Dual economy in Hong Kong: A quick explanation

Tsang Shu-ki (20/2/05)

A friend who tried to know what the fuss about the “dual economy” discussion was in Hong Kong visited my website but found it hard to gain a comprehensive picture. I replied as follows.

The concept of the “dual economy” is a core one in development economics, with its modern version dating back to the writings of Arthur Lewis in the 1950s. It was initially applied to the agricultural-industrial dichotomy in traditional economies but could conveniently be extended (and has been extended) to other “dualistic economic structures” where supply, demand, institutional and technological factors prevent free flows of resources between and effective integration of two non-convergent sectors. Policy responses therefore need to be “differentiating” instead of “comprehensive”.

I first used it for a discussion on the HK economy in an article in 1998:

http://www.hkbu.edu.hk/~sktsang/Tsang981013.html

Then as a member of the Hong Kong Foundation for Social Democracy (HKFSD), I drafted the economics section of its “Hong Kong in the 21st Century” Report (completed in October 2001), which was forwarded to the SAR Government and the then Financial Secretary Antony Leung:

http://www.socialdemocracy.org.hk/HK21C-(10.13).doc (or the PDF version).

An English summary of it is available as:

http://www.socialdemocracy.org.hk/HK21(ES)_English.doc

The SAR Government later announced measures to promote the “local community economy” in HK. There were confusion and debates about the idea(s) and the related issues; so I wrote a clarification in English:

http://www.socialdemocracy.org.hk/Tsang020624.doc

Eventually a collection of relevant pieces (most in Chinese and written by me and other members) was posted on the HKFSD website:

http://www.socialdemocracy.org.hk/articles.htm

I also had another short note published on Ming Pao:

http://www.hkbu.edu.hk/~sktsang/Tsang020725.doc

Then SARS, CEPA, the historic July 1 march etc. took over in 2003; and attentions to the idea waned.

Well, with the issues of economic and social polarisation in Hong Kong highlighted recently by internal and external media concerns (and the government’s own reactions) about suspected government-business collusion and worsening poverty problems, the tide might, just might, turn again.