Pertinent to Economic Integration: Performance of Growth Attributes in China and Hong Kong

The political sovereignty of Hong Kong was reverted to China in 1997, and an increasing pace of economic integration between the two economies has taken place. This paper theoretically decomposes the economic and productivity growth of China and Hong Kong into the four attributes of input growth, adjusted economies of scale effect, technical progress, and efficiency growth. A stochastic frontier model is used to estimate the growth attributes, and a human capital variable is incorporated in the translog production function. The empirical study compares the growth, productivity and efficiency performance of the two economies of China and Hong Kong since the early 1980s. Relevant policy implications are discussed in view of the huge potentials between the two economies.