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Financial Services Sector as a Driver of Productivity Growth in Hong Kong

Author

Listed:
  • Frank Leung

    (Research Department, Hong Kong Monetary Authority)

  • Gaofeng Han

    (Research Department, Hong Kong Monetary Authority)

  • Kevin Chow

    (Research Department, Hong Kong Monetary Authority)

Abstract

Hong Kong has seen strong growth in labour productivity since 2002. Sectoral breakdown shows that the advance in output per labour has been mainly supported by the expansion in financial and trade related activities attributable to the vibrant increase in offshore trade and exports of financial services. Using the data envelopment analysis (DEA) method, we find that the observed increase in labour productivity has been underpinned by the rise in total factor productivity (TFP). Based on a panel dataset of major economic sectors, regression analysis suggests that exports of services and the China factor are the two key determinants of TFP growth in Hong Kong.

Suggested Citation

  • Frank Leung & Gaofeng Han & Kevin Chow, 2009. "Financial Services Sector as a Driver of Productivity Growth in Hong Kong," Working Papers 0914, Hong Kong Monetary Authority.
    • Handle: RePEc:hkg:wpaper:0914
    as

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    File URL: http://www.info.gov.hk/hkma/eng/research/working/pdf/HKMAWP09_14_full.pdf
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    References listed on IDEAS

    as
    1. Francesco Crespi & Mario Pianta, 2008. "Demand and innovation in productivity growth," International Review of Applied Economics, Taylor & Francis Journals, vol. 22(6), pages 655-672.
    2. Ayhan Kose, M. & Prasad, Eswar S. & Terrones, Marco E., 2009. "Does openness to international financial flows raise productivity growth?," Journal of International Money and Finance, Elsevier, vol. 28(4), pages 554-580, June.
    3. He, Dong & Zhang, Wenlang, 2010. "How dependent is the Chinese economy on exports and in what sense has its growth been export-led?," Journal of Asian Economics, Elsevier, vol. 21(1), pages 87-104, February.
    4. Frank Leung & Kevin Chow & Jessica Szeto & Dickson Tam, 2008. "Service Exports: The Next Engine of Growth For Hong Kong?," Working Papers 0804, Hong Kong Monetary Authority.
    5. Corrado Carol & Lengermann Paul & Beaulieu J. Joseph & Bartelsman Eric J., 2007. "Sectoral Productivity in the United States: Recent Developments and the Role of IT," German Economic Review, De Gruyter, vol. 8(2), pages 188-210, May.
    6. Dachraoui, Kaïs Harchaoui, Tarek, 2003. "A Frontier Approach to Canada-U.S. Multifactor Productivity Performance," Economic Analysis (EA) Research Paper Series 2003010e, Statistics Canada, Analytical Studies Branch.
    7. Anthony N. Rezitis, 2006. "Productivity growth in the Greek banking industry: A non-parametric approach," Journal of Applied Economics, Universidad del CEMA, vol. 9, pages 119-138, May.
    8. Kose, M. Ayhan & Prasad, Eswar & Terrones, Marco E., 2008. "Does Openness to International Financial Flows Contribute to Productivity Growth?," IZA Discussion Papers 3634, Institute of Labor Economics (IZA).
    9. Andrew Worthington, 1998. "The determinants of non-bank financial institution efficiency: a stochastic cost frontier approach," Applied Financial Economics, Taylor & Francis Journals, vol. 8(3), pages 279-287.
    10. repec:bla:germec:v:8:y:2007:i::p:188-210 is not listed on IDEAS
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    Cited by:

    1. Michael Cheng & Wai-Yip Alex Ho, 2009. "A Structural Investigation into the Price and Wage Dynamics in Hong Kong," Working Papers 0920, Hong Kong Monetary Authority.
    2. He, Dong & Liao, Wei & Wu, Tommy, 2015. "Hong Kong's growth synchronization with China and the US: A trend and cycle analysis," Journal of Asian Economics, Elsevier, vol. 40(C), pages 10-28.

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    More about this item

    Keywords

    Total factor productivity; labour productivity; economic integration;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F15 - International Economics - - Trade - - - Economic Integration

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