What is the relationship between economic policy and social policy? In booming Hong Kong, its economic growth has not done much to provide enough social welfare and services to the poor and elderly. It remains to be among the world's richest economies with high Gini coefficient (income disparity between rich and poor). [Presentation made in the Social Policy and Aging class of the MPPG program, EdUHK.]

1. How to Bite an Apple
Social Welfare
Spending in Hong
Kong’s Economic
Growth
Mark Raygan E. Garcia
markraygan@yahoo.com

2. The Rosy Picture
On the outside,
economic growth
misleads. It
doesn’t always
mean social
development.

3. A Bite into GDP
Social Welfare
Agriculture
Infrastructure
Military/Defense
Foreign Affairs
Sci-Tech
Debt Financing
(for aging population)
How big should
it be in HK’ 20%
GDP max
spending?

4. The Ideal Equation
Economic Growth = Improved Social Welfare
Spending
Some concepts:
• Address disparity/income gap;
provide “catch-up” mechanism
• Promote “well-being” (physical and
social dimensions; self-assessment
variable)
• Redistribution (left vs right thinking)

5. The Actual Equation
Economic Growth ≠ Improved Social Welfare
Spending
Some considerations:
• Concept of “investment”(education for young
vs healthcare for aging population)
• Inequality within equality (fruit allowance -
same amount for rich and poor elderly)
• Reactive vs proactive (i.e. non-contribution,
no-mean test allowances)
• Enhanced governance through market
mechanisms (i.e. Singapore)
• Socio-political, socio-cultural ideologies
(strong family culture)

6. The Welfare State
Fundamental principles:
Key role in the protection and promotion
of economic and social well-being of its
citizens
• equality of opportunity
• equitable distribution of wealth
• public responsibility for those unable
to avail themselves of the minimal
provisions for a good life
Key Indicators in Welfare
State Modeling
1. Economic (sustained,
steady growth)
2. Ecological (green
investments &
practices)
3. Social (social services
& social welfare)

7. Economic Growth & Social
Welfare
Some concepts:
1. Economic growth — a necessary
condition (core driving force), not a
sufficient condition for development
2. Economic growth — a primary factor
and material condition for solving
social problems
3. Demand driven by cash enough to
back need for supply

8. Economic Policy & Social
Policy
Some debates:
• Social policy (+) — ‘productive factor’,
investment dimension; contributes to
production and wealth generation (EU);
generates social capital
• Social policy (-) — burden on the
economy; extractive; state intervention
towards social legitimation in wealth
generation; distorts capitalist orientation
• (HK context) Economic policy
influences/dictates/constrains social
policy
So which actually
supports what?

9. Contextualizing Hong Kong
Economic Growth (Plus):
• One of four ‘Asian Tigers’
• Ranked 1st — World’s Most
Economically Free (since 70s)
• Ranked 2nd — World
Competitiveness
• Ranked 7th — World
Competitiveness Index
Economic Growth Ironies:
• Ranked highest in income inequality
(world’s most developed economies)
• Surging housing prices (30% higher
than NYC)
• Declining quality of life index
• “Third-world” standard social spending
(myopic view of social security)

10. Social Welfare Spending vs
GDP

11. Social Welfare Spending vs Aging
Population

12. Upward HK Social Welfare
Spending?

13. Conclusions
Questions Analysis
Does economic
growth translate to
more resources for
poor people?
In the ideal context:
Yes. The conditions capacitate government to translate income to economic activities and social
services for marginalized sectors. But achieving dynamism requires a combination of government
intervention and market mechanisms.
In the Hong Kong context:
Not enough. While there can be a conservative upward trend in social welfare spending, the same is
(a) marginal with respect to its strong GPD; (b) insufficient in relation to its counterparts in the same
economic competitiveness ranking; and (c) short-sighted with respect to its fast aging population and
low fertility rate.
What influences the
relationship between
economic growth and
social welfare?
In the case of Hong Kong, where economic policy influences social policy, the extent to which
economic growth impacts social welfare can be influenced by:
• Keen interest to maintain reputation as world’s freest market, further encouraging investments and
competitiveness through low taxes;
• Chinese culture that imposes social welfare responsibility on family; one that views acceptance of
social welfare as admission of being “lazy”; one that highlights hard work (devaluing the concept
behind non-contributions in certain social services)
• Diverse yet dominating political interests in policy-making