Reindustrialisation the key to Hong Kong’s race for productivity and growth in the digital era

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A race for productivity is emerging in this new economic era. Covid-19 has further hampered what has been a “decade-long trend of weak productivity growth”, according to the global business research group, The Conference Board. Long-term productivity is crucial as it improves living standards, creates more and better jobs, higher wages, greater equality and a more diverse economy.

All eyes are on innovation and technology as the answer to the productivity challenge. The International Monetary Fund (IMF) found that as Covid-19 recedes, investment in intangible assets such as digital technologies and patents may result in higher productivity, versus smaller gains from investment in tangible factors like buildings and infrastructure. A 10 per cent rise in intangibles could raise productivity by 4.5 per cent, according to the IMF.

For advanced economies like Hong Kong, intangibles such as technology have to be the focus as the workforce is ageing and population growth is low, while land is scarce with costs continuing to rise. But the key must be to invest in technology that truly makes workers work smarter and more efficiently, and not simply work longer.

Hong Kong’s potential is in reindustrialisation and the prospect of revitalising local manufacturing as a pillar of the city’s economy. Asia, in particular, is seeing rapid adoption of Fourth Industrial Revolution Industry (4IR) technologies such as AI, IoT, data analytics, robotics and automation to fuel new industry.

The city has genuine potential to lead the world in advanced manufacturing processes and precision manufacturing that can drive new products and new sectors but, crucially, forge new skills and career paths.