Economic impact of Hong Kong air cargo industry

Abstract

Hong Kong, a gateway of the Mainland China and a centre of the long East Pacific Asian Corridor, obtains its merit of strategic location and becomes an important air cargo transshipment centre in Asia for several decades. Air transshipment, an input of production, motivates the productivity of other factors and transports outputs in the market. This services provision is a necessary in a modem economy. The paper attempts to study the economic impacts of air cargo industry in Hong Kong labour market. It initially reviews the background and features of local air cargo industry. A model has been developed to examine the relationship between the industry and labour market. One percent increase in GDP level may lead to 1.3% increase in trade value by air. A percent increase in air cargo value brings a 0.07% increases on employment level. Assuming the GDP continues to grow at three percents per annum in coming ten years, the trade value by air will increase by 3.6% in 2010 over 1999. This prosperous industry may stimulate the employment level by 0.39% in ten years time. Despite the fact that Hong Kong is the second busiest air cargo-handling city in the world, its road of success is not smooth, according to the milestone of Hong Kong air cargo industry. The industry has transited through plenty of threats in the past and has built up a prestige in the region now. A further attempt of this paper is to discuss the future prospects of Hong Kong air cargo industry. It mentions the current unfavorable conditions and challenges faced by the industry, include domestic government policy, growth of the hinterland, keen competition from its neighbours, provisions on physical infrastructure and technological breakthrough. Through the investigation of the success of the industry in terms of economic contributions, further direction on how to maintain its achievement is analyzed.