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. Bradley Associates: How big should be your nest egg?
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 thechaebols, 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 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.