The Superiority of Knowledge over Natural Resources for Economic, Financial, and Social Transformation: A Case Study of Hong Kong and LDCs

Abstract

Economic, financial, and social transformation is vital for eradicating poverty and realising national development goals. Since the 1997 handover, Hong Kong has faced drastic social, political, and economic challenges. Asset price bubbles, stagnant wages, and skyrocketing rents have triggered stark income inequality between the middle class and financial tycoons. Hong Kong’s post-handover economic policies prioritise local tycoons’ interests and supply-side initiatives by promoting the "Free Market" ideology. The case of Hong Kong highlights that abundant land, money, assets, and natural resources do not necessarily guarantee tranquillity, wealth distribution, and prosperity. Globally, the resource curse and Dutch Disease effects in less developed countries (LDCs) drain regimes’ investment from the public mindset and favour the interests of the elite and the wealthy. A paradigmatic view proposes that knowledge is superior to natural resources for economic, financial, and social transformation.

The conventional view supports that strength in natural resources or capital investment in land, money, and assets guarantees development and growth. Most scholars associate development with possessing valuable natural resources, including crude oil, precious metals, and land. Nevertheless, evidence suggests that countries rich in natural resources are prone to stagnation, regression, or malevolent growth. A strong negative correlation exists between natural resource wealth and nations and states' economic and political performance. Most post-colonial countries in Africa, Central Asia, and Latin America suffer despicable poverty, political upheavals, and social deterioration after honourable independence from colonial rule and exploitation by the West. The developmental success of regimes within the same geographical, cultural, and social area, which possess comparable land and resources, is related to historical contingencies and social choices in developing and accessing knowledge-related capabilities and competencies. By comparison, Asian dragons relaxed their dependency on foreign knowledge and enhanced their superior knowledge capability, fully complementing their social and political conditions.