Innovation for Hong Kong's Upward Social Mobility

19 Since the 1990s, Hong Kong has encountered many obstacles in developing a knowledge-based society and advancing technology and innovation. As a result, Hong Kong has fallen behind other developed economies in the region, and faces the risk of being marginalized38. Under the national policy of building the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), Hong Kong should seize this opportunity to seek economic transformation by examining current pain points and making the best use of the advanced experience of Mainland China and the world. This chapter reviews the main factors hindering the development of Hong Kong’s technology and innovation industries, including government, infrastructure, cultural and social domains, and explores the future development opportunities. 3.1 Government: Insufficient Investment in R&D, Incoherent Policies and Insufficient Coordination, Laissez-faire Economic Policies, and Lack of STEM-oriented Policies in the Education System 3.1.1 Insufficient investment in R&D: The Hong Kong government has long been criticized for its allocation and management of resources dedicated to technology and innovation. According to the Census and Statistics Department, Hong Kong spent HK$24.5 billion (US$3.14 billion) on R&D in 2018. In 2018, the GERD as a percentage of GDP was only 0.86%39. According to the latest World Bank data,40 this figure lags far behind South Korea (4.81%), Japan (3.26%) and Mainland China (2.19%), and is much lower than the average 2.37% of the Organization for Economic Cooperation and Development (OECD) member economies.41 Low public R&D investment has had its consequences: the lack of R&D investment inevitably limits the number of research results, which is clearly reflected in the number of patent applications. According to the WIPO, Hong Kong, amongst the more than 100 economies surveyed in 2019, only applied for 429 patents. This is in sharp contrast to the thousands or even tens of thousands of applications from economies such as Sweden, Finland, Singapore, and Israel, which have similar economic volume and populations. When compared with Mainland China, Hong Kong’s applications represent less than 1%. As OECD experts Guellec and van Pottelsberghe (2001) pointed out, R&D performed in public sector, in particular the higher education sector, have a substantial impact on economic growth in the long run.42 At the end of 2018, the Hong Kong government promised to increase its R&D expenditure to 1.5% of GDP before the five-year term of Ms Carrie Lam Cheng Yuetngor’s current term of government expires. This shows that the Government has taken a substantial and hopeful step in the right direction to accelerate the development of Hong Kong’s technology and innovation industries. 3 Challenges for the Development of Hong Kong’s Technology and Innovation Industries 38 Xinqi, S. (2018, May 14). Hong Kong must ‘innovate or die’, new study warns. South China Morning Post. 39 Table 207 : Research and development (R&D) expenditure by performing sector | Census and statistics department . (2019, December 23). Census and Statistics Department. 40 The World Bank, Research and development expenditure (% of GDP), 41 OECD, OECD Main Science and Technology Indicators, 2019 data release, 42 OECD. (n.d.). R&D AND PRODUCTIVITY GROWTH: PANEL DATA ANALYSIS OF 16 OECD COUNTRIES.