In last year's World Competitiveness Yearbook compiled by the International Institute for Management Development in Lausanne, Hong Kong's competitiveness has jumped to second. This has made it the envy of many countries around the world. Analyses by various media organizations and scholars have ascribed this ranking to the advantages Hong Kong obtains from its relationship with China. Making a comparison with Taiwan, which ranks 11th, some have suggested that the key to improving Taiwan's ranking lies with the cross-strait relationship.
It is interesting to note that many who previously despised such rankings, have suddenly acquired faith in them. Certain media have also painted a rosy picture of the bright future that will dawn under "one country, two systems," adding that Taiwan is marginalizing itself by holding out against China. I believe that this attitude makes Taiwan seem like a nation of fools.
The World Competitiveness Yearbook bases its rankings primarily on a multinational analysis of current competitiveness and is therefore heavily influenced by short-term fluctuations in the economy. Ever since the bursting of the US dotcom bubble, the ranking of Taiwan's and Hong Kong's competitiveness have slipped. It is worth noting that in 2004, Taiwan managed to escape the world economic downturn and its ranking returned to the level it held in 2000. It took Hong Kong until last year to recover from the economic slump and in the current wave of recovery, Taiwan has improved its placement relative to Hong Kong, going from being 15 places behind in 2002, to only nine places behind last year. The same trend can also be seen in the indices for media freedom, economic freedom and clean government, in which Taiwan is clearly catching up with Hong Kong.
We should also look at the indices in which Taiwan has historically led Hong Kong. In the World Economic Forum's Growth Competitive Index, Taiwan increased its lead over Hong Kong by five positions last year. In the World Knowledge Competitiveness Index published by the Robert Huggins Association, Taiwan is now 15 places ahead of Hong Kong. In the US' political freedom index for this year, published recently, Taiwan is ranked with the US as among the freest countries in the world, while Hong Kong has retained its original ranking, which is below that of India. Over the last decade, Taiwan's GDP has grown by 16 percent, while that of Hong Kong has remained at about the same level as a decade ago and its unemployment rate now exceeds Taiwan's by 1.5 percent.
Looking across these various indices, we can see that in those in which Taiwan lags behind Hong Kong, Taiwan has managed to improve its position and in those in which it leads Hong Kong, it has increased its lead. It is worth noting that the indices in which Taiwan has increased its lead measure long-term growth and the effectiveness of industrial transition. And in areas such as unemployment and income, which most concern ordinary Taiwanese, Taiwan has seen improvements that have surpassed those of Hong Kong. It is therefore no surprise that there are councilors in Hong Kong's Legislative Council who have used Taiwan's example to berate the incompetence of the chief executive. In the recent Hong Kong protests demanding broader-based voting rights, there was even a banner declaring "Taiwan, we admire you."
I would like to ask that if people believe that hope for Taiwan's competitiveness lies in the cross-strait relationship, then what is wrong with Hong Kong? After all, it is the territory with the the highest level of economic integration with China.
David Su is a doctoral student in the department of economics at the University of Rhode Island.
Translated by Ian Bartholomew
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