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Hong Kong innovators

Why the Hong Kong government can’t buy its way to an innovative tech scene

Letty Kwan and Chi-Yue Chiu say true innovation comes from not just financial support, but also strong institutions that allow an open exchange of ideas

PUBLISHED : Sunday, 10 April, 2016, 1:00pm
UPDATED : Sunday, 10 April, 2016, 3:46pm

The Hong Kong public should be familiar with the rhetoric, if not the efforts, of successive administrations to drive innovation, often seen as the holy grail of economic development.

The latest push came in the form of a HK$17 billion package in this year’s budget to finance research projects, encourage small firms to invest in research and development, support local start-ups and assist university teams to commercialise research results. Meanwhile, a report by Our Hong Kong Foundation suggested that we should take a holistic approach by increasing investment in research while ensuring the regulatory environment creates space for innovation.

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These proposals are laudable. But evidence shows that the mere injection of taxpayers’ hard-earned cash into the technology ecosystem is not enough to engender innovation that drives lasting economic growth.

Innovation output can be measured by the quantity of new ideas, products and services, and its benefits can in turn be measured by the impact of these on the local economy. But the most valuable output is achieved when those services and products enjoy transformational global influence. Facebook, Google Maps and the iPhone are cases in point.

R&D investment can improve innovation by attracting talent. However, the supply and quality of global talent (human capital) are not in themselves enough. A key factor is institutional support – a stable sociopolitical environment that safeguards press freedom and the rule of law.

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A recent study by the Chinese University of Hong Kong examines, for the first time, the interactive effects of human capital and institutional support. The results confirm that talent plays a critical role in driving innovation, but also that the creative power of human capital can only be harnessed by a culture that encourages open exchanges. An economy is more likely to achieve transformational innovation if it also possesses strong institutional support.

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Where, then, does that leave Hong Kong? We have a transparent government, comprehensive intellectual property protection, a sophisticated legal system and an independent judiciary. Our society is open to ideas. Nonetheless, as the study shows, transformational innovation in a society only flourishes when institutional support is upheld by the public.

The government has made clear its intentions. But the high standards of an efficient government can slip; the rule of law can be undermined; a fair judiciary can be compromised. To ensure that the conditions remain ripe for innovation, we must protect the integrity of our institutions.

Letty Kwan and Chi-Yue Chiu are professors of psychology at the Chinese University of Hong Kong