Too much brawn and not enough brain was the nub of the World Economic Forum's (WEF) severe downgrade of Hong Kong in its annual competitiveness survey. The SAR was stuck in an outdated entrepot model of economic development and had failed to grasp innovation as the new driver of growth. The Government takes such league tables incredibly seriously. Last year, it rolled out the red carpet to the Heritage Foundation after the SAR was returned to first place in its 'economic freedom' index. Having dined out on accolades in the good times it seems churlish now to reject a bad finding. As such, the report is a wake up call - SAR education levels are indeed poor, academia remains on the fringes of commercial life and public policy, while reform in key areas affecting competitiveness such as anti-trust policy has been snail-paced. However, the findings should be taken with a pinch of salt. The SAR ranks highly in surveys based purely on objective criteria of economic openness. The WEF compilers have a fixation with technology as the dominant driver of economic growth, which is contested by many economists. Hong Kong is a metropolitan economy principally connected to the Pearl River Delta. As such, it is similar to trading and finance hubs like New York and London, neither of which is a great innovator in pure science or technology development. SAR firms enjoy widening re-export margins and high returns on capital. There is a much stronger argument that economies that emphasise high levels of personal liberty, fully contested markets, good education and efficient government do well. The Harvard Business School compilers of the report particularly praised Singapore's state-sponsored move into life science industries. Unfortunately the savage downturn in Asian economies that force-fed capital into high-technology ventures raises serious questions about such an approach. Hong Kong must not ignore a comprehensive analysis that relies heavily on input from key business decision makers. Equally, it should not ditch its principles when much of the techno-babble about new economic paradigms is unravelling.