GRAVITY TRADE MODEL: AN EMPIRICAL OF EMPIRICAL ANALYSIS OF APPAREL EXPORTS FOR HONG KONG

Well versed with the capability of providing one-stop service and provision of high quality products has made Hong Kong the world's second largest exporters of apparel products in 2007. The value of Hong Kong's total apparel exports to the world amounted to US$ 28 billion which represented about 10% of the world's total apparel exports in 2007. Taking the data from 1990-2006, the country-specific factors for apparel exports between Hong Kong and its top ten export markets' are analyzed statistically using the gravity trading model to identify effects of the major determinants that underpin the apparel exports of Hong Kong. The result renders robust support for the gravity model and shows that GDP, per capita GDP, population size of the importer's country or region, value added factors of the exporter; all these factors have shown statistical significance and positive effects on Hong Kong's apparel exports. In contrast, real exchange rates, geographical distance and cost of labour have negative impacts on apparel trading.