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According to Global Competitiveness Index1, Hong Kong is endowed with the world’s best physical infrastructure which include transport, electricity and telephony infrastructure. This figures is contributed from the policy of Infrastructure-based development. Investment in infrastructure is part of the capital accumulation required for economic development and may affect socioeconomic measures of welfare. In normal situation, extensions in electric frameworks, roadways, and railroads demonstrate remarable economic improvement. Be that as it may, this relationship may not maintain in Hong Kong because of  lower marginal return on infrastructure investments.     In productivity measures, infrastructure is investing in physical capital which is the stock of equipment and structures. These capital can use for produce goods and services such as building railways to provide transportation services. Hong Kong ranks No. 1 in the infrastructure means that the transportation and communication services is the most convenient among the world. It can reduce the time cost of labour and increase the mobility of the society. However, as a developed region, Hong Kong will perceive diminishing of marginal return in the future. When there are additional capital investment in the infrastructure, there are only small effect on productivity. Using U.S. as an example2, in the 1930s, the U.S. economy successfully recovered from the slump of the Great Depression by investing in infrastructure. However, since the 1970s, the scale of US infrastructure investment continued to decline, while investment in infrastructure gradually showed a negative correlation with economic growth. Therefore, Hong Kong should put more resources on non-physical infrastructure such as innovation and education system to promote technology and modern industry, instead of physical infrastructure which has declining return.    In AD-AS model, infrastructure is closely related to the aggregate-demand curve. For instance, when building new roads, the policy makers increase government spending at every price level and the AD curve shift right. Then, the output level increases and increases the competitiveness of Hong Kong. However, the advantage of Hong Kong may not persist because infrastructure always utilize large amount of funds and it would cause large financial burden in economics downturn. Member of the Legislative Council, Edward Yiu Chung-yim clarified that 3Hong Kong was entering a “construction peak period” as the government spent large amount on construction in the previous decade. Since most of the infrastructure projects are financed by the revenue of land sales, the government may face deficit during economic downturn because the government will earn less from land sales. In addition, the land resources of Hong Kong is limited, the revenue from land sales are not able to support infrastructure in long term. Even when government fork out the money from other funds, it would affect citizen’s general livelihoods. Therefore, using infrastructure to push economy is not a long-terms approach.    In order to improve the competitiveness, Hong Kong should increase the efficiency of fund usage and existing infrastructure. When talking about infrastructure, most of the citizens may think about white elephants. These disagreeable and dubious infrastructure projects range from half-empty office complexes to underused voyage terminals. A portion of the white elephants as of now under development are ridden with wastefulness, and consistently they are postponed costs taxpayers money. For examples4, the Hong Kong-Shenzhen-Guangzhou Express Rail Link costs HK$85 billion but its expected passengers figures is not high. So, the government should have more public consultation with the citizens to phase out some unnecessary infrastructure. Then, the government can have more funding to develop the industry that have more marginal return and catch up faster such as creativity industry. Besides, Hong Kong should focus more on maintaining the quality of existing infrastructure. For examples5, the Hong Kong International Airport used to the best airport in the world (Skytrax,2017), but it is now the fifth in the world. Even the Tokyo Haneda Airport, which don’t have a high ranking before, has surpassed Hong Kong after its refurbishment. As Hong Kong has already well developed in transport, electricity and telephony infrastructure, Hong Kong should focus more on the quality but not quantity. For instance, the railroad system of Hong Kong, the MTR has occurred three disruptions in one day6. In order to keep the competitiveness, the government should use the funds to upgrade its infrastructure to ensure a good basic requirement for an economy.

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