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Competitiveness has emerged as a pre-eminent issue in many major economies around the world. The ability of a nation or region to succeed in international markets, to achieve high levels of productivity, to create an attractive business environment, and ultimately to provide a high standard of living to its residents has long been a focus of analysis and policy. Work on competitiveness over the last two decades has shown the importance of a systemic approach that encompasses overall economic conditions, government policies, links between industries, industrial economics, and the effectiveness of firms in understanding the forces that stimulate economic growth and development.
In order to better understand Hong Kong’s competitiveness, the Bauhinia
Foundation has commissioned Enright, Scott & Associates Limited to
undertake a four part project. The first part of the project focuses on
international views of Hong Kong’s competitiveness. The second focuses on
competitiveness within specific Hong Kong industries. The third focuses on
Hong Kong’s competitiveness in different types of business activities. The
fourth focuses on issues that cut across the economy as a whole, a synthesis
of the results of the previous stages, and recommendations that come out of
the research. The idea is that a multidimensional approach will provide
greater insight into Hong Kong’s competitiveness, and potential strategies and
programs to improve this competitiveness, than a one-dimensional approach.
The present report relates the results of the first part of the project on
international views of Hong Kong’s competitiveness. Much of the discussion
of Hong Kong’s competitiveness takes place in the absence of detailed data
or analysis. There is a tendency to focus on individual pieces of data or single
sources of information without attempts to integrate the various pieces of
information that exist into a coherent picture. Some pieces of information are
reported, used for particular purposes, and then forgotten, while other pieces
of information go unreported or ignored. The result is a set of discussions that
often devolve into opinion and prejudice rather than reasoned debate.
The goal of the present report is to compile information related to Hong
Kong’s competitiveness from a variety of international sources, provide a
limited analysis of what this information indicates for Hong Kong, and to
provide at least initial indications about what areas appear to require further
investigation and consideration in the Hong Kong context. The report aims to
show how the rest of the world, or at least how international sources of
rankings and ratings related to competitiveness, view Hong Kong, and to
explain at least in basic terms how they reach their conclusions and what their
views might indicate for the Hong Kong SAR.
The proliferation of works on competitiveness and comparisons of economies
around the world means that some selection is required. For purposes of this
report, we have compiled assessments from leading international sources on
international competitiveness, business environment and ease of doing
business, economic freedom, prices and costs, human development and quality of life, and corruption and corporate governance. Reviews of works on
competitiveness indicate a high level of consensus that these areas are
critical in determining the ability of a nation or region to foster economic
growth and development. While some analysts might include other sources
that are not covered in the present report, we believe that the present
coverage is appropriate given the focus and the scope of the present project.
In each area, we have identified leading sources of assessments, briefly
introduced their methodologies, summarized major findings with respect to
Hong Kong, and provided some conclusions about the implications for Hong
Kong and about the sources themselves. We then pull together the outlines of
an overall picture of Hong Kong that emerges from an analysis of the results
of the various sources. The purpose here is not to provide the complete data
from any single source, or to provide information that allows the reader to
“reverse engineer” the various indices reported. Instead, the purpose is to
compile information from multiple sources, introduce the sources, explain
what they say about Hong Kong, provide caveats about interpretation of
results drawn from the sources, and indicate what the information indicates
about Hong Kong. In addition, the purpose of this document is not to provide
suggestions about programs or policies that Hong Kong should follow to
improve its competitiveness, but rather to raise issues that come out of the
international sources for further investigation in subsequent parts of the
overall project. Our recommendations and suggestions will be part of the final
project document that takes into account all four phases of the project.
Although all of the international sources that we have investigated do their
best to compare economies on an objective basis, the variables that they use
and the variables are combined into indices, are matters of choice involving
implicit or explicit models of what makes economies work. Different sources
apply different levels of rigor in developing these models. In addition, many of
the international assessments of competitiveness and related areas have
been designed to compare national economies, rather than city economies.
Hong Kong is included in these assessments due to the fact that it is an
independent customs zone, though in an administrative sense it is a Special
Administrative Region of China and not an independent country, and in an
economic sense Hong Kong is a city economy rather than a national economy.
Hong Kong’s rankings can be affected either positively or negatively
depending on how idiosyncratic features of the economy are captured or not
captured. Thus care must be exercised in interpreting the assessments of the
different sources and how the way in which they put together their indices
might influence the rankings of an economy like Hong Kong’s.
In order to deal with some of these issues, we also have included a number of
sources that assess competitiveness, or areas related to competitiveness, for
cities. International comparisons of city competitiveness are relatively recent
and are likely to become increasingly important (and in Hong Kong’s case
relevant) tools for analysis.
We hope that this report will add to the discussions of Hong Kong’s
competitiveness by providing background data on how international organizations and sources view Hong Kong’s competitiveness and what lies
behind those views. We believe that a clear understanding of this information
is important to raise the discussions of Hong Kong’s competitiveness to a
higher level and to provide a firmer basis for subsequent research and