Hong Kong has top high-tech research and development institutions. It lacks the Fourth Industrial Revolution innovation partners. As manufacturing left in the 1990s, the city excelled in entrepot trade, supply-chain logistics, finance and tourism. Should it reinvent itself as an expanded innovation and technology hub with Shenzhen? Oswald Chan reports from Hong Kong.

The Hong Kong Special Administrative Region allocated a substantial HK$200 billion ($25.7 billion) for innovation and technology (I&T) development. The weak link in its ecosystem for I&T is its "knowledge and technology outputs" as identified by the World Intellectual Property Organization (WIPO), citing a deficiency in technology commercialization: "The city has not yet been able to translate costly innovation investments effectively into more and higher-quality outputs. ... It produces less innovation outputs relative to its level of innovation investments."

WIPO monitors 133 economies across 80 indicators of innovation, grouped into innovation inputs and outputs, to rank subjects. It sums its matrix of innovation into a net index.

Hong Kong's ranking dropped over half-a-decade from 11th in 2020 to 18th this year, in both innovation inputs and outputs. For the 2024 WIPO list, Singapore (fourth) and South Korea (sixth) are in the top 10, above Germany (ninth). Japan (13th) is out of the top 10. The Chinese mainland (11th) stands next to Denmark (10th).

Hong Kong performed poorly for "business sophistication" and "infrastructure", with "knowledge and technology outputs" ranking lowest. It did well in indicators for "market sophistication", "institutions", "creative outputs" and "human capital and research".

It is a moot point whether the city should redefine its I&T ambitions beyond itself, as a fully integrated joint hub with the high-tech showcase of Shenzhen. The reality is that manufacturing capacity has left Hong Kong, and the center of gravity for technology innovation is firmly anchored in the leading universities of Beijing, and State-directed technology companies. Technology testing and prototyping is implemented in the high-tech base of Shenzhen. Hong Kong continues to be the financial center for startups to raise equity.