The rapid advancement of the service industry in Hong Kong has significantly grown. Information technology, engineering, and physical science talents run away to the dynamic service industry and Greater Bay Area Development. Intangible capital such as human capital and knowledge, rather than physical capital and the labor force, is essential for production in an experience-based economy like Hong Kong (Noked, 2019). The quality and efficiency of productivity and growth of an economy depend on the innovative capacity and the ability to accumulate relevant knowledge. Industries that are as knowledge-intensive as high-tech have become strategic while increasing the knowledge base of the ancient forms of enterprises has become the recent objectives of policy developers. The resource base in Hong Kong is relatively weak, and the trend has led to engineers’ and scientists’ insufficiency to help in high technology advancement. Hong Kong, for instance, has fewer skilled research experts and scientists as compared to other nations. For every 10,000 laborers, for example, there are only ten specialists in science in Hong Kong. Japan’s is 80, 78 in the US, and Singapore’s is 45. Despite huge education investment and growth of pot secondary systems of education over the last two decades, students admitted to colleges and universities in Hong Kong tend to concentrate more on non-science and discipline subjects. Statistics indicate that 24.6% go for business-related programs, 32.7% from arts and social sciences, information and technology, and Engineering disciples in general account for 22.8%, and finally biology, mathematics, and physical disciplines account for 10.6%. The rapid rise of the service industry and the Greater Bay development area is why talents run away from the information technology industry.
Dynamics in the industry
In 1998, the Hong Kong government founded the Commission on Innovation and Technology to establish the best alternative policies to enhance knowledge-based and high technology sectors. In the 9990s, Hong Kong’s government shifted to a relatively active tech policy development as one of the ways to commit its resources and efforts to the knowledge-based and innovation economy. The dynamics pose a significant problem because the experience-based has bent towards the service industry (Cao., 2017). The government has established R&D infrastructure development stimuli to encourage by investing in science parks such as the Park at Tai Po in the New Territories to give premises and land for the development of high tech activities and firms. For example, Hong Kong’s government launched its state of the art Cyberport program in collaboration with private industries such as the Pacific Century Cyberworks Ltd to offer appropriate infrastructure for high technology development. These dynamic programs and strategies would pool technology talents and other technology investors back to Hong Kong.
Hong Kong should focus on knowledge content of insurance, banking, brokerage, and other service industries by encouraging and popularizing the internet. Contrary to these essential objectives that Hong Kong Should focus on, the available high-tech stock and diverse forms of the resource base for the development of technology industries do not meet global standards. They are weak, making the country lag in technology. Even though the country remains one of the most competitive global economies, its competitiveness from high tech standpoint has relatively weakened over a couple of decades ago. A competitiveness study involving 46 countries in indicated that in the last two decades, Hong Kong dropped from position 10 to 25 between 1992 and 1995 and had its competitive average score fell below the overall average. Hong Kong dropped from 15th to 29th position between 19932 and 1998, 9th to 23rd in scientific spheres, and 6th to 11th in technology management. The research study indicates that the overall failure of the Hong Kong high tech development is accounted for by the fact that the country’s manufacturing sector was occupied and dominated by relatively smaller firms and as well the production of light consumer products that are labor intensive. Literature confirms that such good producers are unlikely to venture in R&D activities. Hong Kong’s investment in R&D was also low compared to buy in other more significant economic sectors and NIEs.
Low Hong Kong’s industrial policy can best be defined as an “maximum support and minimum intervention” approach. The government’s industrialization had long been laissez-faire, contrary to the strategic directions in other high ranking technology Asian countries. Hong Kong did not have a specific industrial strategic policy for high technology advancement, and therefore, the allocation of resources was compromised (Lam & Fu., 2019). Hong Kong’s support policy for industrial development was indirect, basically targeted at ensuring that there are adequate infrastructure and input factors such as land for construction and establishing a conducive environment to enhance competitiveness and involvement of the private sector. The open market policy would best suit its strategic plans. The tax system and financial market policies were poorly designed and did not meet the global standards. To a greater extent, the intervention policies were confined to the microeconomic levels and were unfavorable to policies regarding land ownership, transfer, and development, hence discouraging investors. The existing policies prevented the public sector investors, especially technology, especially from the technology-based industries (Loon & Chik., 2019). The government policies have limited direct R&D involvement. The Hong Kong government also had a low long-term strategic approach. It did not support public participation in different activities such as knowledge development because to establish a technology hub, a knowledge base is essential. Otherwise, the development plans are set to fail, given market performance and ranking in terms of competitiveness. However, the government is committed to laying down operational policies to counter the policy failure and programs in the Honk Kong High tech industry that has fallen as compared to other Asian country counterparts, especially in the high tech sectors.