Diversifying the Economic Pillars and Enhancing Innovation and Research Development: Hong Kong Experiences

Abstract

Hong Kong has successfully relied upon “four traditional economic pillars,” including financial services, trade and logistics, tourism, and professional and other producer services. Yet these industries are facing ever-mounting challenges from regional competitors like Shenzhen, Shanghai, and Singapore in recent years. The striving for a knowledge economy has become even more acute after the 1997 handover and the Asian financial crisis in 1997/98, when Hong Kong’s finance-centered economy was questioned for its sustainability. Being too heavily dependent on finance and trade, the role of the government in promoting research and development (R&D) has been criticized for being insufficient to compete with other nearby countries. The Hong Kong Special Administrative Region government (the Hong Kong government, hereafter) used to assume that technological development was a straight linear process and that innovation would spread from upstream scientific research by universities to downstream commercialization processes by enterprises. Hence, it simply acted as an infrastructure builder and funding provider without playing an importance role in the process (Baark and Sharif 2006). However, since the last decade, there has been more government participation in R&D activities, especially in promoting more regional innovative cooperation with Mainland China. Most recently, the Hong Kong government has reiterated its ambition to restructure its economy in response to growing challenges after the global financial crisis.