Public policy bulletin (First Issue - June 2022)

2 between the two c i t ies . Hong Kong i s a spec ial administrative region of China but is governed by its own highly autonomous institutions, while Shenzhen has been selected as China’s first special economic zone, enjoying a certain degree of flexibility in economic development. Because of its historical status as an entrepot, economic policies in Hong Kong are still influenced by a laissez-faire tradition. In contrast, Shenzhen’s administrative structures are integrated with Mainland China’s central ized political and legal apparatuses. Moreover, Shenzhen is a commercial and industrial epicenter serving South China, whereas Hong Kong is a trading and financial gateway connecting China and the world. Our paper considers Hong Kong and Shenzhen’s “crossborder regional innovation systems (CBRISs)” (Trippl 2010). In this study, we defined a border as the territorial dividing line between two regions of the same country with distinctive institutional, social, and cultural environments (Asheim et al., 2011; OECD, 2013; Sohn, 2014). Using this comparative framework, we sought to answer several important questions. First, what are the main differences between innovation policies in Hong Kong and Shenzhen? Second, how well do they make use of their synergy? Third, are there any areas in which comprehensive collaboration would pay dividends? Fourth, what are the obstacles to such collaboration? Study Methodology To minimize subjective interpretation, we appl ied hierarchical cluster analysis (HCA), a statistical method that is used to identify groups/categories that share distinctive characteristics based on information provided in a set of data. First, we collected documents on innovation policies in the two cities and adhered closely to the guidelines set by the European Commission for identifying relevant innovationpromoting policies. We read and summarized each of these documents in detail and assigned variables to describe the characteristics of these policies. Second, using these character ist ic var iables , we implemented HCA to generate two unique tree diagrams of hierarchical clusters that visualized the structure of innovation policies in Hong Kong and Shenzhen. The HCA method also enabled us to identify distinctive clusters of policies from these tree diagrams based on which agencies formulated the policies, which sectors the policies targeted, and the content of the policies. Third, by comparing the tree diagrams of Hong Kong and Shenzhen, we obtained insights that were useful in addressing our research questions. Findings and Analysis Our most remarkable finding reveals a sharp contrast between the innovation policy frameworks of Hong Kong and Shenzhen. According to the algorithm, the number of policy clusters in Hong Kong is 20, indicating a highly fragmented policy structure. Moreover, differentiation between these policy clusters is low, reflecting extensive functional overlap. In contrast, policy clusters in Shenzhen are fewer and highly concentrated. The algorithm suggests that its number of policy clusters is 7. Moreover, differentiation between policy clusters in Shenzhen is significantly higher than that in Hong Kong, reflecting a clear division of duties. This is because innovation policies in Shenzhen are designed following a clear, top-down, and highly targeted approach. Another essential finding is that, according to Lundquist and Trippl’s stages-of-integration model (2013), these two innovation hubs are operating at the weak integration stage wi th low social acceptance of integrat ion, persistent wide gaps in institutions, and lack of mutual trust. Agencies in Hong Kong have begun developing channels with Shenzhen in innovation-related areas, but encouraging outcomes are rare, reflecting divergent, overlapping, and uncoordinated policy agendas in Hong Kong. Recently, nevertheless, accompanied by regional initiatives designed to promote regional integration (e.g., the GBA initiative), growing linkages in scientific and technological areas (e.g., Hong Kong’s research institutes and branches in Shenzhen), and improving physical accessibility (e.g., high-speed rails and cross-border bridges), the relationship between these two innovation centers has come more closely to resemble the semiintegration stage. Recommendations After comparing innovation policy frameworks between Hong Kong and Shenzhen, we identified four areas – as well as the agencies that would be involved – with considerable potential for cross-border collaboration. They are summarized in Table 1. Innovation policies in the Greater Bay Area: Hong Kong and Shenzhen P u b l i c P o l i c y BULLETIN