The Role of Institutions in Economic Development in Hong Kong

English

Abstract

This article uses Hong Kong as a case study to analyse the impact of institutions on
economic growth. The Chinese territory of Hong Kong is a special administrative area
with its own government and a free market economy. Since it went from being a modest
fishing town to a worldwide financial and commerce centre in less than a century, Hong
Kong is often held up as an exemplary model of economic growth. The rule of law,
government, and economic climate in Hong Kong are all examples of the city's renowned
institutional excellence. This article summarises research on the notion, categorization,
and effect of institutions on economic growth from both a theoretical and empirical
perspective. To further evaluate the impact of government spending (GG) on government
financial condition (GFC), regional development expenditure (RDE), and itself, a vector
autoregression (VAR) model is employed in this paper. The article concludes that GG
significantly affects itself and GFC positively, but has a negative effect on RDE.
According to the article's findings, Hong Kong's institutions are very influential in the
city's economic results and performance, and policymakers should take a nuanced,
context-aware approach to enhancing their quality and efficacy.