The World Economic Forum recently released its latest Global Competitiveness Report, an annual ranking of 133 economies based on the Forum’s Global Competitiveness Index (GCI). The GCI tracks 12 pillars of competitiveness, including institutions, infrastructure, macro-economic stability, labour market efficiency and innovation. Hong Kong this year retained its 11th place ranking, while topping the financial market pillar. It also improved in the infrastructure pillar, placing second to Germany.
“Hong Kong undoubtedly remains one of the world’s major financial centres, and continues to lure both investors and companies,” the report noted. “This is partly because of its close links with the Chinese mainland’s financial markets.”
David O’Rear is Chief Economist of the Hong Kong General Chamber of Commerce, a partner institute of the World Economic Forum’s Global Competitiveness Network. In Six Questions, Mr O’Rear says Hong Kong’s determination to stay competitive will continue to spur it to raise its game.
In terms of business competitiveness, how is Hong Kong doing compared with other economies?
Hong Kong has always been among the most competitive economies in East Asia, first as a trading port, then in manufacturing and now in high-end business and financial services. It is telling to note that both London and New York, in separate analyses of global competitors, mention only Hong Kong as an emerging threat to their markets.
In this year’s Global Competitiveness Report, Hong Kong placed in the top 20. What are Hong Kong’s strengths, and where do you think it can do better?
Hong Kong has an international-standard economy, which means the rule of law, globally recognised accounting standards, safe and stable financial institutions, excellent physical infrastructure and one of the freest flows of information, capital, goods and people in the world. While there are areas in need of greater attention, most of those identified in the World Economic Forum study are areas in which Hong Kong does not compete. These include manufacturing, large domestic market size and production-based research.
What are the critical areas Hong Kong must address to improve its competitiveness?
Hong Kong’s own determination to remain competitive is the only factor that matters. If we think we are going to be overtaken by Singapore, as in the 1990s, or Shanghai now, it will spur us to raise our game by benchmarking against competitors.
How has the global economic crisis affected competitiveness in general?
This economic environment is highly unusual in that some 85 economies around the world are currently in, or just out of, recession. Typical recessions affect only 20 to 30 economies at a time, so this one is uniquely broad. And, as it is primarily a loss of demand that is causing contraction, all competitors are affected in pretty much the same way.
Besides these economic rankings, what’s the general message the Chamber is hearing from business?
Cash is king, and there isn’t enough of it going around. Small and medium-sized enterprises, in particular, are crying for operating capital in order to survive this terrible economic crash.
How would you compare the Hong Kong’s Government’s measures to tackle the crisis compared with other economies? Have they helped or hurt Hong Kong’s competitiveness?
The government has generally applied macro-level remedies in recent months, which have helped many medium- and larger-sized companies. However, the cash flow of smaller companies has not been directly addressed through, for example, the suspension of all kinds of government fees and charges. This is where the urgent need for greater attention is most obvious.
