I have written very favorably about Hong Kong and I have also sung the praises of Singapore. But if you want to know which jurisdiction has a brighter future, it certainly seems like Singapore will be the long-run winner.
The above video is a segment from my recent interview with the Soul of Enterprise, which mostly focused on fiscal issues such the debt limit and spending caps.
I was glad, however, that we briefly detoured to a discussion of the two Asian city states.
Neither jurisdiction is perfect, of course, but both Singapore and Hong Kong have very pro-market policies by global standards.
And they both showed that it is possible to escape the “middle-income trap.”
But which one is doing the best?
According to the Maddison data shown in this chart, Singapore has vaulted ahead in the past two decades.
I included the United States for purposes of comparison. And it is remarkable how both Singapore and Hong Kong used to be very poor by comparison.
But let’s get back to the main focus of today’s column.
A recent article in the U.K.-based Economist compares Singapore and Hong Kong.
In economic dynamism, the state of the urban fabric and the vibrancy of civic life, which city comes top: Hong Kong or Singapore? Until not long ago, it was obvious…that Hong Kong won hands down. But recently the balance shifted. There is clearly no contest anymore. It is game over in favour of Singapore. …Hong Kong and Singapore, once dirt-poor, have astonishing success stories to tell. Both are hubs for international finance, trade, transport and tourism. Both have attracted the brightest professional minds. …The imposition of a draconian national-security law in 2020 marked the obvious break in Hong Kong’s trajectory. …Some 200,000 expatriates have left Hong Kong in the past three years, along with even more Hong Kongers. By contrast, in 2022 the number of foreign professionals in Singapore grew by 16%… In 1997, the year of Hong Kong’s return to China, the two cities’ GDP per person was remarkably similar ($26,376 in Singapore, $27,330 in Hong Kong). Today Singapore’s is 1.7 times higher than Hong Kong’s. Singapore’s economy has grown by one-seventh since 2017; Hong Kong’s not at all. …Singapore is at a crossroads. Hong Kong has hit a dead end.
The bottom line is that China’s takeover of Hong Kong has had a negative effect.
As I noted in the video clip, economic policy has not moved significantly in the wrong direction, but entrepreneurs and investors do not trust Beijing.
That skepticism may be warranted.
P.S. As part of my anti-convergence club, I’ve compared Hong Kong and Cuba, along with Singapore and Jamaica.
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Image credit: Merlion444 | CC0 1.0.
