Economic Contribution to Hong Kong of the Aviation Sector: A Value-Added Approach

Abstract

The emergence of air transport has greatly facilitated long-distance travel and the exchange of goods. The industry also contributes substantially to the economy. Our study measures the benefits that the aviation industry has brought to the Hong Kong economy using the value-added (VA) approach. We find that air transport itself and services that are incidental to the sector (direct benefits) contributed about 2.54 percent of gross domestic product (GDP) at factor cost (at current prices) in 2003, while trade services and the tourism industry (indirect benefits) contributed 4.48 percent. Hence, the total benefit brought by the aviation industry was 7.02 percent of GDP at factor cost (at current prices) in 2003. This demonstrates that the industry is a major component of the Hong Kong economy, and our findings should aid in understanding the effects of recent changes in aviation policies, which have altered the business environment of the aviation market.