Singapore and Hong Kong have great similarities with respect to their economic systems. Lately, the two ports have been referred to as ‘‘East Asian Tigris” following a six percent increase per year in their entire economies. During last three decades there was observed that the two former British colonies have widen their industrial investments leading to a notable transformation from a fairly poor economy to an industrial status. A number of methods continue to be used to promote the growth in the two ports. The most dominant methods applied by the two ports are discussed below. The criteria of choice were on the basis of popularity.
Hong Kong and Singapore economies have seen recent changes in their economy with capital deepening taking a pivotal role. This method requires that the capital for every individual assumes an increasing trend. Increase in capital intensity is calculated in terms of available capital per labor hour. The method also promotes capital increase per worker and the overall output per individual worker is continuously increased. However, there are limitations to this method and as a result of depreciation, investments are necessary to sustain capital growth.
This method requires the use of both monetary and policy interventions. Economic policies typically referred to as fiscal policies are often applied to sustain and initiate the development. Governments and other non-governmental organizations are responsible for the development of these policies. Projects funded by governments help in stimulating growth. A second view of stimulus is the monetary intervention. In such case, the interest rate on borrowed money is substantially lowered to encourage new investments.
It is worth mentioning that, the economic stimulus method would have far-reaching advantages in a newly industrialized economy. A criteria for choosing this method involved a critical analysis of the two methods with regard to sustainability. Economists argue that capital deepening is a necessary but not sufficient method for economic development and it is not viable for attaining sustainable economic growth. The economic stimulus method is self sustaining and was hence rated the best for a typical industry in Hong Kong and Singapore.
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