Structural transformation and economic growth in Hong Kong : another look at young's Hong Kong thesis

Hong Kong registered high total factor productivity (TFP) growth until the 1980's. Its output growth since the mid-1980's has been driven by the cross-regional division of labor in which Hong Kong relocated manufacturing to mainland China and provided support and entrepôt trade services mainly in the form of service exports. However, TFP growth rate has been low in the booming services sector and high in the declining manufacturing sector, leading to a significant slowdown in overall TFP growth during the 1990's. Because of the deceleration in the growth rate of service exports since the mid-1990's and the greatly reduced size of the manufacturing sector, Hong Kong's potential output growth rate appears to have dropped significantly. J. Comp. Econ., June 2001, 29(1), pp. 366-382. Lingnan University, Tuen Mun, Hong Kong. Copyright 2001 Academic Press. Journal of Economic Literature Classification Numbers: O11, O47, O53.