University of Wollongong Graduate School of Business TBS 905 Economic Analysis for Business

Describe, Compare and Contrast the Economies of Hong Kong SAR and Malaysia
MAIN ASSIGNMENT

Prepared by Mahendra Singh 25 October 2010

it is treated as a free market economy. Introduction to Hong Kong (SAR) Economy Hong Kong’s economic system is made independent of China under the principle of ‘One Country. Two Systems’. since the 1970’s have transformed itself from raw materials producers to an emerging multi-sector economy. With minimum intervention from the Chinese government. This comparison aims to show the statistical data to represent which country made the most of its scarce resource and has the potential for the citizens to have a better quality of life in general. Hong Kong has recovered from the downturn quickly than the people anticipated. As China is becoming increasingly the largest trading partner with Hong Kong. Its natural resources are very limited.Introduction This report describes. maintaining the 1983’s arrangement. In 2003. Prime Minister Abdullah influenced to farther up the economy by attracting investments in technology industries and pharmaceuticals for value-added production chain. Its GDP fell in 2009 due to the Global Financial Crisis. and so raw materials and food are imported. It showcases few economic indicators from last 5 years that are analyzed and interpreted the underlying factors comparing the two economies. Hong Kong is on the major International Financial centers in the world that features low tax and free trade. Introduction to Malaysia’s Economy Malaysia. But Hong Kong’s low open economy left itself exposed to the slowdown of the global economy. Hong Kong closely links its currency to the US dollar. contrasts and compares the Economies of Malaysia and Hong Kong. nearly valuing half of Hong Kong’s exports. .

the US Dollars are represented throughout the report.The current administration of Prime Minister Najib. Electronics still plays a significant role boosting exports as a major driver of the economy. For simplicity. the state oil producer supplies more than 40% of government revenues. clarity and commonality. Malaysia has also profited as an oil and gas exporter. the decreasing demand for consumer goods worldwide did hurt the economic growth of Malaysia. Nevertheless in 2009. . also continued similar efforts to boost the economy by introducing several reforms in the service sector. Petronas.

But this statistics doesn’t represent the standards of living or the quality of life that the citizens of each nation enjoy. But it does provide the overall indication of the well being of the nation. GDP is the market value of the final goods and services produced within a country in a given period of time. or the way the wealth produced by the nation is shared among its citizens. p150}. For example. But it is not a perfect measure of wellbeing. More precisely. Hong Kong’s GDP : After easing of travel restrictions from China.5 Million (2001) to 17. GDP is a good measure of economic wellbeing because people prefer higher to lower incomes. . the total number of tourists from mainland to Hong Kong has increased from 4.Gross Domestic Product Gross Domestic Product (GDP) measures an economy’s total expenditure on newly produced goods and services and the total income earned from the production of these goods and services. Economists use GDP as a primary tool to gauge productivity and to measure how effective the nation has used its resources to produce the services and goods.7 Million (2009). GDP excludes the value of leisure and the value of clean environment. {Stonecash et al 2009. its people. 40% of Chinese firms are listed on Hong Kong stock exchange. Real GDP is the production of goods and services valued at constant prices. The GDP of Hong Kong is closely higher than that of Malaysia and in 2008 Malaysia’s GDP went higher than Hong Kong’s.

6 %) {Source http://www. Electronic equipments. The Major export partners were US (15. wood and wood products.6 %). rubber. From 1989 to 2008 the GDP growth has averaged a strong 4% . Singapore (14. .6 %). Compared to the economies in developed countries. Here below the pie charts displays the components that produces the GDP of both nations. 2010} Malaysia’s GDP : In the last four years. here the service sector contributes the most GDP to each of these nations. and this was due to the manufacturing industries moving into China. Malaysia’s growth has been the fastest despite the hike in domestic consumption and the fall of the key tech exports. chemicals and textiles were the major items exported from Malaysia.Unless otherwise noted.com/economic-growth/malaysia. The major part in helping this growth was due the production of crude palm oil becoming the 2nd largest producer in the world.html) Components of GDP To see how the nation is really performing among the other nations lets look deeper into its economy that is.economywatch. { Source: CIA World Factbook . the components of the GDP. liquefied natural gas. palm oil. This represents a developed nation that has gone from basic agriculture industries moving forward to service sector to fulfill consumer desires. Thailand (5 %) and Hong Kong (4. information in this page is accurate as of February 19.And in last 10 years Hong Kong’s service industry has rapidly grown to 90% ( 2009 ) of the territory’s GDP. Petroleum.

Around 92.3 % . Primary sector: The Steep hillside is mainly responsible for zero agriculture. printed materials and precious stones. Forcing most of the agriculture imports from China. clocks. the economic structure of Hong Kong can be divided into following sectors.indexmundi. Tertiary Sector: The major drive of Hong Kong’s economy is services sector. Rubber and palm oil plays major forieng exchange earners in this sector.) From the above graph.com (2009 est. electrical goods and appliances. plastics. Secondary Sector : In 2009. Primary Sector: Its development is largely due to the wealth of natural resources like forestry and agriculture. the economic structure of Malaysia can be divided into following sectors. It produces and exports textiles.6% to nations GDP. the manufacturing sector of Hong Kong contributed 7. in 2007 was contributed to the nations GDP which apparently is a drastic increase from 1980’s 68.Table 2 Components of GDP – Source http://www. Table 3 Components of GDP – Source http://www. toys.) From the above graph.1% of labor forces were engaged in Hong Kong’s 2009 agriculture sector. Secondary Sector: Malaysia is the largest exporter of semiconductors and electrical goods and appliances in the world. Not even 0. .com (2009 est.indexmundi. footwear.3%.

tourism and telecommunications.Tertiary Sector: This service sector comprises of finance . .

First. also identifies the trends and hw well the country’s economy is changing over time and reacting to external factors. The gross domestic product per capita is the value of all final goods and services produced within a nation in a given year divided by the average (or mid-year) population for the same year. it is equal to the total expenditures for all final goods and services produced within the country in a stipulated period of time (usually a 365-day year). Second. it . The term Constant Prices refers to a metric for valuing the price of something over time. Line Graph of Malaysia and Hong Kong to show the past 5 yrs how the countries have done Explain the graph With the GDP data . The gross domestic product (GDP) is one of the measures of national income and output for a given country's economy.Real growth in GDP is an indicator that projects a country’s performance in comparison with its peers. without that metric changing due to inflation or deflation. all of which are conceptually identical. the following table determines the purchasing power parity basis that is divided by the population for the same year as of July Explain the graph About GDP Per Capita (Adjusted by Constant Prices) The GDP dollar estimates given on this page are adjusted for inflation. GDP can be defined in three ways.

and gross operating surplus (or profits). it is equal to the sum of the income generated by production in the country in the period—that is. plus taxes less subsidies on products. taxes on production and imports less subsidies.is equal to the sum of the value added at every stage of production (the intermediate stages) by all the industries within a country. in the period. source (wikipedia) . compensation of employees. Third.

House Hold Savings Graph Graph for 5 yrs for both Countries Tabular info on Population and Ageing Population (Source OECD Factbook 2010) Explain the Graph Home Ownership and Explain wrt the graphs Hours Worked Bar Chart of no. of hours worked by 2 countries in general from last 5 years (Source OECD Factbook 2010) Explain the Graph Real GDD per hour graph And explanation Trade Balance Bar graph and its explaination .

com/g/r.gov.dfat.indexmundi.com/Economics/GDP-Per-Capita-PPP.Conclusion References http://www.tradingeconomics.gov.aspx? Symbol=MYR LATEST GDP [Fact sheet]: Malaysia : http://www.indexmundi.com/malaysia/gdp_real_growth_rate.dfat.aspx?t=0&v=66&l=en http://www.tradingeconomics.au/geo/fs/hong.au/geo/fs/mlay.pdf Hong Kong : http://www.html http://www.aspx? Symbol=MYR http://www.com/Economics/GDP-Per-Capita-PPP.pdf .

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