Financial Services Sector as a Driver of Productivity Growth in Hong Kong

Hong Kong has seen strong growth in labour productivity since 2002. Sectoral breakdown shows that the advance in output per labour has been mainly supported by the expansion in financial and trade related activities attributable to the vibrant increase in offshore trade and exports of financial services. Using the data envelopment analysis (DEA) method, we find that the observed increase in labour productivity has been underpinned by the rise in total factor productivity (TFP). Based on a panel dataset of major economic sectors, regression analysis suggests that exports of services and the China factor are the two key determinants of TFP growth in Hong Kong.