Working Paper: NBER ID: w9328
Authors: Robert C. Feenstra; Gordon H. Hanson; Songhua Lin
Abstract: In this paper, we estimate the benefits to countries that purchase goods from China of having access to intermediary services provided by Hong Kong. Traders in Hong Kong supply information on markets and producers in China, which provides welfare gains to foreign firms using these services. During the 1990s, Hong Kong intermediated about half of the goods that China exported to the rest of the world. Our results suggests that gains to intermediary services provided by Hong Kong equal 16% of the value of goods that China exports to other countries through Hong Kong, and range between 10% and 21% of this export value for various manufacturing goods and across different years.
Keywords: International Trade; Outsourcing; Intermediary Services; Hong Kong; China
JEL Codes: F1; D8
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| intermediary services (L84) | welfare gains (D69) |
| intermediary services (L84) | trade volumes (F10) |
| foreign firms' purchasing decisions (F23) | intermediary services (L84) |
| gravity equations (D50) | purchases from Hong Kong (F29) |