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How Did Hong-Kong Become the Most Competitive Economy in the World? Hong-Kong Surpasses the USA in Competitiveness, According to an IMD Report

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香港如何成为全球最具竞争力经济体?According to an annual report recently published by IMD, a renowned Swiss business school, the USA has surrendered its status of the most competitive economy in the world to none other than Hong-Kong. The USA is only ranked 3rd at the list, while Switzerland, the IMD home country, came second. And while overcoming the USA in competitiveness is an enormous achievement for Hong-Kong’s economy, it is no less important to note the slide of Hong-Kong’s closest competitor, Singapore, one position down to the 4th place in the list. In fact, Singapore has succeeded to surpass Hong-Kong on the list only once, in 2014.

What is it, then, that makes Hong-Kong’s economy so competitive? According to Bloomberg, Singapore’s stricter rules on hiring foreign labour and government policies boosting labour costs are the key factor in decreasing its competitiveness, while Hong-Kong is leading in favourable business legislation and public finance, and keeps improving its labour market in terms of work hours, skill levels and skilled workers immigration. However, the Hong-Kong labour market may become less flexible, with the introduction of new tendering guidelines, requiring government institutions to assess wages of subcontracted employees, starting July 1, 2016. Hong-Kong’s government is the biggest single employer in Hong-Kong, and thus labour conditions in Hong-Kong will improve for unskilled workers as well – but stricter wage policies also mean less flexibility and less competitiveness.

Being one of the biggest trade hubs in the world, Hong-Kong is truly a global city. The investment in infrastructure, favourable business conditions and openness for expatriate skilled workers, are the key factors in making Hong-Kong the world’s leader in competitiveness. City Venture, a new CIV research strand, studies the phenomena turning a city into a success, venture-wise: how can a city favour the inception of ventures within it, nurture them and benefit from their growth? What are the conditions enabling these developments, and no less importantly, what are the factors that can make cities and ventures fail?

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