Tourism as an Element of Economic Diversification in Hong Kong

Abstract Everybody knows that tourism is often called 'smokeless-industry' - although from the social point of view it has produced a lot of smoke because among others it may destroy traditional values, pollute cultural heritage, entail un- desirable demonstration effect and promote prostitution. These social prob- lems call for careful study by social scientists. The scope of this paper will be confined to the economic impact of tourism only, leaving its social impact untouched. The LDCs usually attach great importance to the development of tourist industry, because it is, wrongly or rightly, often times regarded as a pass- port to economic development in the LDCs. Even in today's Hong Kong, which is highly industrialised and commercialised, tourism still plays an important role in the economy as a whole. Hong Kong is presently one of the major exporters in the world of textiles, clothing, electronics, watches and toys. However, the local demand for imported consumer goods and production goods is so strong that the visible trade account is constantly in deficit. Tourism is an important foreign exchange earner and as such it covers a significant part of the visible trade deficit. In absolute terms at current prices, tourism is now the third largest export industry in Hong Kong, after clothing and electronics.