HONG-KONG GOVERNMENT POLICY AND INFORMATION TECHNOLOGY INNOVATION - THE INVISIBLE HAND, THE HELPING HAND, AND THE HAND-OVER TO CHINA

Although Hong Kong and Singapore have remarkably similar social, econo mic, and historical profiles, their policies to promote economic and t echnological progress constitute an on-going natural experiment and pr ovide a stark contrast, The well-documented, state-led information tec hnology (IT) effort in Singapore is used here to benchmark the lesser known policies and interventions of the Hong Kong government and to ex amine their impact on IT innovation. Economic restructuring and politi cal uncertainty in Hong Kong, resulting in the mass emigration of manu facturing operations and the professional elite, have prompted a tradi tionally noninterventionist state to selectively complement the invisi ble hand of market forces. The Hong Kong government has supported know ledge building and diffusion and helped to create public goods such as electronic commerce, but it has stopped short of guiding or directly subsidizing IT innovation efforts. Emerging IT issues and policy optio ns are considered as Hong Kong becomes part of the People's Republic o f China (PRC) under the principle of ''one country, two systems.'' Fre e trade and information flows, efficient telecommunications, property rights protection, and technology management expertise are identified as critical factors if Hong Kong is to remain an attractive conduit fo r and recipient of technology transfer, and if its businesses are to s ustain their fast-follower and focus strategies, synergize technologic al innovations from China and the West, and capitalize on the vast new domestic market.