Hedging Perspectives for Small States and Regimes: A Comparative Study Between Singapore and Hong Kong

Main Article Content

Kian Cheng Lee
Haiping Gao

Abstract

This paper argues that Singapore’s far-sighted implementation of a multi-pronged hedging strategy over the decades has enabled her to become a financial hub in Asia. Through employing the theories of hedging and comparative politics to analyze Hong Kong and Singapore, this paper seeks to elucidate the significance of hedging initiatives in securing distinctions in the global arena. While Hong Kong and Singapore had been neck and neck in vying for the position of Asia’s top financial hub, the latter has triumphed in recent years. Employing the documentary research method, the authors seek to unravel the key research question: “How did Singapore utilize holistic hedging strategies to mitigate her internal limitations and external threats to overtake Hong Kong as Asia’s top financial hub?” By examining political hybridisation, industrial diversification, social integration, and diplomatic engagements as the four independent variables, this paper demonstrates the importance of adopting purposive and responsive hedging strategies for small states and regimes in a conflicted and volatile world.

Article Details

How to Cite
Lee, K. C., & Gao, H. . (2024). Hedging Perspectives for Small States and Regimes: A Comparative Study Between Singapore and Hong Kong. Political Science and Public Administration Journal, 15(1), 23–60. Retrieved from https://so05.tci-thaijo.org/index.php/polscicmujournal/article/view/267582
Section
Research Article

References

Acemoglu, D., Johnson, S., & Robinson, J. A. (2001). The Colonial Origins of Comparative Development: An Empirical Investigation. American Economic Review, 91(5), 1369-1401.

Alesina, A., & Perotti, R. (1996). Income Distribution, Political Instability, and Investment. European Economic Review, 40(6), 1203-1228.

Ali, I., Rehman, K. U., Ali, S. I., Yousaf, J., & Zia, M. (2010). Corporate Social Responsibility Influences, Employee Commitment and Organizational Performance. African journal of Business management, 4(13), 2796.

Anbumozhi, V., Kimura, F., Thangavelu, S.M. (2020). Correction to: Supply Chain Resilience. In Anbumozhi, V., Kimura, F., & Thangavelu, S. (Eds.) Supply Chain Resilience (pp. 3-14). Singapore: Springer.

Ariel, B., & Betancourt, R. R. (2010). Civil Liberties and Economic Development. Journal of Institutional Economics, 6(3), 281-304. doi: 10.1017/S1744137410000081

Booth, J. A., & Seligson, M. A. (2009). The Legitimacy Puzzle in Latin America: Political Support and Democracy in Eight Nations. New York: Cambridge University Press.

Briggs, T. W. (2006). Corporate Governance and the New Hedge Fund Activism: An Empirical Analysis. Journal of Corporation Law, 32(4), 681-738.

Chang, E. C., & Wong, K. P. (2003). Cross-Hedging with Currency Options and Futures. Journal of Financial and Quantitative Analysis, 38(3), 555-574.

Chang, J. Y. (2022). Not between the Devil and the Deep Blue Sea: Singapore’s Hedging. International Studies Quarterly, 66(3), p. sqac034. https://doi.org/10.1093/isq/sqac034

Chang, T. C. (1997). From “Instant Asia” to “Multi-Faceted Jewel”: Urban Imaging Strategies and Tourism Development in Singapore. Urban Geography, 18(6), 542-562.

Charles, M. E. (1997). A Future for Small States: Overcoming Vulnerability. London: Commonwealth Secretariat.

Chong, L. -L., Chang, X.-J., & Tan, S.-H. (2014). Determinants of Corporate Foreign Exchange Risk Hedging. Managerial Finance, 40(2), 176-188.

Ciorciari, J. D. (2019). The Variable Effectiveness of Hedging Strategies. International Relations of the Asia-Pacific, 19(3), 523-555.

Ciorciari, J. D., & Haacke, J. (2019). Hedging in International Relations: An Introduction. International Relations of the Asia-Pacific, 19(3), 367-374.

Climate Change Performance Index. (2022). Countries. Retrieved February 22, 2023, from https://ccpi.org/countries/

Constantinou, C. M., & Opondo, S. O. (2016). Engaging the ‘ungoverned’: The Merging of Diplomacy, Defence and Development. Cooperation and Conflict, 51(3), 307-324.

Cruz-Saco, M. A. (2008). Promoting Social Integration: Economic, Social and Political Dimensions with a Focus on Latin America. Retrieved February 22, 2023, from http://www.un.org/esa/socdev/social/meetings/egm6_social_integration/documents/Promoting_Social_Integration.Pdf

Dayley, R. (2018). Southeast Asia in The New International Era. London, New York: Routledge.

De Deyn, M. L. Z. Q., Ng, Q. X., Loke, W., & Yeoc, W. S. (2020). A Tale of Two Cities: A Comparison of Hong Kong and Singapore’s Early Strategies for the Coronavirus Disease 2019 (COVID-19). Journal of Infection, 81(3), e51-e52.

Delgado, M., Ketels, C., Porter, M. E., & Stern, S. (2012). The Determinants of National Competitiveness (No. w18249). Cambridge, M.A.: National Bureau of Economic Research.

Dutta, S., Lanvin, B., Rivera León, L., & Wunsch-Vincent, S. (2022). Global Innovation Index 2022: What is the Future of Innovation-driven Growth?. Retrieved February 22, 2023, from https://doi.org/10.34667/TIND.46596

Elman, M. F. (1995). The Foreign Policies of Small States: Challenging Neorealism in Its Own Backyard. British Journal of Political Science, 25(2), 171-217.

Ezrow, N. M., & Frantz, E. (2011). State Institutions and the Survival of Dictatorships. Journal of International Affairs, 65(1), 1-13.

Fierke, K. M. (2005). Diplomatic Interventions: Conflict and Change in a Globalizing World. London: Palgrave Macmillan.

Fook, L. L. (2018). Singapore–China Relations. Southeast Asian Affairs, 321-340.

Freedom House. (2014). Freedom in the World 2014. Retrieved February 22, 2023, from https://freedomhouse.org/sites/default/files/2020-02/Freedom_in_the_World_2014_Booklet.pdf

Fukuyama, F. (1996). Trust: The Social Virtues and the Creation of Prosperity. Simon and Schuster. New York: Simon and Schuster.

Gill, B., & Tang, J. T. (2007). US-Hong Kong Relations: Prospects for a Unique Partnership. N.P.: Center for Strategic and International Studies CSIS.

Global Europe. (2020). Globalization Report 2020: The Most Important Facts in 5 Charts. Retrieved February 22, 2023, from https://globaleurope.eu/globalization/globalization-report-2020-the-most-important-facts-in-5-charts/

Goh, E. (2005). Meeting the China Challenge: The U.S. in Southeast Asian Regional Security Strategies (Alagappa, M., Ed.). East-West Center. Retrieved February 22, 2023, from http://www.jstor.org/stable/resrep06541

Goldin, I., & Vogel, T. (2010). Global Governance and Systemic Risk in the 21st Century: Lessons from the Financial Crisis. Global Policy, 1(1), 4-15.

Hanegraaff, M., Beyers, J. A., & De Bruycker, I. (2016). Balancing Inside and Outside Lobbying: The Political Strategies of Lobbyists at Global Diplomatic Conferences. European Journal of Political Research, 55(3), 568-588.

Hedlund, J., Fick, S., Carlsen, H., & Benzie, M. (2018). Quantifying Transnational Climate Impact Exposure: New Perspectives on the Global Distribution of Climate Risk. Global Environmental Change, 52, 75-85.

Heilmann, S. (2008). Policy Experimentation in China’s Economic Rise. Studies in Comparative International Development, 43(1), 1-26.

Hoehl, S., & Hess, S. (2022). Liquidity, Hedging and The Survival of North German Dairy Farms. European Review of Agricultural Economics, 49(1), 208-236.

IMD World Competitiveness Center. (2022). World Digital Competitiveness Ranking. Retrieved February 22, 2023, from https://www.imd.org/centers/wcc/world-competitiveness-center/rankings/world-digital-competitiveness-ranking/

International Telecommunication Union. (2020). Digital Access Index. Retrieved February 22, 2023, from https://www.itu.int/ITU-D/ict/dai/

Jones, D. M., & Jenne, N. (2022). Hedging and Grand Strategy in Southeast Asian Foreign Policy. International Relations of the Asia-Pacific, 22(2), 205-235.

Jones, E. (2008). Economic Adjustment and Political Transformation in Small States. New York: Oxford University Press.

Jung, J. K., Patnam, M., & Ter-Martirosyan, A. (2018). An Algorithmic Crystal Ball: Forecasts-Based on Machine Learning. Washington: International Monetary Fund.

Kahan, M., & Rock, E. B. (2017). Hedge Funds in Corporate Governance and Corporate Control. In Mitchell, L. E. (Ed.). Corporate Governance (pp. 389-461). London: Gower.

Kao, P.-S. (2022). The Political Economy of China’s Strategic Layout in Europe: A Case Study of the Belt and Road Initiative. The Chinese Economy, 55(4), 303-316.

Kim, M. (2023). Hedging Between the United States and China? South Korea’s Ideology-Driven Behavior and Its Implications for National Security. International Relations of the Asia-Pacific, 23(1), 129-158.

Kojima, G. (2019). Increased Healthcare Costs Associated with Frailty Among Community-Dwelling Older People: A Systematic Review and Meta-Analysis. Archives of Gerontology and Geriatrics, 84, 103898.

Koopmans, R., & Schaeffer, M. (2015). Relational Diversity and Neighbourhood Cohesion. Unpacking Variety, Balance and In-Group Size. Social Science Research, 53, 162-176.

Kreutzer, T. (2009). Generation Mobile: Online and Digital Media Usage on Mobile Phones Among Low-Income Urban Youth in South Africa. University of Cape Town. (Master Thesis), University of Cape Town.

Kuik, C. -C. (2008). The Essence of Hedging: Malaysia and Singapore’s Response to a Rising China. Contemporary Southeast Asia: A Journal of International and Strategic Affairs, 30(2), 159-185.

Kuik, C. -C. (2010). Smaller States’ Alignment Choices: A Comparative Study of Malaysia and Singapore’s Hedging Behavior in the Face of a Rising China. (Ph.D. dissertation), Johns Hopkins University.

Kuik, C. -C. (2021). Getting Hedging Right: A Small-State Perspective. China International Strategy Review, 3(2), 300-315.

Kuok, L. (2016). The US-Singapore Partnership: A Critical Element of US Engagement and Stability in The Asia-Pacific. Retrieved March 12, 2017, from https://www.brookings.edu/research/theus-singapore-partnership-a-critical-element-of-us-engagement-and-stability-in-the-asiapacific

Lai, Y. M., & Kuik, C. -C. (2021). Structural Sources of Malaysia’s South China Sea Policy: Power Uncertainties and Small-State Hedging. Australian Journal of International Affairs, 75(3), 277-304.

Lanvin, B., & Monteiro, F. (2022). The Global Talent Competitiveness Index 2022. The Tectonics of Talent: Is the World Drifting Towards Increased Talent Inequalities?Fontainebleau: INSEAD.

Lee, S. -W., & Ducruet, C. (2009). Spatial Glocalization in Asia-Pacific Hub Port Cities: A Comparison of Hong Kong and Singapore. Urban Geography, 30(2), 162-184.

Lel, U. (2012). Currency Hedging and Corporate Governance: A Cross-Country Analysis. Journal of Corporate Finance, 18(2), 221-237.

Li, Z., Huang, B., Yang, Z., Qiu, J., Zhao, B., & Cai, Y. (2021). Mitigating Drought Conditions Under Climate and Land Use Changes by Applying Hedging Rules for The Multi-Reservoir System. Water, 13(21), 3095.

Lim, D. J., & Cooper, Z. (2015). Reassessing Hedging: The Logic of Alignment in East Asia. Security Studies, 24(4), 696-727.

Lindenberg, M. (2002). Measuring Household Livelihood Security at the Family and Community Level in the Developing World. World development, 30(2), 301-318.

Liu, B. (2012). Sentiment Analysis and Opinion Mining. Synthesis Lectures on Human Language Technologies, 5(1), 1-167.

Lobo, M. (2011). Migration, Citizenship and Intercultural Relations: Looking through the Lens of Social Inclusion. London: Routledge.

Logistics Performance Index. (2019). Global Rankings 2018. Retrieved February 22, 2023, from https://lpi.worldbank.org/international/global

Loi, C., & Lim, J. (2019). Hedging in the Discussion Sections of English and Malay Educational Research Articles. GEMA Online Journal of Language Studies, 19, 36-61.

Lowy Institute. (2021). Global Diplomacy Index. Retrieved February 22, 2023, from https://globaldiplomacyindex.lowyinstitute.org/

Martínez-de-Albéniz, V., & Simchi-Levi, D. (2006). Mean-Variance Trade-offs in Supply Contracts. Naval Research Logistics (NRL), 53(7), 603-616.

Mehta, V. (2014). Evaluating Public Space. Journal of Urban design, 19(1), 53-88.

Mendiolaza, G. A. (2019). An Examination of Foreign Policy Strategies of Middle Powers During Great Power Competition: A Case Study of Thailand’s Strategic Hedging Between a Dominant USA and Ascending China. AU eJournal of Interdisciplinary Research, 4(1), 19-36.

Morgan, J. D., & Evans, J. (2022). Public Space Index. In Morgan, J. D. & Evans, J. (Eds.). Participatory Mapping of Territoriality Across Florida’s Beaches (pp. 41-57). Cham: Springer Nature.

Murphy, A. M. (2017). Great Power Rivalries, Domestic Politics and Southeast Asian Foreign Policy: Exploring The Linkages, Asian Security. Taylor & Francis, 13(3), 165-182.

Na, S., Su, Y., & Kunkel, T. (2019). Do Not Bet On Your Favourite Football Team: The Influence of Fan Identity-Based Biases and Sport Context Knowledge on Game Prediction Accuracy. European Sport Management Quarterly, 19(3), 396-418.

Nicotra, M., Romano, M., Del Giudice, M., & Schillaci, C. E. (2018). The Causal Relation Between Entrepreneurial Ecosystem and Productive Entrepreneurship: A Measurement Framework. The Journal of Technology Transfer, 43, 640-673.

Noorafkan, A., & Tishehyar, M. (2022). From Hegemony to Hedging: Future of The Asia Pacific in Post-Post-Cold War Era. In International Congress-2022 Future Dynamics in Asia (pp. 10-16). N.P.: Arel USAM.

Norris, P. (Ed.). (1999). Critical Citizens: Global Support for Democratic Government. Oxford: OUP Oxford.

Oba, M. (2019). Further Development of Asian Regionalism: Institutional Hedging in an Uncertain Era. Journal of Contemporary East Asia Studies, 8(2), 125-140.

O'Brien, K. L., & Leichenko, R. M. (2000). Double Exposure: Assessing the Impacts of Climate Change Within the Context of Economic Globalization. Global Environmental Change, 10(3), 221-232.

Ottaway, M. (2013). Democracy Challenged: The Rise of Semi-Authoritarianism. Carnegie Endowment. Washington, D.C.: Carnegie Endowment for International Peace.

Pan, G., & Korolev, A. (2021). The Struggle for Certainty: Ontological Security, The Rise of Nationalism, and Australia-China Tensions After COVID-19. Journal of Chinese Political Science, 26(1), 115-138.

Pang, B., & Lee, L. (2008). Opinion Mining and Sentiment Analysis. Foundations and Trends® in Information Retrieval, 2(1-2), 1-135.

Porter, M. E. (2008). On Competition. Boston: Harvard Business Press.

Qiao, Y. (1996). Stock Prices and Exchange Rates: Experiences in Leading East Asian Financial Centres - Tokyo, Hong Kong and Singapore. The Singapore Economic Review, 41(1), 47-56.

Ramin, K., & Meyer, A. (2012). World Justice – The Rule of Law Around the World. doi: 10.1016/B978-1-84334-693-7.50003-9

Razak, A. M., & Suhadak, S. (2019). Pengaruh Worldwide Governance Indicators Dan Macroeconomic Terhadap Ihsg (Studi pada Negara Indonesia, Malaysia, Filipina, Singapura, dan Thailand Tahun 2004-2016). Jurnal Administrasi Bisnis, 71(1), 1-10.

Reddit. (2022). Bloomberg Innovation Index 2021. Retrieved February 22, 2023, from https://www.reddit.com/r/europe/comments/lcefst/bloomberg_innovation_index_2021/

ReliefWeb. (2022). Global Peace Index 2021. Retrieved February 22, 2023, from https://reliefweb.int/report/world/global-peace-index-2021?gclid=Cj0KCQiA3eGfBhCeARIsACpJNU9DWFzDCoOXjBGcNy1nmFKWGLgcdrC9pztUJi8Nn9HBD1giwEOs8cEaApbpEALw_wcB

Ružeková, V., Kašťáková, E., & Žatko, M. (2016). Comparison of the V4 Economies According to International Competitiveness Indices and the Basic Pillars of the Knowledge Economy. International Conference on European Integration 2016, Ostrava, Czech Republic.

Saeed, T., Bouri, E., & Tran, D.K. (2020). Hedging Strategies of Green Assets against Dirty Energy Assets. Energies, 13(12), 3141.

Saha, S., & Yap, G. (2014). The Moderation Effects of Political Instability and Terrorism on Tourism Development: A Cross-Country Panel Analysis. Journal of Travel Research, 53(4), 509-521.

Schippa, C. (2011). The Global Peace Index. In Go, F. M., & Govers, R. (Eds.). International Place Branding Yearbook 2011: Managing Reputational Risk (pp. 112-129). Basingstoke: Palgrave Macmillan.

Seng, Q. K., Keung, H. K., & Kay Cheng, S. (2008). Implicit Theories of Creativity: A Comparison of Student‐Teachers in Hong Kong and Singapore. Compare, 38(1), 71-86.

Sorensen, G. (2018). Democracy and Democratization: Processes and Prospects in a Changing World. New York and London: Routledge.

Stevens, P., Lahn, G., & Kooroshy, J. (2015). The Resource Curse Revisited. London: Chatham House for the Royal Institute of International Affairs.

Swaspitchayaskun, J., & Surakitbovorn, S. (2023). Thailand and Its Development Strategies under USA-China Power Rivalry: The Difficulty of Balancing Influence and Hedging. The Chinese Economy, 56(4), 330-338.

Taskinsoy, J. (2019). The Global Competitiveness Index: A Comparative Analysis between Turkey and G8 Nations. Retrieved February 22, 2023, from https://doi.org/10.2139/ssrn.3500542

The Economist Intelligence Unit. (2020). Democracy Index 2020. Retrieved February 22, 2023, from https://www.eiu.com/n/campaigns/democracy-index-2020/

The Heritage Foundation. (2023). Country Rankings: World & Global Economy Rankings on Economic Freedom. Retrieved February 22, 2023, from www.heritage.org/index/ranking

Tidd, J., & Bessant, J. R. (2020). Managing Innovation: Integrating Technological, Market and Organizational Change. Hoboken, N.J.: John Wiley & Sons.

UNDP. (2022). Human Development Report 2021/2022: Uncertain Times, Unsettled Lives: Shaping Our Future in a Transforming World [EN/RU/ZH]. Retrieved February 22, 2023, from https://reliefweb.int/report/world/human-development-report-20212022-uncertain-times-unsettled-lives-shaping-our-future-transforming-world-enruzh

Vaicekauskaitė, Ž. M. (2017). Security Strategies of Small States in a Changing World. Journal on Baltic Security, 3, 7-15.

Vidra, R. (2012). The Pragmatic “Little Red Dot”: Singapore’s US Hedge Against China. LSE IDEAS, 15, 67-73.

Vision of Humanity. (2020). Global Peace Index. Retrieved February 22, 2023, from https://www.visionofhumanity.org/maps/

Vu, V.-H., Soong, J.-J. & Nguyen, K.-N. (2022) The Political Economy of China’s Rising Role in the Asia-Pacific Economic Cooperation (APEC): Strategies and Instruments of the Chinese Way. The Chinese Economy, 55(4), 255-267.

Wang, J. (2018). Innovation and Government Intervention: A Comparison of Singapore and Hong Kong. Research Policy, 47(2), 399-412.

Wardle, M., & Mainelli, M. (2022). The Global Financial Centres Index 32. Retrieved February 21, 2023, from https://www.longfinance.net/publications/long-finance-reports/the-global-financial-centres-index-32/

Wilkins, T. (2023). Middle Power Hedging in The Era of Security/Economic Disconnect: Australia, Japan, and The “Special Strategic Partnership”. International Relations of the Asia-Pacific, 23(1), 93-127.

World Economic Forum. (2008). Global Competitiveness Report 2008-2009. Retrieved February 22, 2023, from https://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2008-09.pdf

World Economic Forum. (2015). Global Information Technology Report 2015. Retrieved February 22, 2023, from https://www.weforum.org/reports/global-information-technology-report-2015/

World Economic Forum. (2019). The Global Competitiveness Report 2019. Retrieved February 22, 2023, from https://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf

Yusuf, S., & Nabeshima, K. (2005). Creative Industries in East Asia. Cities, 22(2), 109-122.

Zhu, S., & Pickles, J. (2014). Bring in, Go up, Go West, Go out: Upgrading, Regionalisation and Delocalisation in China’s Apparel Production Networks. Journal of Contemporary Asia, 44(1), 36-63.