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February, 2000 Internet Enhanced Hong Kong's Market Freedom |
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Rapid Internet penetration accelerated the Information Flow.
- The latest December-1999 PRI Hong Kong Free Market Index (FMI) was 100.4 (Table 1), or 3.8% increase over June 1999. The noticeable increase in the index value of Information Flow continues to contribute to the rebound of the FMI.
- The index value of Information Flow has substantially increased by 16.8%, compared to that of June 1999. In particular, the index value based solely on objective data (objective index) surged up by 34.1%, which is largely attributed to the rapid increase in the internet traffic. Indeed, the total Internet Access Time has reached 157 minutes per person in November 1999, with year-on-year increase of 69%.
Table 1 Index Values of the Seven Free Market Factors for Compiling
the Overall FMI in the Six Consecutive Periods
|
Factor |
Jun 97 |
Dec 97 |
Jun 98 |
Dec 98 |
Jun 99 |
Dec 99 (% change over Jun 99) |
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|
Government Influence |
100 |
103.6 |
108.4 |
108.2 |
108.8 |
106.2 |
(-2.4) |
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Infrastructure Sufficiency |
100 |
99.6 |
98.2 |
97.0 |
95.5 |
98.1 |
(+2.7) |
|
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Legal Protection |
100 |
99.8 |
95.7 |
90.4 |
92.1 |
96.2 |
(+4.5) |
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Information Flow |
100 |
100.9 |
104.8 |
108.4 |
112.3 |
131.2 |
(+16.8) |
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Resource Mobility |
100 |
98.8 |
95.5 |
93.3 |
93.6 |
92.8 |
(-0.9) |
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Market Competition |
100 |
96.6 |
95.9 |
90.9 |
92.2 |
95.7 |
(+3.8) |
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Pricing Flexibility |
100 |
103.6 |
99.4 |
99.5 |
103.5 |
101.0 |
(-2.4) |
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Free Market Index |
100 |
99.4 |
96.1 |
94.3 |
96.7 |
100.4 |
(+3.8) |
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High market freedom maintained
- The index values of the other six factors, namely Government Influence, Infrastructure Sufficiency, Legal Protection, Resource Mobility, Market Competition and Pricing Flexibility, remained steady (less than 5% change) over the past six months.
- The individual index values for the seven "Perceived" indices and the four "Objective" indices are presented in Table 2.
- Based on the qualitative response by our panel members, we find that Hong Kong maintains a high level of market freedom.
Reduced Price Flexibility caught concern
- The latest perceived index value of Pricing Flexibility recorded a 2.4% decrease over six month ago, although such change was statistically insignificant. In fact, the apparent price control on some commodities, such as the rigidity of oil prices and the simultaneous price changes by mobile phone operators, has triggered some public concerns.
Performance of the SAR government still be the focus
- The index value on Government Influence stabilized in the second half of 1999. The objective index has decreased by 3.1% over June 1999, which mainly resulted from the marginal reduction in the proportion of number of civil servants to the total labour force. Moreover, a 1.7% decrease of the perceived index has been recorded when compared to the first half of 1999. However, there were opinions concerning about the increasingly authoritative attitude adopted by the government on some policy issues.
Table 2 The Perceived Level and the Objective Level of the Index Values of the FMI
+ All statistically insignificant at the 5% two-tailed test confident level. |
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