Although Hong Kong and Singapore have remarkably similar social, economic, and historical profiles, their policies to promote economic and technological progress constitute an on-going natural experiment and provide a stark contrast. The well-documented, state-led information technology (IT) effort in Singapore is used here to benchmark the lesser known policies and interventions of the Hong Kong government and to examine their impact on IT innovation. Economic restructuring and political uncertainty in Hong Kong, resulting in the mass emigration of manufacturing operations and the professional elite, have prompted a traditionally noninterventionist state to selectively complement the invisible hand of market forces. The Hong Kong government has supported knowledge building and diffusion and helped to create public goods such as electronic commerce, but it has stopped short of guiding or directly subsidizing IT innovation efforts. Emerging IT issues and policy options are considered as Hong Kong becomes part of the People's Republic of China (PRC) under the principle of "one country, two systems". Free trade and information flows, efficient telecommunications, property rights protection, and technology management expertise are identified as critical factors if Hong Kong is to remain an attractive conduit for and recipient of technology transfer, and if its businesses are to sustain their fast-follower and focus strategies, synergize technological innovations from China and the West, and capitalize on the vast new domestic market.
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