Trust and Transparency: the pathway to competitiveness

[IMD World Competitiveness Ranking 2026]

Analysis

The mobility numbers this last month between GBA neighbouring regions and the gradual facilitation towards seamless cross-border access continue to strengthen GBA integration. Almost daily, news items relay how these realities are impacting the lives of the average resident. In The Times pages alone, digital payments via Visa’s “Tap to Ride” pilot program added Shenzhen’s Metro to transit pay systems already in Hong Kong and Guangzhou. Record-breaking numbers of border crossings between Hong Kong and Shenzhen, and Zhuhai and Macau also tell of easing mobility: Qingmao port recorded 20 million crossings 15 days earlier than last year. New shopping centers such as Parkside Mall near the Gongbei Border Gate and other offerings for Macau and Hong Kong residents are drawing residents with value-for-money and higher levels of quality.  To remove the friction from the journey, facial recognition clearance systems are now in place in Hengqin, Zhuhai-Macao Hall of the Hong Kong-Zhuhai-Macao Bridge and Qingmao, and new rules are being proposed and quotas extended to expand vehicle access.

People drive the GBA integration, and the development of frictionless systems to engage residents in cross-border experiences build familiarity and trust in the authorities’ capacity to build prosperity, stability and security. These three goals are critical elements in Hong Kong’s development of its first Five-Year Plan as announced by Hong Kong’s CE John Lee in his speech marking the 29th Anniversary of Hong Kong’s handover to China. 

The stated aims for Hong Kong going forward are to continue to consolidate Hong Kong’s own strengths and diversify its economy – to improve finance, innovation and technology, shipping and human capital development and by doing so encourage leading companies into Hong Kong. For this, the level of global competitiveness is a defining factor.

Prosperity, stability and security are at once both outcomes of good governance and requirements for national competitiveness and human thriving. The interdependence of global competitiveness and residents’ perceptions of quality of life has been acknowledged both in the CE’s speech and by international institutions tracking global competitiveness.

IMD World Competitiveness Center’s analysis for 2026 was released in June.  Competitiveness is not measured through GDP alone, although that is but one indicator of how well an economy has done. The GDP measure is insufficient as it does not tell us much about what it took to get there; what inputs and circumstances lead and might predict future outcomes that affect people’s quality of life (the ultimate aim of economic activity). IMD’s analysis considers the complexities of political, social and cultural life of an economy.

Comparison can be taken between Hong Kong and the number one country on the competitiveness ranking, Singapore, to help tease out the areas of potential improvements raised by CE John Lee in his address at the 29th Anniversary.

Fortunately, there are already similarities between Hong Kong and Singapore: they are both small city economies; both have majority Chinese populations (7.56 million for HK and 6.1 million for Singapore); and British historical and institutional legacies have been influential. They are both included in the Smart City Index (although Hong Kong dropped out of the top 20 this year). A Smart City is defined as a high-performance urban centre that balances structural development with application of technology, concern for the environment and inclusiveness of all peoples living there for a great quality of life. The IMD Smart City Index report, titled “The Quest for Trust and Transparency,” finds that cultivation of public trust by citizens is built on transparency. Counterintuitively, it is not the technology-related indicators of greatest importance for strong Smart Cities but trusted institutions, reliable public infrastructure and government structures.

Trusted institutions refer to governance that effectively builds cooperation rather than centralisation of power. It allows many parties from the community to come together to “share information, coordinate investments, and pursue common goals.” Trust in the government structures that manage data – often our own personal data – is not freely given. Citizens demand data sovereignty all the while city planners require access to more and more data for Smart City efficiencies: a fine line to tread.

The authors of the 2026 Smart City report, Christos Cabolis and Fabian Grimm articulate the success of a Smart City, not by the question “Can we build a Smart City?” but by reflecting on whether we should “trust the ones being built.” A noteworthy addition to the Smart City list this year is the impressive first-time entry of Zhuhai at 40th place. Singapore sits 9th and Hong Kong at 21, after Shanghai at 20. Singapore benefits from technology being embedded in credible government institutions.

Hong Kong has dropped two places in the Smart Cities Rankings, being lower than the mean of countries in its group on responses to the structures provided. Governance is clearly of concern to respondents: information accessibility on local government decisions, concern for corruption, residents’ contribution to decision-making and the community’s ability to provide feedback on local projects are all rated low. Traffic congestion, affordable housing and recycling services are also matters of concern. 

On the upside, Hong Kong rates itself highly on structures around basic sanitation, public safety, public transport and also does well across all the applied technologies to do with governance, health and safety, transport, cultural activities and opportunities for work and education.

The Smart City rankings are comparative rankings as perceived by residents against other cities in the same Human Development Index grouping. It is about how it feels to live in the city. The way the government can elevate the lived experience is by encouraging dynamic economic activity. This is where the competitiveness rankings help further diagnose gaps and celebrate achievements.

The synthesis of discussions in Zurich at the June IMD World Competitiveness Summit determined that competitive advantage “increasingly depends on how effectively countries mobilise their strengths, adapt to disruption and translate potential into performance”. This is not just about cost, capital and scale anymore, but about institutional credibility. The strongest national performers, it was said, “are those that offer businesses and investors clear, trusted rules.”

Hong Kong has moved up the rankings this year into second place after Singapore. The Managing Director of Singapore’s Economic Development Board put Singapore’s achievements down to constant renewal and adaptation to stay relevant and useful to the world.

Within the competitiveness rankings, Hong Kong sits 11th globally on Economic Performance elements, but 3rd in International Investment (down a place) and international trade – where its strengths have always been. Business Efficiency is another area of competitiveness ranked 3rd globally: 2nd in finance and 3rd in management processes.  Basic infrastructure (4th), technological infrastructure (6th) and education (3rd) – all elements which were also rated well by residents in the Smart City Index – provide a strong foundation for economic activity and investment attractiveness.  Tax Policy and Business Legislation both ranked number one globally and act as strong incentives for investors.

IMD cites Hong Kong’s Economic Performance as the most significant concern: the Employment criterion deteriorated to 32nd globally with both short- and long-term employment growth contracting (ranked 60th and 62nd respectively). The cost of doing business – such as office rentals – and living well are being impacted by structural cost pressures bringing Hong Kong to 70th worldwide on that element of the competitiveness index, not dissimilar to Singapore at 68th place. Singapore has improved its labour market by investing in apprenticeships and employee training.

The role of Hong Kong as a “super-value adder” for businesses is a very similar approach to Singapore’s aim of contributing value and relevance to the world. The Smart City rankings also remind us that our cities should be of value and relevance to the ways we wish to live, for that is the raison d’être of all that our governments secure for us. The people’s concerns reflect the same elements that are put forward by the competitiveness report: the structural costs of doing business and living – especially housing affordability – and faith in government and institutions to create fulfilling employment and develop human capital.

The IMD reports suggest that trust, credibility and consistency in legal, administrative and structural systems are not just critical to attracting and retaining businesses, but are also the foundation upon which citizens assess the performance of their governments. These national rankings are not impacted so much by global uncertainties, crises and destabilising influences of the modern geopolitical era, but recognise within the competitiveness measures the ability of nations and cities to adapt to these pressures. 

Hong Kong is well positioned to adapt to the constantly changing nature of the GBA and its responses to global pressures. Simultaneously Hong Kong is itself an influential meso-level actor in the way it diffuses and communicates trusted and credible integrated systems for prosperity, stability and security through the daily lived experience of increasingly mobile citizens of the GBA.