Studying Hong Kong

20 Years of Political, Economic and Social Developments

Tai Wei Lim, Tuan Yuen Kong

• Publisher: WSPC
• Year: 2018
• ISBN:
  9789813223561
• Topic: Social Sciences
• Subtopic: Cultural & Social Anthropology
• Index: Social Sciences

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This book captures the essence of Hong Kong's development in the past two decades from 1997 to 2017. It is broken into four parts — economics, society, politics and culture.

Hong Kong's role remains as a gateway for global trading houses, businessmen, investors and traders. Hong Kong continues to be an open economy and has stuck to free trade policies, as one of the former four successful "tiger economies" in East Asia. In the political and international relations realm, this book examines Hong Kong's relations with China, other major powers and the world at large. It also covers domestic developments, including legal developments. Other chapters in the book examine cultural developments in Hong Kong from specific case studies of iconic animation character to trans-boundary popularity of Hong Kong popular culture in China.

With contributions from Alvin CAMBA, Henry CHAN, Yoshihisa GODO, Wing Lok HUNG, Sean KING, Tuan Yuen KONG, Tai Wei LIM, Carol MA, Samantha MA, Parama SINHA PALIT, Zhengqi PAN, SIM Japanese Culture and Gaming Society, Hiroshi TAKAHASHI, Ghim Yeow TAN, Katherine TSENG, Elim WONG, Kai Keat YEO and Chun Wang YEUNG, this book provides a snapshot of Hong Kong in the past twenty years and is a fascinating read.

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--> Readership: This book is intended for students as well as professionals and the general public interested in understanding Hong Kong culture, history and politics. -->
Keywords:Hong Kong;China;East Asia;;1997;Economic;PoliticsReview:

"Hong Kong is often referred to as a crossroad of the East and West. However, Hong Kong is not merely an intersection of China and the Western world, but has unique history and culture. When I started learning Cantonese in Tokyo, many other students who were similarly motivated were from an older generation than me, and interested in Hong Kong films. This is proof that Hong Kong shown on the screen attracted the Japanese audience as a unique city. Hong Kong has been depicted as a city that is 'exotic' and 'chaotic' in popular media in Japan and the West. Of course, it is certain that orientalism of Japan and the West is present. However, what promotes such imagination and description seems to be the 'freedom' that Hong Kong possesses. I am particularly interested in how this free and somehow chaotic atmosphere of Hong Kong, 20 years after the handover of sovereignty, will generate new culture and evoke our new imagination. I recommend this publication to readers who want to better understand Hong Kong in all its facets and from different perspectives."

Masakazu MATSUOKA
Hitotsubashi University
Key Features:

• The book is timely as it deals with a topic that is in the news in 2017. The future of Hong Kong has been debated and scrutinized intensely since the 2014 Occupy Central and 2012 National Education protests. Since then, Hong Kong has been forging a new relationship with a new administration in Beijing
• It has regional and international implications. Hong Kong's "One Country Two Systems" served as a model for possible reunification with Taiwan. Regionally, observers are using Hong Kong as a barometer for the future of Chinese governance. Internationally, Hong Kong's international financial center makes it an important node in the globalized world
• Very often, Hong Kong's popular culture is left out of academic analyses on the city state. There are macro and micro case studies examined by different scholars in this publication and they explain the popularity of Hong Kong popular cultural characters like the animation McDull and also classic cop films that resonate with an East Asian and even international audience
• The diversity of scholars in this volume makes it exciting, with contributions from Hong Kong, Singapore, Malaysia and the Philippines. Their multidisciplinary backgrounds also contribute to the value-add of the volume. There is a strong attempt to include individual scholars of different political orientation, background, training, professional experience and expertise to present a balanced view of Hong Kong's development

Part 1

HONG KONG ECONOMICS

THE POLITICAL ECONOMY OF DOMESTIC INNOVATION PARTNERSHIPS: A COMPARATIVE PERSPECTIVE OF HONG KONG AND SINGAPORE

Zhengqi PAN

Introduction

Since the 1960s, East Asia’s economic development has been the marvel of many policy makers and academicians worldwide. Beginning with Japan in the postwar era, the other Asian economies of Hong Kong, Singapore, South Korea, and Taiwan — dubbed the “Four Asian Tigers” — all experienced phenomenal growth rates from the 1960s to the 1990s. Economic success in East Asia has largely relied on export-oriented industrialisation (EOI), which entails the access to and capture of overseas markets through the export of competitive products. Under the EOI development model, domestic firms are exposed to foreign competition and are geared towards foreign markets. However, with the proliferation of complex global value chains (GVCs) and production networks in the late 1990s and especially the 2000s, markets have become much more interdependent and exposed, leading to intense competition among firms globally. In addition, as the East Asian economies move up the value chain, they can no longer rely solely on labour and physical capital accumulation to sustain economic growth. Innovation has become a critical component for these East Asian economies to stay competitive and relevant.

With the rapid advancement of information and communication technology (ICT), and the increasing use of robotics in manufacturing and services, the most competitive economies are knowledge-based economies (KBEs). As Powell and Snellman (2004) note, the “key components of a knowledge economy include a greater reliance on intellectual capabilities than on physical inputs or natural resources, combined with efforts to integrate improvements in every stage of the production process, from the research and development (R&D) lab to the factory floor to the interface with customers”.¹ Indeed, KBEs are highly versatile economies that rely heavily on R&D, as well as skills upgrading to advance industrial and service-related processes and products. Positioned high on the GVC, the advanced East Asian economies of Hong Kong, Japan, Singapore, South Korea and Taiwan thus need to constantly engage in the latest research and development to stay ahead of the curve.

The broader context of national innovation spans beyond the private sector. For highly innovative KBEs, the innovation environment encompasses the collaborative relationship between three major actors: the government, the industry and the academy (or universities). Importantly, Pan (2016) notes that one key feature of KBEs is that “these economies harness the resources of multiple actors, from the government to the industry to the academy, forging a trilateral synergistic relationship between the actors and sustaining a virtuous cycle of economic innovation”.² Theorised as the Triple Helix Model of innovation by Etzkowitz and Leydesdorff (1995), university-industry-government relations in national innovation systems signify the growing importance of triadic linkages and the shift away from the traditional industry-government dyadic model. Indeed, the authors of the Triple Helix Model expect the university to play an increasing role in KBEs, with universities transforming from being merely academic to more entrepreneurial in nature, responsible for the training, nurturing and development of young entrepreneurs through entrepreneurship and incubation programmes.

Among the developed Asian economies, Hong Kong and Singapore face the most pressure to climb up the value chain and become robust KBEs due to their relatively small geographical sizes and populations. Indeed, small land areas place a natural limit on both the accommodation of talent and the development of economic zones. On the other hand, the small geographical size of the two economies also makes it relatively easier for economic structural shifts to occur on a national scale. In addition, with a strong dependence on high-tech manufacturing and high-end services for economic growth, both Hong Kong and Singapore find it imperative to transform themselves into KBEs. As former British colonies which depended heavily on external trade and international finance, these two economies thus serve as meaningful case studies for comparison.

A stark difference in innovation systems between Hong Kong and Singapore is the role of the government. Hong Kong is generally regarded as a laissez-faire economy, with minimum intervention and planning done by the government, while Singapore practices a hybrid capitalism model, which involves much more state-directed economic strategies and planning. Consequently, in the context of innovation systems, conventional wisdom would posit that the private sector is the primary driver for innovation in Hong Kong, while the government is the dominant innovation driver for Singapore.

Taking a comparative perspective, this chapter examines the role of the government in driving domestic innovation partnerships in Hong Kong and Singapore. In particular, how and to what extent is the government significant in forging trilateral partnerships among the major actors of innovation? Does Hong Kong indeed follow a laissez-faire model of innovation while Singapore follows a state-directed developmental model? What is the trend like? This chapter posits a counter-intuitive argument: I argue that Hong Kong’s development model is becoming increasingly interventionist, due to stiff global economic competition as well as Hong Kong’s domestic political economy. Moreover, Singapore’s development will continue to stay firmly state-directed due to path dependence and the existence of robust institutions. Thus, short of drastic economic and political shocks, Singapore will retain a state-led model of national innovation system. Overall, this chapter contributes to the current political economy literature in two major ways:

•to examine the evolution of innovation systems of two important and comparable economies — Hong Kong and Singapore — in Asia, proposing a counter-intuitive argument that considers the complexity of domestic and international dynamics; and

•to draw on the developmental state theory from political science and the Triple Helix Model of innovation from business to investigate Hong Kong’s and Singapore’s economic development from a multidisciplinary perspective.

The Distinction Between Neoliberalism and Developmentalism

Economic neoliberalism advocates market forces over state intervention in the economy (Hayek, 1973); (Friedman, 1962). Closely related to the neoclassical economics mantra of free market competition, neoliberalism is an ideology that believes in the unfettered workings of the market, unhindered by the state except in cases of public goods provision. Moreover, Harvey (2005) notes that “[neoliberalism] is a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms with skills within an institutional framework characterised by strong private property rights, free markets and free trade”.³ According to Harvey, the state’s role is limited to creating and preserving the overall political, economic, and social institutional framework, and the state only intervenes in areas of public goods provision, where markets do not exist. Drawing from Adam Smith’s concept of the “invisible hand”, neoliberals believe that the market functions best without interference, allocating scarce resources efficiently according to the broad and unrestrained forces of demand and supply.

Neoliberals are highly skeptical of state power. As Milton Friedman famously writes, “When government — in pursuit of good intentions tries to rearrange the economy, legislate morality, or help special interests, the cost come in inefficiency, lack of motivation and loss of freedom. Government should be a referee, not an active player” (Friedman, 1962). Indeed, neoliberals argue that state intervention in the economy invariably distorts price mechanisms, which are important information cues to gauge market behaviour and consumer sentiments. Moreover, Corrales (2012) notes that “the price mechanism — or the opportunity to make a profit by finding the right price that a given market can afford — creates a powerful incentive for suppliers to take the risk of making large investments, adopt cost-cutting measures, incorporate new technologies, and develop new products and services”.⁴ The distortion of price mechanisms due to state intervention thus results in lower economic efficiency, lack of seller motivation and the loss of economic freedom.⁵ In addition, given that the state is prone to be captured by particularistic interests of politicians, interest groups, unions and rent-seeking lobbyists, neoliberals view industrial policy with disdain.

As Corrales (2012) further writes, “Top state leaders will reward top bureaucrats for the political service they fulfill or the political problems that they solve, rather than the public goods such as efficiency that they deliver”.⁶ Consequently, neoliberals believe that the government should keep its hands off the market as much as possible, intervening only in areas where the market is absent.

On the other hand, the developmental state model is antithetical to the core principles of neoliberalism. Advocating the selective use of industrial policy to drive the economy, the developmental state model goes directly against the neoliberal paradigm of free market competition. Nonetheless, the developmental state model arguably consists of some characteristics of neoliberalism in that the model embraces active participation in economic globalisation and world trade, where domestic “national champions” or high potential firms selected by the government to boost the country’s economy are ultimately exposed to intense competition. To note, national champions are first shielded by the government while in their developing stages and then gradually exposed to competition domestically and abroad. As Yeung (2016) notes, developmental states intentionally distort the market by “getting the prices wrong”, instead of following the market-based price mechanism, in order to “induce private entrepreneurs to participate in the state-led industrialisation programme”.⁷ Indeed, politics — not economics — plays a dominant role in developmental states.

From existing research, the key characteristics of the developmental state are:

•a political leadership that is geared towards economic development and has the political will to do so;

•an autonomous and meritocratic bureaucracy that is embedded in business network; and

•active use of industrial policy to promote and sustain economic growth.⁸ As Chalmers Johnson famously remarked, “politicians reign and the state bureaucrats rule” in developmental states (Johnson, 1982).

Consequently, the inextricable link between politics and economics as well as the dominance of politics in developmental states, makes it markedly different from the neoliberal model.

The developmental state model is most visible in East Asia. In fact, Chalmers Johnson first conceptualised the model to explain the meteoric rise of Japan in the 1960s and 1970s. Soon after, the model was used to analyse similar developments in three of the Asian tiger economies, notably South Korea, Singapore and Taiwan.⁹ Indeed, scholars used the developmental state theory to examine how these countries had deftly managed industrial development and economic policies to shore up economic growth and improve the standard of living for their citizens. On the other hand, Hong Kong was excluded from the list as it was deemed to have followed the neoliberal model. Without doubt, the developmental state model challenges the Western paradigm of neoliberalism, and argues against the idea that neoliberalism provides the only way to achieve economic progress.

The Triple Helix Model of Innovation

National innovation systems operate differently in neoliberal and developmental economies. This section discusses the different models of national innovation systems using an analytical framework called the “Triple Helix Model”, as theorised in Etzkowitz and Leydesdorff (1995), and Etzkowitz and Leydesdorff (2000). The triple helix framework focusses on the organisation of and dynamics between innovation actors, and posits a shift from a dyadic innovation collaboration between the indu...

Table of contents

• Cover
• Halftitle
• Title
• Copyright
• Contents
• List of Contributors
• Introduction
• PART 1 HONG KONG ECONOMICS
• PART 2 HONG KONG SOCIETY
• PART 3 POLITICS IN HONG KONG
• PART 4 CULTURE