The role of small factory in economic development: the case of Hong Kong


Jin, Yaoji

TitleThe role of small factory in economic development: the case of Hong Kong
PublisherSocial Research Center, the Chinese University of Hong Kong
Publication DateJune 1974
Keywords:Small business

Economic conditions

Abstract/ Concluding Remarks:Industrialization has been universally envisaged both as a goal value in itself and as a means to attain national wealth and power by developing countries of the so-called Third World. And not uncommon among people, policy-makers and practitioners alike, there is an opinion that to attain industrialization is to develop large-scale, capital-intensive industries. Indeed, large-scale industries have been regarded as the trademark of highly-industrialized societies, Some economists, as Aubrey points out, are of the belief of the “iron law” of history, i.e., that the eventual application of large-scale urbanized industries is regarded as inevitable. In most industrialization programmes, too little attention has been paid to the benefits to be gained by helping develop the small industry sector. Students of industrialization tend to think that although small industry does have a place in the process of industrialization; it, however, will only “occupy a position between peasant agriculture and modern large industry.” In other words, small industry is regarded as a passing phenomenon, appearing only at the initial or early stage of industrialization. As a report points out, such an illusion might arise from an acceptance of anyone or a combination of the following erroneous propositions:
  1. That manufacturing industries in advanced industrial countries, particularly the United States, are composed almost wholly of large establishments.
  1. That modern technology is incompatible with small and medium-sized establishments.
  1. That existing small-scale enterprises in underdeveloped areas should not be encouraged because they are doomed in the long run.
At this juncture, we are not going to argue with this contention, though we are not ready to accept them. We shall return to this point later. What interests us is the fact that in recent years more attention has been given to the examination of the role and function of small industry in the economic development of both developed and developing countries, in capitalistic as well as in socialistic societies. More and more countries have shown interest in small industry development activities and a few have evolved well-planned and comprehensive programmes. India is a good example in this regard. More countries have developed sporadic and isolated measures responding to some single aspect of the needs of small industry, such as financial assistance, technological and managerial training, product design and marketing, etc.

Although it is still far from being definite on the relative significance of large and small industry in economic development, there seems to have a general consensus among students of economic development that in societies where capital is scarce and expensive, and labour is plentiful and cheap, it would be more desirable to develop a less capital-intensive technology. However, it is not the purpose of this paper to discuss what is the best strategy for industrialization. Rather, it aims at a moderate attempt, based on empirical data on small factory in Hong Kong and in the industrial town of Kwun Tong, to give an account on the role and function of small factory in this “industrial colony”, and hopefully to be able to shed some light on the issues and problems of small factory in the process of industrialization. It is our belief that more empirical studies are still badly needed in substantiating the theoretical arguments for or against the employing of small factory in industrialization. It is only when more empirical data on the performance of small factory are available that we are able to formulate ideas more intelligently as how to put the relative significance of small factory in a proper perspective.

This paper is divided into several sections. Section II will be an attempt to define small factory and section III devoted to the function and performance of small factory in the economy of Hong Kong. In section IV, we will compare the role of small factory between Hong Kong and other countries. In the neat section, some thoughts will be given as to why Hong Kong’s small factory performs so impressively and the concluding section will relate small factory to industrialization.
NoteBibliography: p. 64-66
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