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Traded and non traded products services are less

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Unformatted text preview: to the mainland was near completed. Traded and Non-traded Products Services are less tradable. Outward expansion of manufacturing increases income of H.K. people but not recorded in GDP. Boost demand for consumption goods. Prices of traded products determined by world market (relatively cheap as exchange rate is linked). Prices of non-traded products depend on the excess demand over supply. Wage Inflation Abolition of “reached-base” policy. Rapid decline in fertility, rate of natural population decreases. Ageing structure of the population reduces labour supply. Labour force participation rate is low. Outflow of emigrants increases. Unemployment rate is low. Import of labour is constrained. Outsourcing & Adjustment Outsourcing of less skill-intensive activities from the metropolis to the hinterland allows the metropolis to specialize. It is natural & beneficial for the metropolis as long as it maintains a lead in skills over its hinterland (e.g. London & NY). However, specialization implies adjustment costs: U...
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