Assessing economic impact of sovereignty transfer over Hong Kong: a synthetic control approach

Jing Li, Sarina Sangal and Ling Shao

Applied Economics, 2021, vol. 53, issue 30, 3499-3514

Abstract: This article compares the trajectory of Hong Kong’s purchasing power parity–adjusted GDP per capita before and after the 1997 handover with the trajectory of a weighted combination of similar economies, using weights determined endogenously by data. The synthetic Hong Kong is constructed to provide the counterfactual of what would have happened to Hong Kong economy in the absence of transfer of sovereignty. We find that Hong Kong economy is negatively affected, and the gap between actual and synthetic Hong Kong from 1997 to 2001 on average is 7% of the 1996 level if Japan receives the greatest weight. The average negative effect becomes 9% if Singapore receives the greatest weight.

Date: 2021
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DOI: 10.1080/00036846.2021.1883529

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