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MIT study predicts bright economic future for Hong Kong

A year-long MIT study is bullish on Hong Kong's prospects for the 21st century, even though the People's Republic of China will assume control of the territory's prosperous free economy on July 1.

Professors Richard K. Lester of nuclear engineering and Suzanne Berger of political science conducted a seminar for invited guests yesterday (April 8) in Hong Kong on the findings of the study, "Made by Hong Kong." It was published by Oxford University Press and will be available next month.

Professors Lester and Berger both worked on the highly respected 1989 report by the MIT Commission on Industrial Productivity entitled "Made in America/Regaining the Productive Edge." Professor Lester is the founder and director of MIT's Industrial Performance Center.

The new report, based on 516 visits to 350 Hong Kong companies and organizations, draws its conclusion in simple, straightforward language: "We see a future for Hong Kong as a world-class industrial power."

In remarks taped at MIT to welcome the audience at the Hong Kong seminar, President Charles M. Vest said, "The report suggests that the keys to Hong Kong's economic future are strong investment in research and development on the one hand, and investment in the professional and educational development of its workforce on the other.

"Throughout the world, the foundation is being laid for the evolution of a new generation of technology-based products and services--products and services that will appeal to the constantly evolving markets and partnership opportunities in East Asia, Europe and the Americas. Hong Kong can play a major and effective role in this evolution."

The report, conducted by a 22-person MIT team, calls for the Hong Kong business, government and educational communities to dedicate themselves jointly to developing strategies and resources in six vital areas:

  • Strengthening the capacity to create new products and processes
  • Upgrading the capabilities of the industrial workforce
  • Strengthening the public institutions of "safe harbor"
  • Increasing the rate of formation of technology-based enterprises
  • Increasing government's technological competence.
  • Making the territory more attractive to technological experts from the West and the People's Republic.

"The higher value-added goods in the 21st century will be service enhanced products," the report says. "Such products bring together manufacturing and services in ways that defy our conventional statistical categories."

The report notes that the Hong Kong economy's traditional strength has shifted rapidly from products "made in Hong Kong" to those "made by Hong Kong." Industry now contributes 9.3 percent of the territory's gross domestic product, compared to 23 percent 13 years ago. It says: "Hong Kong firms make goods through long production chains that may start in Hong Kong but use manufacturing sites in the Pearl River Delta, further inland and beyond; in Indonesia, the Philippines, Burma (Myanmar), Malaysia, Mauritius, Africa, and more recently, even in Latin America."

The research was sponsored by the Hong Kong Industry and Technology Council, the Better Hong Kong Foundation, the Hong Kong Trade Development Council, Chen Hsong Holdings Ltd. and the Hong Kong Industrial Technology Centre Corp. It was coordinated by the Hong Kong Government Industry Department and the Hong Kong Productivity Council.

"The participation of Hong Kong's business and governmental leadership in this study represents an important step toward the creation of a business climate that can foster a new generation of products and services, and create new markets for businesses worldwide," President Vest said.

"MIT remains committed to the idea that government, industry and the academic community can work together to increase mutual understanding and to develop pragmatic strategies for technological and economic advancement. We believe that this type of cooperation must transcend international borders--and we see our participation in `Made by Hong Kong' as a model for this type of cooperative international endeavor--one that will build stronger bridges of understanding and cooperation between Hong Kong and US industry.

"Of course, we are also very pleased that this study has given us a chance to work closely with a community that has produced so many accomplished MIT alumni. Three of them have been instrumental in the creation and design of the `Made by Hong Kong' project: David Wong, the chairman of Dah Sing Financial Holdings Limited; Kenneth Fang, chairman of the Hong Kong Productivity Council; and Victor Fung, chairman of the Hong Kong Trade Development Council."

Professor Lester, director of the MIT Commission on Industrial Productivity as well as the Industrial Performance Center, and Professor Berger, director of the MIT International Science and Technology Initiative, edited the report. They were assisted by 10 senior researchers and 10 student researchers.

"On behalf of MIT's faculty and administration, it is my pleasure to offer our profound gratitude to each of these distinguished individuals for the work they have done in support of this study and of the ever-stronger ties between MIT and the Hong Kong business community," President Vest said.

The report will be the centerpiece of a two-day conference at MIT May 15-16 entitled "`Made by Hong Kong': Changes and Opportunities of 21st Century Industry in Hong Kong and China."

A version of this article appeared in MIT Tech Talk on April 9, 1997.

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