Competitiveness of the Hong Kong economy

Li, Hongyi and Wei, Xiangdong and Xie, Danyang (2007): Competitiveness of the Hong Kong economy.

Abstract

Our assessment of the competitiveness of the Hong Kong economy from various perspectives indicates that the overall competitiveness of Hong Kong economy has been improving during the past several years. However, from a longer term historical perspective, there are still a number of areas in which Hong Kong’s competitiveness has been eroded relative to her main competitors in East Asia, especially in export sector. On the aggregate level, although Hong Kong’s Total Factor Productivity (TFP) growth rate is amongst the best performers in East Asia in the recent years, it has been adversely affected by the continuing relocation of Hong Kong’s manufacturing production to the Mainland China. On sectorial levels, although Hong Kong’s unit labour costs started to decline since 2000 comparing to her Asian competitors, the unit labour cost-based real effective exchange rate continues to appreciate against her major trade partners. Furthermore, Hong Kong’s competitiveness deteriorated in several important categories of goods and service exports. Overall, our study shows that the Hong Kong economy still maintains its resilience to outside shocks, nevertheless it needs to explore new areas to fuel its future growth.

• Item Type: MPRA Paper
• Language: English
• Keywords: Competitiveness; Productivity; Unit labour cost; Dynamic shift shares
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O18 - Urban, Rural, Regional, and Transportation Analysis ; Housing ; Infrastructure; F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations; F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O57 - Comparative Studies of Countries

References

Collins, Susan M., and Barry P. Bosworth, 1996, “Economic Growth in East Asia: Accumulation versus Assimilation,” Brookings Papers on Economic Activity: 2, Brookings Institution, pp. 135–203.

Ferreira, P, Pessoa, S. and F. Veloso, 2005, “On the Tyranny of Numbers: East Asian Miracles in World Perspective,” Manuscript.

Hsieh, Chang-Tai, 2002, “What Explains the Industrial Revolution in East Asia? Evidence from the Factor Market,” American Economic Review, 92(3): 502-26.

Kim, Jong-Il, and Lawrence J. Lau, 1994, “The Sources of Economic Growth of the East Asian Newly Industrialized Countries,” Journal of the Japanese and International Economies, Vol. 8, pp. 235–71.

Klenow, Peter J., and Andres Rodriguez-Clare, 1997, “The Neoclassical Revival in Growth Economics: Has It Gone Too Far?” NBER Macroeconomics Annual, Vol. 12 (Cambridge, Massachusetts: National Bureau of Economic Research), pp. 73–103.

IMF, 1997, “Competitiveness in Services and Manufacturing,” Chapter V in Hong Kong, China: Growth, Structural Change, and Economic Stability during the Transition, IMF Occasional Paper 152.

Islam, N., Dai, E., and H. Sakamoto, 2006, “Role of TFP in China’s Growth,” Asian Economic Journal, 20(2):127-59.

Iwata Shigeru, Mohsin Khan, and Hiroshi Murao, 2003, “Sources of Economic Growth in East Asia: a Nonparametric Analysis,” IMF Staff Papers, Vol. 50 No. 2.

Li, K.W., 2006. The Hong Kong Economy: Recovery and Restructuring, McGraw-Hill Education (Asia).

MAS, 2002, “Assessing Singapore’s Export Competitiveness Through Dynamic Shift-Share Analysis”, Occasional Paper No. 23, Monetary Authority of Singapore.

Thangavelu, S, 2004, “Total Factor Productivity Growth: Survey Report,” (Part II – National Reports: Singapore), Published by the Asian Productivity Organization.

Young, Alwyn, 1992, “A Tale of Two Cities: Factor Accumulation and Technical Change in Hong Kong and Singapore,” NBER Macroeconomics Annual, Cambridge, MA: MIT Press.

Young, Alwyn, 1994. “Lessons from the East Asian NICs: A Contrarian View,” European Economic Review, 38(3-4):964-73.

Young, Alwyn, 1995. “The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Experience,” Quarterly Journal of Economics, 110:641-680.