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Development ?

What for?

by Dr Edward CY Yiu Associate Professor

Urban Studies Programme

Chinese University of Hong Kong

A Talk to the Session: Conservation +

Development = Our Lives

Youth to Sustainability Summit

AIESEC@CUHK, 7 June 2014

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What is Sustainable Development?

• Sustainable Development is a balanced development between economic, social and

environmental development.

• NO! • Sustainable Development is a

Wrong Question!! • Why we need development? What

is development? What for?

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What is Development?

• Development = Wealth? • Wealth? = Economic Growth?

• Economic Growth = GDP Growth? • GDP Growth? = Real Estate Development?

• Different Metrics will have different Results

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GDP (PPP), HK v SIN HK Rank SIN Rank

Population 7.2 m 5.4 m

GDP (PPP) 2013 US$369.4b US$326.5b

GDP yoy (PPP) 1.4% 1.3%

GDP 5yr annual growth

2.5% 4.3%

Per capita GDP (PPP)

$51,494 6 $60,410 3

Unemployment 3.3% 25 2.0% 13

Inflation 4.1% 4.6%

FDI Inflow $74.6b 3 $56.7b 4

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GDP (PPP) Growth % SAR HK v. SIN v. Swiss

Data from http://www.imf.org/

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Rankings

HK

2014 Index of Economic Freedom 1

2012 EIU Best City 1

2014 Urban Mobility Index (Public Transport) 1

2014 IMD World Competitiveness 4

WJP – Order and Security 2013 4

http://www.heritage.org/index/country/singapore

http://pages.eiu.com/rs/eiu2/images/EIU_BestCities.pdf

Why we need to be the first, every time, everything? Why we need to compare our performance with

others?

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What is GDP Growth?

• GDP ≠ Economic Growth • GDP ≠ Wealth • GDP ≠ Well Being • GDP ≠ Equity • Different Metrics – Different Tricks

– Demolition and Construction – double count

铁公基

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HK GDP Growth by Econ. Activity Econ. Activity 2012 2013 Q1-Q3

Construction 8.3% 3.1

Services 1.8% 3.0

Manufacturing -0.8% -0.1

Agriculture ? ?

GDP 1.5% 2.9%

Services 2012 2013 Q1-Q3

Real Estate 3.9% -4.2% (3D measures)

Wholesale and retail 7.3% 10.5%

Postal and courier 6.4% 14.1%

http://www.hkeconomy.gov.hk/en/pdf/er_13q4.pdf

Public Infrastructure Exp.

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116% up

31% up

Public Infrastructure Exp.

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Year Capital Fund Exp

(HK$b) yoy

Total Govt Exp.

(HK$b) %

2005/06 29.9 197.8 15%

2006/07 27.9 -6.7% 195.6 14%

2007/08 23.4 -16.1% 207.8 11%

2008/09 50.6 116.2% 260.8 19%

2009/10 51.4 1.6% 237.3 22%

2010/11 53.7 4.5% 242.7 22%

2011/12 61.2 14.0% 299.5 20%

2012/13 67.3 10.0% 306.1 22%

2013/14 88.3 31.2% 315.7 28%

Total HK$453.7b HK$2,263.3b 20%

To boost economy

More Public Infrastructure Exp. In Future

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Work In Progress

Projects

Cost Forecasts

(HK$b)

廣深港高鐵

GZH Railway 66.9

港珠澳大橋

HZM Bridge 55.4

屯門西繞道及屯門至赤鱲角連接路

Highway

44.8

蓮塘口岸

Border 24.4

Total HK$191.5b

Planning Projects Cost Forecasts

(HK$b)

新界東北

NENT NDA 120

港深西部快速軌道

HSW Railway 90

機場第三條跑道

3rd Runway 150

中部水域人工島

CW Artificial Island 150

Total HK$510b

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Construction and Infrastructure Led Growth?

• Diminishing marginal return; – i.e. less and less efficient;

• Overcapacity and ghost cities; – Waste of resources, environmental

damage;

• Unsustainable growth model; – Inputs > Outputs;

• Biased wealth distribution; – Government officials, Bankers,

Developers, Contractors, …

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What is Development? WB

• “Human development is the end – economic growth a means.”

• “But [when] growth was achieved at the cost of greater inequality, higher unemployment, weakened democracy, loss of cultural identity, or overconsumption of natural resources needed by future generations…this kind of growth is inevitably unsustainable.”

• (World Bank, 2004, What is Development?)

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Very High Human Development

HDI Swiss HK SIN

New 2013 Estimates 9 13 18

Year Life

expectancy

at birth

Expected

years of

schoolings

Mean years

of schooling

GNI per cap HDI

2012 83.0 15.5 10.0 45,598 0.906

Bad Metrics Lead to Wrong Direction

GDP again!

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Very High HDI, But … Poor Lives

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What is Development For?

• Health • Security • Respect • Personality • Harmony with Nature • Friendship • Leisure

• (Skidelsky and Skidelsky, 2012, How Much is Enough?)

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But … Work to Death

Annual Working Hours HK Chile Germany

2012 Estimates 2,296 2,029 1,397

Rank 5

SIN = 46hrs/wk, HK = 45hrs/wk Prices and Earnings UBS, 2012-11-07

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But … Poor Living Quality • Unaffordable Housing; • Subdivided Flats and Coffin Rooms; • Dilapidated Buildings and Walled City.

Population Density of

HK is 3 times higher

than SIN

Country/ city

GDP per Capita

Ave. Living

Area (sf)

Per Person

(sf)

US 51,704 2,476 ~800

Taiwan 38,357 1,119 ~370

SIN 60,799 1,044 323

Tokyo 35,855 667 ~220

Shanghai 9,055 560 194

HK 50,936 452 161

Ave per person living area of HK = 0.5 of SIN

Housing Price to Income Ratio:

HK 2013 = 13.5, SIN 2013 = 5.1

Unaffordable Housing

SIN

Year Private Housing

Subsidized Housing

Public Rental

Housing

Total Housing Stock -

Households

1983 542,000 36,000 533,000 1,111,000 -239,000

1993 833,000 186,000 677,000 1,696,000 -10,000

2003 1,258,000 395,000 679,000 2,332,000 251,000

2013 1,458,000 391,000 766,000 2,616,000 195,200

Fast increases of both public and private

housing stocks, from shortage to surplus

Not Due to Insufficient Supply, then Why?

But … Inequality

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City / Country Rank Gini

Hong Kong Asia Highest 0.537

Singapore 0.478

Norway Global Lowest 0.256

https://sg.news.yahoo.com/how-govt-could-tackle-singapore%E2%80%99s-income-gap-problem--panel-095938746.html

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The Most Expensive Apartment in the World?

• The Opus

• Frank Gehry-designed;

• (6,683 square feet);

• HK$455 million in 2012;

• i.e. HK$68,000 psf. (US$8,700 psf)

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The Second Most Expensive Luxury Housing in the World

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http://www.economist.com/news/internat

ional/21599041-countries-where-

politically-connected-businessmen-are-

most-likely-prosper-planet

Asset Return > GDP Growth, Why?

29 http://www.pentoy.hk 姚松炎：從房產研究 分析21世紀資本論

香港因壟斷制度造成的貧富不均，正如皮凱提理論所言，已成為資本制度內必然形成的惡果，萬劫不復。

Monopoly!

Money, Land, Housing

•Money supply is fiat

•Land supply is monopolized

•Housing supply is oligopolized

Development – What For?

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The End

comments are welcome. Enquiries to:

ecyyiu@cuhk.edu.hk