Wednesday, July 28, 2010

Hong Kong and its Economy

Met Raymond Yip of the Hong Kong Trade Development Council yesterday. He mentioned, how, over 90% of their Gross Domestic Product (GDP) comes out of services - one of the highest proportion in the world.
What followed was interesting - they control a big slice of manufacturing through their shareholding in China and other countries. This aspect of manufacturing does not get captured in GDP, which goes on the basis of geographical territory. Gross National Product (GNP), which goes on the basis of ownership, would capture it. Thus, when Tatas own steel operations abroad, the output would be part of GDP of UK, but become part of GNP of India.
With globalisation, companies have their operations spread all over the world. This trend will only increase. Should we consider giving more importance to Gross National Product (GNP), when we evaluate the role of countries?

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