Hong Kong's Development in the Global Economic Environment

HONG KONG'S DEVELOPMENT IN THE GLOBAL ECONOMIC ENVIRONMENT

Name

Course

Professor

Institution

City

Date

Abstract

This report looks at the economic development of Hong Kong over the past two decades, zeroing in on its role in a global setting. It delves into the effect of globalization, international trade theory, trade strategies, foreign direct investment (FDI), balance of payments, exchange rates, and competitiveness. Hong Kong's engagement with emerging economies, particularly the BRIC countries, is also explored in the report. Moreover, the city's diverse economic roles as a global financial center, investment center, and arising technology and innovation center are examined. The report also addresses the challenges of globalization, evolving environmental policies, and evolving management methods for resource allocation and decision-making in the city's dynamic business environment. The report covers Hong Kong's journey to be the best in the modern world.

Contents

Introduction. 1

2. Global economies. 1

2.1 Globalization and the Changing Global Business Environment 1

2.2 International Trade Theory and Policy. 2

2.2.1Trade Theory. 2

2.3 Trade Policy. 4

2.3.1 Low Taxes: 4

2.3.2 Trade Help: 4

2.3.3 Investment Promotion: 4

2.3.4 Free Trade Agreements: 4

2.5 Foreign Direct Investment (FDI) in Hong Kong. 5

2.5.1 Strategic location: 5

2.5.2 Favorable environment for business: 5

2.5.3 Monetary Center: 5

2.5.4 Regional headquarters: 5

2.5.5 Investment Promotion: 5

2.6 Balance of Payments, Exchange Rates, and Measures of Competitiveness in Hong Kong. 6

2.6.1 Balance of Payments: 6

2.6.2 Exchange Rates: 6

2.6.3 Measures of Competitiveness: 6

2.7 Economic Growth and Development in Hong Kong and the Influence of Emerging Economies  7

2.7.1 Economic growth: 7

2.7.2 Development: 7

2.7.3 Influence of Emerging Economies: 7

2.8 Regional Economic Activity: Global Financial Center, Investment Hub, Innovation, and Technology Capability in Hong Kong. 8

2.8.1 Global Monetary Center: 8

2.8.1 Investment Hub: 8

2.8.2 Innovation and Technology Capability: 9

3. part 2. 9

3.1 Globalization in Hong Kong. 9

3.2 Environmental Policy in Hong Kong. 10

3.3 Hong Kong practices to maneuver in business; Management Methods for Resource Allocation and Decision-Making in Organizations. 11

3.3.1 Data-Driven Decision-Making: 11

3.3.2 Lean Management Standards: 11

3.3.3 Risk management: 12

3.3.4 Strategic Planning: 12

3.3.5 Corporate Social responsibilities (CSR) integration: 12

3.3.6 Technology Adoption: 12

4. Conclusion. 13

5. References. 14

1 Introduction

Hong Kong is an administrative region of China located on the southern coast, east of the Pearl River Delta, bordering the South China Sea toward the south and the Guangdong Region toward the north. Over the past two decades, Hong Kong has navigated a complex and dynamic global economic environment, presenting both opportunities and challenges. There are topical issues in the worldwide financial environment that have a huge impact on Hong Kong. However, there are difficulties in conducting business activities in Hong Kong. The essay critically evaluates international trade, the role of multinational enterprises, foreign investment, and the growth and development of economies, with a special emphasis on the emerging economies of the BRIC group. It also will evaluate broader global issues such as globalization and environmental policies. Within the framework of business operations, focusing on the management methods employed for resource allocation and decision-making in organizations and the practical techniques applied to address these challenges, the essay provides a comprehensive analysis of Hong Kong's evolving economic landscape in a global context.

2. Global economies

2.1 Globalization and the Changing Global Business Environment

Hong Kong's development over the past two decades has been greatly impacted by the powers of globalization and the ever-evolving global business environment. Globalization, the process of expanded interconnectedness and interdependence of economies (Delios and Capri, 2021), has introduced a new era of opportunities and challenges for organizations working in Hong Kong. One of the most striking effects of globalization on Hong Kong has been the increased flow of goods, services, capital, and information across borders. This has opened opportunities for multinational enterprises (MNEs) to expand their regional activities. Hong Kong's strategic location and well-developed infrastructure have made it a favored decision for some MNEs trying to reach the vast Chinese market. Subsequently, the city has encountered significant foreign direct investment, leading to economic growth. However, globalization has brought challenges. The extreme competition in the worldwide market demands that organizations in Hong Kong continuously advance and adjust to changing consumer inclinations and market dynamics. In addition, the city's high reliance on international trade makes it vulnerable to shifts in global trade policies and international pressures. Recent developments, such as the U.S.-China trade disputes, have highlighted the importance of Hong Kong's capacity to navigate these difficulties. Also, the changing worldwide business environment has forced Hong Kong to adjust to rising trends, like e-commerce, technology change, and sustainability. Organizations are progressively expected to integrate environmental and social responsibility into their operations to meet evolving purchaser expectations and regulatory demands. As a result, management methods in Hong Kong have advanced to resolve these issues, emphasizing sustainability practices and responsible resource allocation.

2.2 International Trade Theory and Policy

2.2.1Trade Theory

International trade theory has had a great impact in shaping Hong Kong's development. The city's unique position as a global trading center has been greatly influenced by different trade theories that support its trade strategies and policies.

2.2.1.1 Comparative Advantage: The hypothesis of comparative advantage, proposed by David Ricardo, features the advantages of specialization in production and trade (Montevirgen, n.d.). Hong Kong, with limited natural resources, has succeeded by zeroing in on enterprises where it holds a comparative advantage, like finance, logistics, and services. By trading with nations that can produce goods more efficiently, Hong Kong has increased its export markets and enjoyed a diverse range of imported items, helping customers and organizations the same.

2.2.1.2 Heckscher-Ohlin Hypothesis: The Heckscher-Ohlin hypothesis accentuates the role of factor endowments in trade (Umair and Tufail, 2022, p24–36). Hong Kong, with its plentiful human resources, has been able to capitalize on labor-intensive industries and services, utilizing its skilled labor force to offer top-notch services to the world. Furthermore, the city's open immigration policies have drawn in experts from around the globe, supporting its position in knowledge-intensive industries.

2.2.1.3 New Trade Theory: Hong Kong's development has additionally been affected by the New Trade Hypothesis, which dictates that economies of scale, product differentiation, and network effects drive international trade (Saif, 2019, p 53). The city has embraced these ideas by cultivating innovation, making an eco-system for new businesses,