In late November 2023, the Portulans Institute, in collaboration with the Saïd Business School at Oxford University, published the 2023 edition of the Network Readiness Index. This initiative, which began with the World Economic Forum in 2002, evaluates 134 economies on a myriad of factors regarding their ability to leverage the benefits of a networked digital economy. This year, the U.S. secured first place for the second consecutive year, while European nations made up seven of the top 10, and 16 of the top 25 ranked countries. Singapore and the Republic of Korea were the only Asian economies ranked in the top 10 – two of only five from the Asia Pacific region in the top 25. Singapore ranked second globally for the second year running. Meanwhile, China continued its forward path, securing a spot in the top 20 this year (ranking 20th) due to its formidable technological prowess.

Prof. Chi Nien Chung Associate Dean (Research and Postgraduate Studies) Chair Professor of Strategic and Organization Management

Hong Kong ranked 25th, behind China, Estonia, and Iceland. Many people might assume this is because Hong Kong lags in its hardware development and its number of leading innovators. To our surprise, Hong Kong actually ranked 3rd in terms of technology, one of the four pillars the index uses to rank different countries. For instance, in internet accessibility, bandwidth and mobile app development, Hong Kong ranked in the top 3, ahead of Singapore. The other three pillars are people, governance, and impact.

Hong Kong's position in the index was mainly hindered by its performance in governance and social impact, rather than technology. These aspects, crucial to the digital economy, have historically been neglected and omitted from both discussion and policy development. For example, Hong Kong ranked 133rd in legal safeguards for privacy, and 44th in bridging the digital payment socioeconomic divide. The territory also scored poorly in how digitisation enhances quality of life. It ranked 83rd in happiness and 115th in freedom of life choices, whereas Singapore ranked significantly higher in these categories – 28th and 34th, respectively. This suggests that while network technology and digitalisation have contributed to happiness and freedom in Singapore, they have not had the same positive impact in Hong Kong.

The reasons for this divergent development are complex and deserve more analysis. What is clear, however, is that Hong Kong needs to pay more attention and allocate more resources to the governance and institutions of the digital economy when it considers moving forward in this area. The recent efforts of some Western countries to better regulate artificial intelligence are a step in the right direction. Investing in skills and upgrading digital capabilities for low-income citizens and small businesses should also be a priority.

Hong Kong's ranking in this year's Network Readiness Index offers an opportunity to examine the strengths and weaknesses of our approach to digital transformation and technological progress. We should focus not only on developing technology to keep up with others, but also on considering how digital technology affects our institutional development and societal well-being.