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The Value of Information in International Trade: Gains to Outsourcing through Hong Kong

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  • 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.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9328.

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Date of creation: Nov 2002
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Handle: RePEc:nbr:nberwo:9328

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  1. Rauch, J E & Watson, Joel, 2001. "Entrepreneurship in International Trade," University of California at San Diego, Economics Working Paper Series qt1qx2x540, Department of Economics, UC San Diego.
  2. Dubin, Jeffrey A & McFadden, Daniel L, 1984. "An Econometric Analysis of Residential Electric Appliance Holdings and Consumption," Econometrica, Econometric Society, vol. 52(2), pages 345-62, March.
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  4. James E. Rauch & Vitor Trindade, 2000. "Information and Globalization: Wage Co-Movements, Labor Demand Elasticity, and Conventional Trade Liberalization," NBER Working Papers 7671, National Bureau of Economic Research, Inc.
  5. James E. Rauch & Alessandra Casella, 2003. "Overcoming Informational Barriers to International Resource Allocation: Prices and Ties," Economic Journal, Royal Economic Society, vol. 113(484), pages 21-42, January.
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  7. Barry Naughton, 1996. "China's Emergence and Prospects as a Trading Nation," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(2), pages 273-344.
  8. Redding, Stephen J & Venables, Anthony J., 2000. "Economic Geography and International Inequality," CEPR Discussion Papers 2568, C.E.P.R. Discussion Papers.
  9. Robert C. Feenstra, 1999. "Discrepancies in International Data: An Application to China-Hong Kong Entrepot Trade," American Economic Review, American Economic Association, vol. 89(2), pages 338-343, May.
  10. Robert C. Feenstra & Gordon H. Hanson, 2004. "Intermediaries in Entrepot Trade: Hong Kong Re-Exports of Chinese Goods," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(1), pages 3-35, 03.
  11. Alessandra Casella & James E. Rauch, 1997. "Anonymous Market and Group Ties in International Trade," NBER Working Papers 6186, National Bureau of Economic Research, Inc.
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  15. Gene M. Grossman & Elhanan Helpman, 2002. "Integration Versus Outsourcing In Industry Equilibrium," The Quarterly Journal of Economics, MIT Press, vol. 117(1), pages 85-120, February.
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Cited by:
  1. Alyson C. Ma & Ari Van Assche & Chang Hong, 2010. "Global Production Networks and the People’s Republic of China’s Processing Trade," Working Papers id:3041, eSocialSciences.
  2. Alessandro Nicita & Marcelo Olarreaga, 2007. "Information and Export Performance," Journal of Industry, Competition and Trade, Springer, vol. 7(2), pages 95-111, June.
  3. Bruce A. Blonigen & Alyson C. Ma, 2010. "Please Pass the Catch-Up: The Relative Performance of Chinese and Foreign Firms in Chinese Exports," NBER Chapters, in: China's Growing Role in World Trade, pages 475-509 National Bureau of Economic Research, Inc.
  4. Lars Calmfors & Giancarlo Corsetti & John Kay & Seppo Honkapohja & Willi Leibfritz & Gilles Saint-Paul & Hans-Werner Sinn & Xavier Vives, 2005. "Chapter 2: Outsourcing," EEAG Report on the European Economy, CESifo Group Munich, vol. 0, pages 39-50, 03.

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