Innovation plays a crucial role in pursuing long-term economic prosperity. Hong Kong and Singapore are Asian leaders in the innovation race and aim to be global hubs for innovation and technology.A study by ACI analyses the innovation performance disparity between Singapore and Hong Kong from three perspectives – R&D, education and economic connectivity.

R&D Expenditure and Personnel

Singapore is a forerunner in Asia’s innovation landscape. In 2021, Singapore recorded over 6,000 patents and generated revenue of more than US$11.6 billion from intellectual property, whereas Hong Kong only earned US$0.7 billion in 2020.

Singapore’s success in nurturing and attracting R&D personnel is one of the factors contributing to its edge over Hong Kong in innovation. For example, to expand its talent pool, Singapore’s Service Obligation Scheme requires international student recipients of government scholarships to work for Singapore for years after graduation. As shown in Figure 1, the R&D workforce is higher in Singapore than Hong Kong. This indicates that Hong Kong has been a less attractive destination for R&D talents. Though Hong Kong has spent efforts in accumulating human capital, such as the Top Talent Pass Scheme, the policies are yet to yield significant results.

Consistent investment in R&D talents and research excellence also explains the disparity in R&D performance. Singapore has allocated increasing investment for Science and Technology Plans to boost technological innovation, from $6 billion in the 2005 Plan to $25 billion in the 2025 Plan. This contributes to its relatively robust R&D intensity, compared to Hong Kong. Even when Hong Kong’s R&D intensity reached the highest historical level of 0.99% in 2020, it was only half of Singapore’s.  

Education

Hong Kong displays a remarkable commitment by its government to achieving educational excellence. This serves as a strong foundation for Hong Kong’s policymakers to leverage and transform their investments into tangible returns.

However, Hong Kong still lags behind in the tertiary education attainment rate among populations beyond 25 years old. ACI research indicates that Singapore’s tertiary education attainment rate has increased from 21.8% in 2000 to 48.3% in 2020, while Hong Kong experienced a minor improvement from 15.6% to 32.8%.

Economic Connectivity

Economic connectivity is another vital link to the communications and transfers of innovative knowledge and technology. Low corporate tax rates, efficient tax services and openness in trade allow Singapore and Hong Kong to be attractive places for foreign direct investments (FDI). The number of regional headquarters in Singapore gives evidence of its attractiveness as a top FDI destination. Although nearly half of the headquarters based in Asia are located in Singapore, the number of regional headquarters in Hong Kong has also been steadily rising in recent years.

Foreign firms have brought significant contributions to Singapore’s innovation performance. Foreign investors in Singapore contributed 87% of the total patent applications and 94% of the patent registrations in 2020.

The study highlights that efforts to enhance economic connectivity and foster vibrant business ecosystems remain imperative for Singapore and Hong Kong to maintain their competitive edge and seize new opportunities.

By HUANG, Yijia

Researchers: FAN, Litianqi, ZHANG, Xuyao