The proposed project is an empirical study of trade and telecommunications traffic between China, Taiwan, Hong Kong, and Macao. It addresses theoretical issues raised by recent work on trade in producer services and the role of knowledge spillover in economic growth. The study is designed to find out whether the volume and balance of international telecommunications traffic can be explained by assuming that trade in producer services constitutes a significant portion of that traffic. If this assumption is valid, then the balance of incoming nd outgoing traffic should be related in a definite way to the commodities trade balance and to factor endowments. This project involves collaboration between researchers in China, the US, Hong Kong, and Taiwan. Results of this study should contribute to trade theory, theories of economic growth, and understanding of the optimal framework for regulation of international telecommunications services.
