The Impact of Relocation on the Total Factor Productivity of Hong Kong Manufacturing

This paper investigates whether Hong Kong manufacturers have been upgrading technology level in the midst of rapid manufacturing relocation. In a translog total factor productivity framework which expresses the growth of manufacturing output in terms of the growth of material inputs, labour, factory space, utilities, and capital, it is found that manufacturing TFP declined in 1984-1993. Given the same amount of inputs, the manufacturing sector could produce in 1993 only 87 percent of the output in 1984. Relaxing the constant-returns-to-scale assumption only reduces the extent of technology decline.