Hong Kong takes 7th place for global competitiveness but lags Singapore in 2018 World Economic Forum study

Hong Kong has outperformed Singapore in entrepreneurship but fallen short in innovation by taking seventh place in a study of global competitiveness by the World Economic Forum.

The Geneva-based institution placed the Lion City in second and the United States No 1 in the 2018 edition of its Global Competitiveness Report released on Wednesday.

The non-profit organisation mapped out the rankings using a revised methodology with 64 new indicators including social capital and entrepreneurial culture to take account of technological change.

The researchers also restructured 12 existing “pillars” used to judge the competitiveness of economies. These categories this year were institutions, infrastructure, information and communications technology adoption, macroeconomic stability, health, skills, product markets, the labour market, financial system, market size, business dynamism and innovation capability.

Hong Kong and Singapore were placed sixth and third respectively in last year’s report. But when researchers reinterpreted last year’s data using the new methodology, Hong Kong’s 2017 position was seventh, and Singapore’s second.

Thierry Geiger, the institution’s head of research and regional impact, future of economic progress, said Hong Kong had performed better than Singapore in terms of entrepreneurship this year. However, it lagged the city state by “quite a margin” in international invention, which takes into account innovations by non-locals and foreign researchers. In essence this category looks at the diversity of the research community.

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“Hong Kong is not bad, but it tends to lag behind Singapore on some of these issues,” Geiger said.

“Singapore spent much more on research and development as a percentage of gross domestic product than Hong Kong – three times as much. So that’s the big difference.”

The think tank said the latest rankings confirmed the widely held view that growth momentum behind economies in East Asia and the Pacific was set to last.

“[Hong Kong, Singapore and Japan] boast world-class physical and digital infrastructure and connectivity, as well as macroeconomic stability, strong human capital and well-developed financial systems,” it said.

In macroeconomic stability and health, Hong Kong was crowned the winner. The city came second in another four pillars – infrastructure, information and communications technology adoption, product markets and the financial system.

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Its weakest sector was innovation capability, in which Hong Kong scored 61.9 out of 100. Singapore notched up 75 in this area.

Geiger said it was “quite remarkable” to see Hong Kong in the top 10 for seven of the 12 pillars. The challenge for the city was “to become even more innovative”, he said.

Japan ranked fifth, up from eighth place last year, based on the revised methodology, which comprised 98 indicators in all. Taiwan and South Korea came 13th and 15th, while China secured 28th place. Chad ranked the lowest.

Hong Kong General Chamber of Commerce chairman Aron Harilela said he was pleased to see the city maintaining its traditional strengths.

“These elements continue to support Hong Kong’s status as a premier international financial centre and a hub for trade and transport,” Harilela said.

The chamber acknowledged concerns the city was being left behind on innovation, but said Hong Kong would catch up and eventually become a front runner in this area.