The View | Hong Kong must invest in knowledge to stay relevant in the hyper-globalised world
Hyper-globalisation has gripped the world since 1990, but we are only beginning to understand it. Hyper-globalisation differs from the old globalisation of 1820 to 1990, because it is happening at a much faster speed and has resulted in a much higher degree of global economic integration in the societies it has impacted.
Whereas the old globalisation was driven primarily by declining transportation costs, the new hyper-globalisation is driven by the information and communications technology revolution, according to Richard Baldwin’s 2016 path-breaking study entitled The Great Convergence.
Baldwin reasons that this revolution made it possible for headquarters to deploy global supply chains and retain effective control of offshore production operations. In essence, factories can now be shipped out, foreign workers effectively managed, and only limited knowledge needs to be transferred to foreign economies. Headquarters are more willing to transfer niche know-how to offshore operations rather than total know-how to foreign operations.
China became deeply integrated into the global economy on a scale totally unimagined in 1979. Its opening enabled hyper-globalisation to blossom and China to thrive with critical input from Hong Kong. Businessmen and professionals from free market Hong Kong became the ideal tutors to show China how to build the most friendly business environment in a socialist economy for attracting foreign investments.
The abundant supply of Chinese workers transformed coastal China into the world’s dominant offshore manufacturing base for companies in the rich industrialised economies. But not everyone did well out of this arrangement.
