My earliest recollections of Hong Kong were of it as a major international manufacturing hub. Although conditions were often poor, manufacturing made Hong Kong one of the most prosperous Asian cities at that time. After the Chinese mainland rejoined the global community, manufacturing moved north to areas with lower labor costs and more space. Factory buildings disappeared and Hong Kong gradually became a shoppers' paradise and a popular tourist destination with its quaint blend of British colonialism and Asian charm. But its once dominant logistics and financial services now face stiff challenges from Shanghai and Singapore.

Yet Hong Kong need not despair as it has a resource which it has not quite fully utilized so far: Its highly educated workforce and some of the world's best universities. The future of every developed economy lies in innovation. That Hong Kong is not already a global innovation leader is an oddity of history. Northern California and Israel are the world's leaders in innovation. The former in absolute numbers, the latter measured by population ratio. Both places are populated by a large number of immigrants rooted in cultures which value education and achievement. A visit to research and development (R&D) centers in Silicon Valley will show you large numbers of bright and ambitious engineers and scientists - many of Asian descent. The Israeli population consists almost entirely of descendants of immigrants and refugees who fled from Europe after World War II. In many ways the history of the people and their attitudes toward education and achievement do not differ much between Hong Kong, Northern California and Israel. So why is Hong Kong not yet a success story in innovation, and why are we not finding "Designed in Hong Kong" as prevalent in the world's shop windows as "Made in Hong Kong" was many years ago?

Let us first dissect this problem and uncover what is needed to generate innovation. The ingredients required for innovation are intelligent and creative people who want to change the world, a culture conducive to driving the momentum of innovation, appropriate protection of ideas created, and financial facilities needed to bring new ideas to the market. As mentioned, Hong Kong has many intelligent people, but whether its education system can also produce a sufficient number of broad-minded and creative people who believe they can and will change the world, is highly questionable. The level of creativity and confidence required to nurture such people can only come from a school system which allows the students a high level of free experimentation, and the chance to learn from failure. A school system which is nearly entirely driven by grades can produce great engineers, but it is unlikely to produce many innovators and entrepreneurs. To create these, Hong Kong's parents and educators need to allow their children and students space to tread their own paths in life and to explore different avenues.

The second point, culture, concerns an ecosystem of independent-thinking and diverse people who believe they are rather separate from the world. A community of people who feel safe and supported in experimentation and believe they have everything to gain; people who have learnt that the status quo can be challenged. There also must be a culture which allows failure and sees it just as a step on the way to success. Then there is trust - without which ideas cannot be shared, cooperation between people of different skill sets becomes impossible; financial institutions will either hold back their money or demand immediate returns. Of course, the right intellectual property protection laws must also be in place.

Outside an outdated educational system, a lack of trust is one of the main problems preventing innovation in Hong Kong. People by nature build trust within their own social groups. But to generate the trust levels needed to enable innovation across society, cross-community platforms have to be constructed. This can take the form of innovation centers, where aspiring entrepreneurs can meet brilliant engineers to create what could be the next famous tech start-up. Such innovation centers should offer low thresholds for participation and the facilities needed to start a new company on a shoestring. These facilities must include IT infrastructure, office space and access to initial start-up capital.

The final spark to ignite innovation is a strong sense of purpose. Israel became innovative because it had no resources other than the brainpower of its citizens: To survive as a nation it has to innovate. Likewise for Hong Kong to continue to thrive within the Chinese nation it has to ensure it utilizes its most valuable resource - its people - and become a leader in innovation. Northern California became an innovation leader because of a combination of military technology development. This brought in the engineers, and a world-class university helped create the early successes which inspired subsequent generations. Hong Kong should focus its efforts on reforming its educational system and building the right infrastructure. It needs to rally the might of its academic and financial community. It has to activate the same entrepreneurial spirit which created Hong Kong's manufacturing successes in the previous century to generate early successes in innovation. If this happens the next famous person from Hong Kong might not be a property developer or a martial arts actor, but a world changing tech-entrepreneur.

The author is a sinologist and executive in a multinational technology corporation. He has spent more than 20 years working and studying in Asia.

(HK Edition 06/02/2015 page13)