Business Competitiveness: A 21st Century model for the Caribbean

Report
Business
Competitiveness:
st
A 21 Century Model
for the Caribbean
Presented to the ECCU Business Symposium and Innovation
Forum
St Kitts and Nevis Tuesday October 22, 2013
1
Structure of Presentation
• A Working Definition
• Theorising Competitiveness –19th and
20th century models
• Michael Porter’s Diamond and Five Forces
Model
• The Global Competitive Index model
• Is there a Caribbean model of Business
Competitiveness?
2
Definitions
World Economic Forum’s Global
Competitiveness Report: competitiveness
as the set of institutions, policies, and
factors that determine the level of
productivity of a country (GCR 2103/2014,
p. 3
Harvard Business School’s Institute for
Strategy and Competitiveness : a nation’s
competitiveness…..is based on the
productivity with which it produces goods
and services.
3
From Absolute to Comparative to
Competitive Advantage
• Absolute Advantage – Adam Smith 1776
• Comparative Advantage – David Ricardo
1817
• Competitive Advantage – Michael Porter
1990
4
Absolute Advantage or
“Anything you can do I can do
better”
Countries should specialise in what they
have absolute advantage in due to natural
advantage (land, labour, capital)
Results in
reduced or no
trade
Inefficiencies in
production
process
5
Comparative Advantage
• Countries should produce those items
they can make most efficiently even if
other countries can produce the item
more efficiently.
Presumes bilateral
trade, full
employment
Transportation
Costs not
included
Small
economies
could not
be
competitive
6
Firm Level Competitiveness –
Determinants of Global Competitive Advantage:
Porter’s Diamond
The Porter Diamond
Firm Strategy,
Structure, and
Rivalry
Factor
Conditions
Demand
Conditions
Related and
Supporting
Industries
Source: International Business : Environments and Operations
,Daniels and Radebaugh
7
PORTER’S CONDITIONS FOR COMPETITIVE
SUPERIORITY
• Demand conditions—observation of need or demand
– usually in home country
– production started near the observed market
• Factor conditions— availability and terms for acquiring
them
• Related and supporting industries—existence of
infrastructure
• Firm strategy, structure, and rivalry
– influenced by other three conditions
Existence of the four favorable conditions does not guarantee that an
industry will develop in a locale
Absence of one of the four conditions from a country may not inhibit
companies from becoming globally competitive
8
Industry Competitiveness
Porter’s Five Forces
9
What of the Caribbean?
10
Wint’s (2003) Model of Competitiveness
for SIDS in the Caribbean
11
Alvin G. Wint, Competitiveness in Small Developing
Economies, 2003 ,UWI Press
World Economic Forum
Global Competitiveness Index
(2013)
• Definition of competitiveness as the
set of institutions, policies, and
factors that determine the level of
productivity of a country (GCR
2103/2014, p. 3)
• Competitiveness of a country
measured based on 12 Pillars
(Factors)
12
Global Competitive Report
12 Pillars of Competitiveness
Quality of
Institutions
Infrastructure
Higher
Education and
Training
Technology
Development
Goods
Market
Efficiency
Market Size
Macroeconomic
Environment
Health and
Primary
Education
Labour
Market
Efficiency
Financial
Market
Development
Business
Sophistication
Innovation
13
Caribbean
Competitiveness
A Human Capital Development Approach
14
Competitiveness Based on
Innovation
In the current context, policymakers must avoid complacency and press
ahead with the structural reforms and critical investments required to
ensure that their countries can provide a prosperous environment and
employment for their citizens. They must identify and strengthen the
transformative forces that will drive future economic growth.
Particularly important will be the ability of economies to create
new value-added products, processes, and business models
through innovation.
Going forward, this means that the traditional distinction
between countries being “developed” or “developing” will
become less relevant and we will instead differentiate
among countries based on whether they are “innovation
rich” or “innovation poor.” It is therefore vital that
leaders from business, government, and civil society
work collaboratively to create enabling environments to
foster innovation and, in particular, to create appropriate
educational systems
( Source: Global Competitiveness Report 2013-2014, p. xiii)
15
5th Pillar – Higher Education and
Training - Barbados
INDICATOR
MEASURE
RANK/148
Secondary education
enrollment, gross %*
Tertiary education
enrollment, gross %
103.7
23
61.8
33
Quality of the educational
system
Quality of math and science
education
Quality of management
schools
Internet access in schools
5.3
6
5.5
9
5.1
26
5.1
38
Availability of research and
training services
Extent of staff training
4.7
41
4.5
32
16
9th Pillar of GCI – Technology
Development - Barbados
INDICATOR
MEASURE
RANK/148
Availability of latest
technologies
Firm-level technology
absorption
5.9
28
5.2
44
FDI and technology transfer 5.0
35
Individuals using Internet,
%*
Fixed broadband Internet
subscriptions/100 pop.*
Int’l Internet bandwidth,
kb/s per user*
73.3
32
23.8
27
69.5
33
Mobile broadband
subscriptions/100 pop.*
36.4
44
Availability of latest
technologies
5.9
17
28
12th Pillar of Competitiveness –
Innovation - Barbados
INDICATOR
MEASURE
RANK/148
Capacity for innovation
Quality of scientific
research institutions
3.4
4.2
81
45
Company spending on R&D
3.0
78
University-industry
collaboration in R&D
4.3
39
Gov’t procurement of
advanced tech products
3.6
54
Availability of scientists
and engineers
4.3
63
PCT patents,
applications/million pop.*
11.3
32
18
Modified Model of Competitiveness
for the Caribbean
Macroeconomic
Stability
Technology
Development
Infrastructural
Development
Global
Competitiveness
Higher
Education and
Training
Firm Level
Competitiveness
Innovation
19
The Third Prong in the Growth
Strategy for the ECCU
Transportation
Information
Technology
Energy
Research and
Development
Environment
Education and
Skills Training
Governance
20
Source: Hon Sir Dwight Venner, ECCB Annual Report,
2012/2013
OECS expenditure on Education
• Relatively high (approx. 5% of GDP) compared
to other CARICOM countries
• Almost 100% achievement of MDG of
universal primary education
• Better outcomes from expenditure could be
gained including more targeted programmes
• Increasing or introducing user fees at tertiary
level
The Eastern Caribbean Economic and Currency Union Macroeconomics and
Financial Systems, Alfred Schipke, Aliona Cebotari, and Nita Thacker, IMF,
2013
21
Focus on Higher Education and
Training in the OECS
Innovation and Technology Development are
enabled by Higher Education and Training
• Increased numbers of persons in Higher
Education directly proportional to development
indices (HDI; GCI)
• Investment in Higher Education and Training has
to be a Public Private Partnership in the OECS
and wider Caribbean
• Higher Education and Training must Enhance
Entrepreneurship and Develop Entrepreneurial
Behaviours.
•
22
Do countries with higher income per capita
have higher tertiary enrollment rates?

Most countries with
gross national income
(GNI) per capita less
than $1000 have
tertiary GERs less than
11%. Tajikistan (20%)
and Kyrgyz Rep (49%)
are the two exceptions.
Countries with GNI pc
more than $20,000
have tertiary GERs
higher than 50%
except for Qatar
(10%), Luxembourg
(10.5%), Brunei
(17.2%), and
Liechtenstein (36.0%).
100
United States
Finland
90
Gross enrolment ratio. Tertiary (ISCED 5 and 6). Total

Most countries with a GNI pc higher than $20,000
have tertiary GERs higher than 50%.
Belarus
Slovenia
80
Norway
70
60
Switzerland
50
40
30
Oman
20
Brunei
Luxembourg,
Qatar
10
R² = 0.2021
0
http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EX
TEDUCATION/EXTDATASTATISTICS/EXTEDSTATS/0,,c
ontentMDK:21528857~menuPK:4324013~pagePK:641684
45~piPK:64168309~theSitePK:3232764,00.html?tertiary
0
20
40
60
80
GNI per capita, Atlas method (current US$)
23
Source: UNESCO Institute for Statistics in EdStats, Nov. 2012
Note: Data is for the most recent year between 2009 and 2011.
Which countries have the lowest
tertiary enrollment rates?




These countries have
less than 4% of tertiary
age students enrolled in
tertiary education.
33 countries have less
than 10 percent of
tertiary age youth
enrolled.
50 countries have more
than half of tertiary age
youth enrolled.
8 countries have tertiary
GERs higher than 80%
and 4 countries have
tertiary GERs higher than
90%: Finland, the United
States, Cuba, and Korea,
Rep.
http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTEDUCATION/EXTDATASTATISTI
CS/EXTEDSTATS/0,,contentMDK:21528857~menuPK:4324013~pagePK:64168445~piPK:641
68309~theSitePK:3232764,00.html?tertiary
10 Countries with the Lowest
Tertiary Gross Enrollment Rates
(2008-2011)
1
Turks and Caicos Islands
0.08
2
Malawi
0.72
3
Niger
1.51
4
Eritrea
1.99
5
Tanzania
2.11
6
Chad
2.17
7
Central African Republic
2.57
8
Burundi
3.25
9
Afghanistan
3.33
Dominica
3.57
10
Source: UNESCO Institute for Statistics in EdStats, Nov. 2012
Notes: Figures are most recent year with data between 2008-2011. Purple =
2011; Black = 2010; Blue = 2009; Green = 2008.
Data were not available for 72 of 214 countries.
24
25
The Road to being Innovation
Rich
• Focus on higher education linked to
national goals (agriculture, agriprocessing,
transportation, Tourism, Financial
Services)
• Private Sector should partner with the
Public sector for HE, skills training, R&D
• Financial Sector should support
innovation, entrepreneurship, financing
for SME’s
26
EPILOGUE
27
References
• Daniels, J and Radebaugh, L (2012) International Business:Environments and
Operations, Pearson.
• ECCB Annual Report, 2012-2013 http://www.eccbcentralbank.org/PDF/ar_2013.pdf
• Schipke, A., Cebotari, A. Thacker, N., (2013) Eastern Caribbean Economic and
Currency Union: Macroeconomics and Financial Systems, IMF.
• Schwab, Klaus (2013) World Economic Forum: The Global Competitiveness
Report 2013-2014. http://www.weforum.org/reports/global-competitivenessreport-2013-2014
• Wint, A (2003) Competitiveness in Small Developing Economies, UWI Press.
• Harvard Business School Institute for Strategy and Competitiveness.
http://www.isc.hbs.edu/index.html
• UNESCO, Edstats
http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTEDUCATION/EXTDATA
STATISTICS/EXTEDSTATS/0,,contentMDK:21528857~menuPK:4324013~pagePK:6
4168445~piPK:64168309~theSitePK:3232764,00.html?tertiary
28
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