Cross-border Investment and Economic Integration: The Case of Guangdong Province and Hong Kong SAR

Naubahar Sharif & Can Huang


In this chapter, we undertake a comparative study of the performance of local and foreign competitors’ manufacturing firms in a FDI-recipient region—Guangdong Province, China—and analyzes the policy implications of the comparison for the advanced, FDI-outflow region—Hong Kong Special Administrative Region (HKSAR). By highlighting changes in productivity that vary with changes in manufacturing firm ownership, we reveal that domestic firms have been catching up with their foreign counterparts, including Hong Kong-based firms, though foreign firms have successfully strengthened their dominating position in Guangdong’s manufacturing industry.

JEL Codes: D24; L60; O47

Key words: Total Factor Productivity, Manufacturing Sectors, Asia, China, Guangdong, Hong Kong

UNU-MERIT Working Papers ISSN 1871-9872