The Gravity of Liberation : An analysis of Hong Kong's trade flows

Sammanfattning: June 1 1997. After 155 years under British rule, Hong Kong was reunited with its ancient roots, China. The administrative power shifted. What happened then? In this paper we analyze how Hong Kong’s trade flows changed after the liberation. We conduct our analysis with main focus on the trade predicting factors of Gravity, Institutional quality and Hong Kong’s relationship to China. We have found that trade flows did not significantly change much, however, Hong Kong’s attitude towards its trade partners’ institutional quality seem to have. Further, Hong Kong seem to have embraced the reunification with China and is now more dependent of its new ruler, in terms of trade, than before.