Factors behind Economic Growth in Hong Kong and Singapore Essay

There are many similarities between Hong Kong and Singapore. Both countries enjoy high economic growth rates for the past three decades, they are known as â€Å"East Asian Tigers† because they made a transition from poverty to Newly Industrialized Economies (NIE’s) in a very short period of time. Both Hong Kong and Singapore were British colonies with both legal and administrative systems of their former colonial powers. They are the busiest ports in the world in terms of throughputs. They have climbed the industrial ladder and are now important international financial centers because of their reliance on trade since 1960’s (Kim. t al 1994). In addition both cities are densely populated since land is scarce and land together with property prices is very high. These two cities are known for being fee traders with few restrictions on trade and capital flows which many a times are Gross Domestic Product (GDP). In Hong Kong the state owns all the land whereas in Singapore the state owns four fifths of the total land. Consequently both cities capture economic rent primarily by nationalizing land and leasing it out. While the state owns much of the land in Singapore and the sole landowner in Hong Kong, the inefficiencies that could result from state ownership are taken care of through the creation of markets for state, land and property leases. Meanwhile the public leasehold system where the state is the major role player in land use, planning and resource allocation works very well in both cities since the public sector institutions of both are efficient and non-corrupt. These institutions in both countries benefit from adequate checks and balances, merit-based recruitment and pay scales which are high enough to reduce the temptation to corruption. In conclusion, there economies are widely believed to be the most economical free in the world are these economic freedom emanates from the governments â€Å"hands-off policy† which allows for flexibility and renovation of any given industry in a very short time. Both countries also have very little available land and very few natural resources therefore importing most of their food and raw materials equally most of their exports consists of re-exports which are products made outside their territories.