Macau - Overview of economy

Manufacturing and services are the 2 main pillars of the modern Macau economy. Macau, like Hong Kong and Singapore, has an export-oriented economy, which benefits from growing trade with Western Europe and the United States. Throughout the 20th century, Macau specialized in manufacturing for the export market and servicing international merchants and bankers.

Macau was established as a Portuguese colony in 1557, becoming one of the most important trade distribution centers in the region for the next 3 centuries. Its significance as a trading center rose as the Chinese government maintained a policy of voluntary isolation from

the world, allowing international trade only in few assigned ports. Portugal proclaimed Macau a free port (such ports were set up in Asia by the European colonial powers in the 19th century in an effort to promote international trade with a minimum of tariffs and other barriers) in 1849. However, in the 19th century Macau's importance declined with the rise of the British colony in Hong Kong.

The Macau administration has maintained a free-market economy, which in combination with the entrepreneurial skills of the local population and the region's political stability, has contributed to growth of wealth and prosperity. Macau's main exports are textiles, clothing, and services, though it lags behind Hong Kong and Singapore in the proportion of value-added production.

Tourism also plays a significant role in Macau's economy. However, it has been the gambling industry that has contributed so much to the image of Macau as a tourist destination. The gambling industry also has attracted organized criminal syndicates, called "triads," which are involved in gambling, illegal people trafficking, prostitution, and pirated production of various goods, including music and computer CDs. During the 1990s, the government made considerable efforts to restrain and eliminate the power of these criminal groups.

The territory depends heavily on imports of foodstuffs and raw materials from neighboring China because it has no agriculture, due to its very small size. Nonetheless, it maintains a relatively high standard of living due to its sound infrastructure , promotion of economic balance, low inflation , stable currency, and foreign trade surplus .

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