Title
Border effect between Hong Kong and Mainland China
Document Type
Journal article
Source Publication
Pacific Economic Review
Publication Date
2-2016
Volume
21
Issue
1
First Page
3
Last Page
12
Publisher
Wiley-Blackwell Publishing, Inc.
Abstract
This study applies newly developed methodologies to investigate the border effect between Hong Kong and mainland China. It makes three contributions to a better understanding of the border effect puzzle. First, the special relationship between mainland China and Hong Kong provides us with a unique opportunity to disentangle the factors underlying the observed border effect. Second, in addition to estimating the border effect between mainland China and Hong Kong, we also estimate that between the mainland provinces of Guangdong and Shanghai. This comparison between two types of border effects facilitates a better understanding of the extent of domestic market integration in China. Third, owing to the nature of our data and the new estimation approach we adopt, our estimated border effects are less subject to the measurement error-related and estimation-related biases commonly seen in previous studies. We find the estimated border effect between Hong Kong and mainland China to be approximately 266 km, which is substantially larger than that between Guangdong and Shanghai (1.3 km). Both are substantially smaller than the estimated border effects found in many previous studies.
DOI
10.1111/1468-0106.12148
Print ISSN
1361374X
E-ISSN
14680106
Publisher Statement
Copyright © 2016 John Wiley & Sons Australia, Ltd. Access to external full text or publisher's version may require subscription.
Full-text Version
Publisher’s Version
Language
English
Recommended Citation
Fan, S. C., Wei, X., & Wu, J. (2016). Border effect between Hong Kong and Mainland China. Pacific Economic Review, 21(1), 3-12. doi: 10.1111/1468-0106.12148
