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Hong Kong SAR's economic integration with the Mainland has primarily taken place in the Pearl River Delta (PRD). Taking stock of integration trends, this paper discusses key implications for ensuring economic benefits of further integration are sustained and associated costs minimized. Besides further investments in infrastructure, Hong Kong SAR's role as a producers services and finance hub will depend on frictionless movements of goods, services, people and know-how, requiring policy coordination to further promote trade and investment and developing a common human skills base with the PRD. Regional cooperation will also be needed to minimize the costs of rising levels of cross-border pollution.

Exports and Imports --- Macroeconomics --- Environmental Economics --- Trade: General --- International Investment --- Long-term Capital Movements --- Environmental Economics: General --- Labor Economics: General --- Empirical Studies of Trade --- International economics --- Finance --- Environmental economics --- Labour --- income economics --- Exports --- Foreign direct investment --- Environment --- Labor --- Trade in services --- Investments, Foreign --- Environmental sciences --- Labor economics --- Balance of trade --- Hong Kong Special Administrative Region, People's Republic of China --- Income economics

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This paper examines volatility spillovers from mature to emerging stock markets and tests for changes in the transmission mechanism-contagion-during turbulences in mature markets. Tri-variate GARCH-BEKK models of returns in global (mature), regional, and local markets are estimated for 41 emerging market economies (EMEs), with a dummy capturing parameter shifts during turbulent episodes. LR tests suggest that mature markets influence conditional variances in many emerging markets. Moreover, spillover parameters change during turbulent episodes. Conditional variances in most EMEs rise during these episodes, but there is only limited evidence of shifts in conditional correlations between mature and emerging markets.

Finance: General --- Financial Risk Management --- Macroeconomics --- General Financial Markets: General (includes Measurement and Data) --- Externalities --- Financial Crises --- Finance --- Economic & financial crises & disasters --- Emerging and frontier financial markets --- Stock markets --- Spillovers --- Financial crises --- Securities markets --- Financial services industry --- Stock exchanges --- International finance --- Capital market --- Hong Kong Special Administrative Region, People's Republic of China

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We document Hong Kong SAR's evolving role as an international financial center in the Asia region, the importance of the growing special link with China as well as supply-side advantages, and outline the scope for future financial services growth. Hong Kong SAR has a long established track record as Asia's premier center for cross-border financial transactions. Further financial opening of China is likely to consolidate Hong Kong SAR's leading position as Asia's international financial center over the medium term. However, preserving Hong Kong SAR's first-mover advantage in the long-term calls for a development strategy that balances reaping the benefits from the special China role with the need to transcend into a truly international center in the long run.

Finance --- Hong Kong (China) --- Asia --- Economic conditions. --- Economic integration. --- Exports and Imports --- Industries: Financial Services --- International Investment --- Long-term Capital Movements --- Current Account Adjustment --- Short-term Capital Movements --- Financial Institutions and Services: Government Policy and Regulation --- International economics --- Foreign direct investment --- Portfolio investment --- Capital flows --- Capital account --- Financial services --- Investments, Foreign --- Portfolio management --- Capital movements --- Balance of payments --- Financial services industry --- Hong Kong Special Administrative Region, People's Republic of China

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This Selected Issues paper assesses the external competitiveness of Mauritius over the period 1980–2007, with particular attention to the most recent years. The paper estimates the equilibrium real exchange rate using the macroeconomic balance approach, the single-equation equilibrium exchange rate approach, and the capital-enhanced equilibrium exchange rate approach. A wealth of structural competitiveness indicators are also analyzed. The findings indicate that the real exchange rate at the end of 2007 was broadly in line with its equilibrium value.

Investments: Commodities --- Finance: General --- Foreign Exchange --- Inflation --- Macroeconomics --- Globalization --- Price Level --- Deflation --- General Financial Markets: General (includes Measurement and Data) --- Agriculture: General --- Development Planning and Policy: Trade Policy --- Factor Movement --- Foreign Exchange Policy --- Globalization: General --- Currency --- Foreign exchange --- Finance --- Investment & securities --- Price controls --- Exchange rates --- Real exchange rates --- Consumer price indexes --- Prices --- Real effective exchange rates --- Nominal effective exchange rate --- Government policy --- Price indexes --- Competition --- Hong Kong Special Administrative Region, People's Republic of China

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This paper documents the evolution of measures of financial integration for major advanced and emerging markets economies, assesses whether advances in integration have had a significant positive impact on countries' risk-adjusted growth opportunities, and identifies some of the channels through which financial integration may foster growth. Three main results obtain. First, financial integration has progressed significantly worldwide, particularly in emerging markets, and regional integration has advanced at the fastest pace in Europe. Second, a country's speed of integration predicts future country's risk-adjusted growth opportunities, while improved risk-adjusted growth opportunities predict future advances in integration, indicating that the countries whose integration has been faster may have benefited most from a virtuous dynamics in which financial integration and improved real prospects are mutually reinforcing. Third, financial integration predicts globalization but the reverse does not necessarily hold, while advances in financial integration predict advances in financial development and improvements in the liquidity of equity markets.

International economic integration. --- Globalization. --- Liquidity (Economics) --- Assets, Frozen --- Frozen assets --- Global cities --- Globalisation --- Internationalization --- Common markets --- Economic integration, International --- Economic union --- Integration, International economic --- Markets, Common --- Union, Economic --- Finance --- International relations --- Anti-globalization movement --- International economic relations --- Finance: General --- Investments: Stocks --- General Financial Markets: General (includes Measurement and Data) --- Financial Markets and the Macroeconomy --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Investment & securities --- Financial integration --- Stock markets --- Financial sector development --- Stocks --- Emerging and frontier financial markets --- International finance --- Financial services industry --- Stock exchanges --- Hong Kong Special Administrative Region, People's Republic of China