Economic development and structural setting : Hong Kong electronics industry

A structural analysis of the economic development in developing economies is proposed. A development model is constructed and examined against the experience of the Hong Kong electronics industry. The proposed model indicated that the local structural settings of developing economies did not foster a high profit incentive and investment environment for rapid economic development. However, the same settings when integrated into an international structural context can generate a structural profit that is based on the difference in the cost of production. This structural profit can act as an engine of growth for the whole economy. The application of the model has shown that the calculation of the structural profit is not simply based on certain factors of production but on the overall cost of production. In addition, the application also indicated that three main aspects of the structural settings have played the determining role in shaping the development of the industry, namely, the export network, risk and uncertainty in the local structural settings and peripheral industries.