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 Kung relocated manufacturing to m ainland China and provided support and entrepot trade services mainly in th e form of service exports, However, TFP growth rate has been low in the boo ming services sector and high in the declining manufacturing sector, leadin g to a significant slowdown in overall TFP growth during the 1990's. Becaus e of the deceleration in the growth rare of service exports since the mid-1 980's and the greatly reduced size of the manufacturing sector, Hone Kong's potential output growth rate appears to have dropped significantly. (C) 20 01 Academic Press.