Hong Kong's Free Economy: At the Crossroads?
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Case Code: ECON067 Case Length: 18 Pages Period: 2016 - 2018 Pub Date: 2018 Teaching Note: Available |
Price: Rs.500 Organization : - Industry : Economic Sector Countries : Hong Kong Themes: Fundamental Economics, Micro Economics |
Abstract Case Intro 1 Excerpts
Introduction
In 2018, for the 24th year in a row, Hong Kong was ranked at the top position as the world’s freest economy in the Heritage Foundation's Economic Freedom Index. The Index ranked Hong Kong high on parameters like a transparent legal system, simple tax code, and a straightforward business start-up process. Hong Kong remained the most open and free economy in the world, supported by its low tariffs, high quality legal framework, little tolerance for corruption, high degree of transparency, and low government intervention. All these factors played a major role in improving the government integrity. Economic freedom drove Hong Kong to its optimum level of growth. Hong Kong’s prosperity was also attributed to its proximity to the mainland China. Before Britain handed over Hong Kong to China in 1997, Hong Kong had developed into one of the world’s major financial and business centers. It was very different from China politically too. At the same time, it was one of the most expensive cities in the world, characterized by wide wealth disparities. After the transfer, political unrest gripped the territory and the residents continued to fight for democracy and autonomy. They wanted China to uphold its "One Country, Two Systems" pledge by allowing an independent selection of their leaders based on universal suffrage. However, China continued to ignore their demand and tried instead to establish its presence by imposing its system on Hong Kong over the years. This led to protests by youngsters who felt that the leader for the country was not being elected democratically as promised in the Joint Declaration 8 and the Basic Law. Some analysts were of the view that China’s undue interference in Hong Kong’s affairs and the restrictions it was imposing on the freedom of the people would affect Hong Kong's economic freedom ranking. They questioned whether Hong Kong’s economy would be able to maintain its free economy status due to the deteriorating rule of law and human rights environment.
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