Prof. Chung Yue Ping & Prof. Chen Shuangye
In the recent White Paper Proposal of "Theme-based Research", two of our colleagues revisited the concept of human capital and brought our attention to the connection between human capital and enduring competitiveness of Hong Kong.
Hong Kong is being challenged by cities and areas like Shanghai, Shenzhen, Taiwan, Singapore, Dubai, and cities in European Union for a competitive position of regional and international business. The traditional geographical advantage and the competitive economic scaffoldings in Hong Kong will not lose the attractiveness but may not guarantee a competitive edge in the era of new business in global-information society. People and human resources are of the same importance with economic infrastructure to be taken into consideration in the conscious and deliberate framing of Hong Kong as regional and international business center. Human capital in Hong Kong should be considered as one of the strategic potentials for developing Hong Kong's competitiveness as regional and international business center.
With its historical legacy with the Western world and its geographical proximity to China, Hong Kong has long been a major center where the East meets the West and a major port for regional and international business. The phenomenal economic growth of China and dynamic development of Asian economies in recent decades open up new opportunities for Hong Kong in its further development as an important business center.
In the global-information society, traditional business centers are challenged by the compression of time and space, and the virtual communications facilitated by information technology. However, via the physical or virtual, a highly valued business center should be a place where transactions can be settled and maintained most efficiently and effectively. It depends on the evolving of an institutional environment (North, 1990) and the structuring of governance mechanisms (Williamson, 1996) conducive to growth in such direction.
While there are concerns in the economic scaffoldings (such as risk management & property rights management) leading to "autonomous adaptations" to changes, there should also be due attention to the "coordinated adaptations" to changes that Hong Kong is facing when trying to establish itself as a regional and international business centre. Such coordinated adaptations should depend largely on the capacity of the actors, acting either independently or in group, in realizing and responding to incentives and institutional constraints. This is the "Human Capital" dimension in economic development emphasized by the Nobel Laureates Theodore Schultz (1961) and Gary Becker (1964, 1993). Hong Kong should educate, retain, and facilitate mobility of human resources capable of dealing with disequilibria encountered locally in relation to growth in China, in the region and to globalization.
In the recent OECD (2002, 2009) and European Union (2009) policies, education and international mobility of highly skilled are given increasing attention as human capital strategy for gaining economic competitiveness. In the Asian regions, Chinese Mainland, Taiwan, Korea, Japan, Singapore and Dubai are investing heavily on higher education as what EU does to increase their economic competitiveness.
Business transactions cannot possibly take place in a vacuum without any actor(s) making decisions at different levels. Such decisions need a deep awareness of the local institutional environment/ constraints and an extensive experience with the local specific practices, in additional to the general knowledge learned in school or university.
In Schultz's (1961) original discussion of human capital, investments in human capital include resources committed to education, health and mobility which enhance labor productivity. Labor mobility is considered an important investment in the human capital. With the "compression of time and space" through the internet and the ramifications of globalization, labor mobility should receive new conceptualization and refreshed analysis. Wage differentials may not be the only motivation for labor mobility from the individual perspective. The more educated human capitals and those with more financial capitals are NOT moving, as expected, to the less developed regions where they are more highly valued comparatively. There are social, political and cultural considerations too. For example, studying abroad has also initiated and resulted in mobility of the more educated and better-off human capital to the more developed regions.
According to Bourdieu's (1986) classical understanding of capitals, economic capital can be produced and sustained by conversion of other forms of capitals, like social capital and cultural capital. To be applied in the issue of Hong Kong's strategic position of business center, developing competitive advantage of Hong Kong can be translated into nurturing, developing and sustaining volume and varieties of different capitals, which can be converted and multiplied. Human capital is one of the foremost strategic capitals. It can generate interactive effect on other capitals. For example, mobility of human capitals will bring along family wealth, relationships and social networks in additional to the intellectual capacity. Human capital can be considered to include both the social capital (Coleman, 1988) and intellectual capital embedded on the individual which enhance his/her productivity and help enlarge volume and variety of capitals for economy.
Therefore human capital perspective shall receive due attention in enhancing Hong Kong's development into a regional and international business centre.
