A Coasian institutional inquiry into Hong Kong's colonial borders

Abstract

This thesis is an original inquiry into international borders as permeable zonal boundaries that follows up Skeldon’s (1986, 1995) studies. It departs from the conventional view, as established in a literature review, that borders are similar to hard screens with portals (check points) for exchanging capital and labour. It examines the nature of Hong Kong’s border as a permeable boundary for a Coasian trade of capital and labour between Colonial Hong Kong and China via two major exits from China. The nature of the border in either case was not “hard” in the historical context from January 1841 to the end of the study period June 1997. Informed by the Coasian cattle-crop parable (1960) and corollary of the Coase Theorem in a reality with positive transaction costs (e.g. Cheung (1982), Polinsky (1974), Webster and Lai (2003)), the author found that the border of Hong Kong as an institutional arrangement was de facto permeable, which allowed for the migration of labour and other capital. The border also served a Hirschman exit function (Hirschman 1970) between Colonial Hong Kong and China, which held two Weberian monopolies of violence (Weber 1919). Tested by statistical figures, this thesis verifies the hypothesis based on the invariant theorem of the Coase Theorem a la Stigler (1987): resource outcome (the rate of immigration) was invariant to institutional arrangements (immigration and border control measures).