Hong Kong has lost the long-time crown as the world’s most competitive economy, according to the latest rankings from the IMD World Competitiveness Centre.
Apparently, the key factor is a drop in Hong Kong’s score in infrastructure.
IMD evaluates competitiveness based on four major aspects– government efficiency, business efficiency, economic performance and infrastructure.
According to this year’s IMD ranking, Hong Kong continued to lead the world in government and business efficiency, and improved slightly in economic performance to 9th place from the 11th last year.
But on infrastructure, the city’s ranking dropped three places to 23rd in IMD report.
Strangely, in a separate ranking done by World Economic Forum (WEF) , the city came out as number one in its infrastructure ranking, despite the overall ranking being number six.
The sharp contrast between WEF and IMD lies in the way infrastructure is defined.
Specifically, WEF report largely focuses on physical infrastructure, including power, water supply, roads, railways, airports, etc. This is where Hong Kong has strength.
IMD break downs infrastructure into five sub-categories, namely basic infrastructure (such as power plants, roads, railways, airport, etc), education infrastructure, technological infrastructure, scientific infrastructure, and health and environment infrastructure.
It is our weakness in the last three items that contributed to the slip of Hong Kong’s IMD rating.
This is not difficult to understand. For example, many cities around the world already have high-speed Wi-fi coverage. We are still miles away from getting there.
Hong Kong lacks sufficient support for start-ups, scientists, research institutions in general. And the city also lags behind other global cities in introducing latest technologies.
In terms of healthcare, the city has the world’s best private hospitals, while the public healthcare sector struggles to meet rising demand.
Hong Kong has been investing heavily in physical infrastructure, such as high-speed railway, HongKong-Zhuhai-Macao Bridge and the third airport runway. Local authorities need to bear in mind that the city should also beef up its competitiveness in soft infrastructure.
This article appeared in the Hong Kong Economic Journal on May 25
Translation by Julie Zhu
[Chinese version 中文版]
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