A short summary of the academic paper titled: "The politics and specifics of knowledge-based economy implementation in Hong Kong" by Dr Gordon McConnachie, Alan Lung and Sharon Gal Or

1. Comment › Insight & Opinion
Monday, 24 June, 2013, 12:00am
Alan Lung
Alan Lung says Hong Kong has all the necessary tools to become a leading
21st-century knowledge economy. All that's lacking is the imagination to strike
out, and the realisation that it's possible
While there is a general consensus that Hong Kong needs to diversify from its heavy reliance
on financial services and property, more discussion is needed on how to move forward.
Certainly, there is no lack of entrepreneurism here.
Hong Kong has to look more closely at its long-term economic survival. The task is not
straightforward. The city cannot rely on policies handed down from Beijing; they may not work
in our free market economy. And, now the British are gone, it is not politically correct to copy the
UK model, either.
To come up with our own answers, we need a good understanding of the economic
transformation of the OECD countries. Then, we need to devise a strategy, and find support
from the public and Legislative Council to make things happen.
The Organisation for Economic Co-operation and Development acknowledges the link between
a knowledge-based economy and the creation of high-wage and high-quality jobs. This
knowledge-based development strategy, however, seems to lie in the "I don't know that I know"
portion of Hong Kong's collective intelligence. Hong Kong doesn't seem to recognise its own
potential and has so far failed to find a strategy for economic diversification and the creation of
high-end jobs expected by the younger generation.
Hong Kong has always been about free trade, a good legal system, and a strong belief in the
free market principle. We have thrived on new ways of thinking and doing things. We have all
the basic conditions needed to make things happen, yet we don't recognise that we are already
a developed economy, and that the game-changing opportunity must be based on innovation,
not suspicion of the unknown, indecision and inactivity.
A knowledge-based economy is not just about research and development, and the pursuit of
knowledge in universities. It is also about making money.
Policymakers should note that South Korea has formally abandoned the "catch-up" mentality
and is thinking of itself as a global leader of development. To achieve this, Seoul has decided it
should not rely on the chaebols, the large family-owned conglomerates, for further economic
development. Instead, it is trying to strengthen the innovative capacity of its small and
medium-sized enterprises.
Hong Kong started as a trading port and later became Asia's financial centre. It is probably
more international than Korea and we should remember that generating economic growth
through knowledge- intensive businesses is what Silicon Valley is about. The shining Asian
example of this mode of development is Taiwan. This strategy of trying to put innovative SMEs
Hong Kong has the tools to be a leading knowledge economy http://www.scmp.com/print/comment/insight-opinion/article/1267435/h...
1 of 2 27-Jun-13 5:15 PM

2. at the centre of the "new economy" has been adopted by many OECD countries.
Hong Kong's Economic Development Commission, established recently by the government, will
probably come up with a new policy to support SMEs. But a strategy of picking and predicting
winners and supporting certain industrial sectors at the expense of others is not feasible. The
key to success has to be across-the-board support for knowledge-intensive SMEs, including
those in the service sector, given that they are the source of many innovative ideas and
development capacity for other sectors of the economy.
The fundamental conditions to build a knowledge-based economy are already here. We don't
need a miracle to make things happen; some clear-headed thinking and small policy
adjustments will do the job.
Hong Kong prides itself on being a rules-based society that provides a level playing field.
Investing more in education, in science and technology, an innovation ecosystem, and support
for young entrepreneurs are all part of an intellectually sound and politically defensible
economic development strategy.
We would be wise not to try to duplicate what the mainland and the rest of the world are
already doing. Rather, we should focus on our niche - international connections, the last 10 per
cent of research and development, commercialisation and the Closer Economic Partnership
Arrangement (Cepa) with mainland China. We can offer a platform for the mainland to "go out"
and international enterprises to "go in", provide the service capacity for Chinese enterprises and
focus on commercialisation. These are all sound strategies.
This month marks the 10th anniversary of the signing of Cepa, an appropriate moment to
consider an upgraded strategy. A renewed focus on innovation and technology co-operation
between the mainland, Hong Kong and Europe will benefit all. Hong Kong needs to: develop
and utilise the skills required to strengthen its SMEs' capacity to innovate; realign and
co-ordinate R&D spending; think internationally; and, see itself as a leader not a follower in
regional development.
The government must be prepared to lead, soliciting support from the business community, the
public and lawmakers, with a focus on implementation, accountability and good governance.
This will ensure economic development brings benefits to the younger generation sooner rather
than later.
Alan Ka-lun Lung is a director of Asia Pacific Intellectual Capital Centre and chairman of
the Hong Kong Democratic Foundation
Source URL (retrieved on Jun 27th 2013, 5:14pm): http://www.scmp.com/comment/insight-
opinion/article/1267435/hong-kong-has-tools-be-leading-knowledge-economy
Hong Kong has the tools to be a leading knowledge economy http://www.scmp.com/print/comment/insight-opinion/article/1267435/h...
2 of 2 27-Jun-13 5:15 PM