Transport, processing and information: value added and the circuitous movement of goods

Goods move in circles. Excluding trade with China, between 1984 and 1996 an average of 15% of the annual value of Hong Kong re-exports originating in the United States, i.e. goods from the United States which were not “substantially” transformed when they passed through Hong Kong, ended up being shipped to…the United States. In 1996 the value of such goods was about US$ 400,000,000. Similarly, of Hong Kong re-exports originating in Israel, an average of 65% were subsequently shipped to…Israel (1996 value of US$ 115,000,000). When not moving in circles, goods follow acute angles. Figure I below graphs the annual cumulative distribution function of the spherical angles described by the country of origin, Hong Kong, and the country of destination of Hong Kong’s non-China related re-export trade. On average, about 50% of Hong Kong’s non-China re-export trade followed an angle of less than 90o