Singapore and Hong Kong are both small city-states that were formerly British colonies. While they share some similarities as ethnic Chinese societies and newly industrialized economies, they pursued divergent economic paths after WWII. Singapore took a more interventionist approach through government institutions while Hong Kong followed a laissez-faire model. Both achieved economic success but began to converge in the 1980s as Singapore liberalized and Hong Kong became more interventionist facing political changes. The 1997 Asian Financial Crisis exposed weaknesses in the region's economies, particularly in financial regulation and real estate bubbles, and led to currency devaluations and recessions.