Integration under 'One Country, Two Systems' - The Case of Mainland China and Hong Kong-

Ever since the handover of the territory in 1997, Hong Kong has had its own unique law and its own economic system and international legal personality, and has not been integrated with Mainland China. The Basic Law guarantees the uniqueness of the Hong Kong SAR until 2047. But close economic ties between Hong Kong and the Mainland will promote closer economic integration. The Basic Law limits only a customs union and the introduction of a single currency, but not the formation of a Free Trade Agreement (hereafter FTA) and monetary union. FTA has already been realized in the form of the Closer Economic Partnership Arrangement (hereafter CEPA). The Hong Kong SAR government, including the bureaucrat as well as the Chief Executive Tung Chee Hwa, was opposed to, and hesitant towards, the formation of a regional trade agreement with the Mainland, but the business community made them to adopt a positive attitude towards the CEPA. It is unclear how much integration can been deepened, but it can be argued that the current policy of the Hong Kong SAR is too supportive of business, and an excessive degree of economic integration may threaten the uniqueness of Hong Kong. But if Hong Kong achieves democracy and enjoys complete autonomy, it will be easy for economic integration to co-exist with the 'One Country, Two Systems' approach, in the interests of the business community and of the citizens of the SAR.

Backward-bending of labor supply function and free riders

It seems like that backward- bending of labor supply function can be observed in Central Asian Countries such as Uzbekistan and Kazakhstan. People’s basic needs of life are satisfied and they do not increase labor supplies even if wage increases. It is possible to find some cases in which slowdowns increase, when a manager in a firm enforces penalties for workers have slowdowns. This phenomenon occurs because a worker prefers the position of equilibrium on the labor supply function always in the upper direction. This article explains the increase of free-riders by penalties and how to avoid them.

Agglomeration and directional imbalance of freight rates : the role of density economies in the transport sector

This paper examines the conventional assumption that bilateral transport costs are symmetric. We develop an economic geography model with transport sector in which asymmetric freight rates can occur as a result of density economies. Comparing this to models without density economies, we show that agglomeration of economic activities is more likely to emerge and that multiple equilibria can emerge for some parameters. Then we show the change in its bifurcation and stability of equilibrium and conclude that economies of density in transport flows can act as an agglomeration force.