore face similar situations with respect to their economic growth. Both are Chinese-run city-states with limited natural resources, a history of British rule and a desire to build harmonious and prosperous societies. This paper will examine how these two economies are seeking to encourage continued economic growth, now that both are among the world's developed nations.

From a structural point-of-view, Hong Kong's economic policy is guided by the Commerce and Economic Development Bureau. This Bureau exists to provide a unified strategy on matters that facilitate economic growth such as broadcasting, telecommunications, innovation, investment promotion and external commercial relations. The objective is to have coherent, consistent and reliable policy that is specifically designed to facilitate trade (CEDB, no date).

Building on this superstructure, Hong Kong has implemented specific pushes for economic growth in given industries. Hong Kong prefers to focus on service industries where it believes it has competitive advantage, such as education services, medical services, testing and certification, innovation and technology, environmental industries and cultural, creative industries (Hong Kong Economic and Trade Office, 2009). The SAR government funnels resources specifically into the promotion of these businesses both to stimulate supply and demand, and it sets policies through its government bodies that are designed to encourage growth in these particular target areas. The Hong Kong government specifically supports industries that it feels serve the SAR's needs, and avoid those it feels do not contribute to Hong Kong's growth, such as low-wage labour industries (So, 2013).

Singapore's government also supports the development of business. There were some differences in the approach to Singapore's growth. Historically, Singapore has controlled its economy more tightly than Hong Kong, for example with a managed-float currency regime to promote exports, versus Hong Kong's free float regime (Lim, 2008). Other differences in the Singapore model include reliance on state-controlled immigration, dominance of multinationals and government-linked corporations and a relative absence of large home-grown corporations like would be found in other major Asian economies (Ibid).

Singapore's need for labour growth, combined with an absence of space for new immigrants, has led it to focus as Hong Kong has on high-value manufacturing and service industries, for example electronics and biomedical manufacturing (Chen, 2013). The country has traditionally relied on growing its workforce as a means of increasing its economic capabilities. While Hong Kong has done the same in the past, its policy has diverged at this point. Faced with an influx of labour from the PRC, Hong Kong now faces a situation where it needs to focus on bringing in high-end labour, rather than the unskilled labour that is currently flooding in. Singapore shares a similar need, but has less space for new arrivals. A more open border with Johor Bahru on the mainland gives Singapore the ability to house labour out of the country that Hong Kong does not enjoy, but could encourage businesses to relocate there as well, to Malaysia's benefit.

Singapore has also focused on trade more than Hong Kong has. Traditionally, Singapore has adopted a role as a trade hub, where Hong Kong was a finance and insurance hub. As both economies have diversified, they have taken different paths. Singapore today remains committed to labour growth and strong government intervention in the economy, while Hong Kong seems to prefer stemming labour growth and uses government to encourage private investment. The result is that despite the surface similarities, there are significant differences between Hong Kong and Singapore with respect to how they promote economic growth. Thus, while Hong Kong emphasizes trade policy, Singapore emphasizes macroeconomic policy.