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These issues and the MECI are covered in more detail in Ganeshan Wignaraja (edited),
Competitiveness Strategy in Developing Countries, London: Routledge, forthcoming
December 2002. (ISBN: 0-415-22836-0). This volume seeks to generalise the lessons across
developing country and enterprise cases, and sheds light on which trade and industrial
strategies work best, and which do not work in relation to industrial competitiveness.
By comparison, the technology and innovation perspective seems to provide the optimal
framework for evaluating competitiveness performance and designing policy remedies. The
technology and innovation perspective emphasizes that enterprises have to undertake
conscious investments to convert imported technologies into productive use and they interact
with different kinds of institutions within a national innovation system (NIS). In turn, sustained
collective learning is associated with enhanced industrial competitiveness in existing
industries and the creation of new competitive advantages. The process of collective learning
is itself affected by systemic weaknesses in NIS (e.g. market imperfections, systems failures
and poor incentive and regulatory policies) and leads to inter-country differences in collective
learning and competitiveness records. Remedying systemic weaknesses is the principal aim
of an industrial competitiveness strategy.
3. Core Elements of Competitiveness Strategy
The core elements of an industrial competitiveness strategy suggested by the technology and
innovation perspective are as follows:
(a) a national partnership involving complementary actions by the government and the
private sector;
(b) a liberalisation plus approach involving a mix of incentive and supply-side policy
measures; and
(c) where appropriate on economic grounds, policies to promote the competitiveness of
particular industrial clusters.
An important qualification needs to be made, however, about the application of these
elements to economic policy in developing countries. Developing countries differ in their size,
geographical location, history and initial economic and political conditions. The design of a
competitiveness strategy must reflect this diversity and be tailored to the unique historical,
geographical, economic and political circumstances of particular developing countries.
Experience suggests that A one size fits all competitiveness strategy has less chance of
success than a tailor-made approach.
Incentive and Supply-Side Policies
Bearing in mind the need to tailor a strategy to country circumstances, the experience of
successful developing countries suggests that the following incentive and supply-side
measures are pertinent to a liberalization plus approach:
access to ample industrial finance at competitive interest rates through prudent monetary
policy management, competition in the banking sector, training for bank staff in assessing
SME lending risks and specialist soft loans for SMEs;
an efficient and cost-competitive infrastructure with respect to air and sea cargo,
telecommunications, Internet access and electricity.
an apex public-private sector body to formulate competitiveness strategy and monitor its
implementation.
Each of these headings involves a variety sub-tasks --such as diagnostic studies, regular
consultation with key stakeholders, developing a common vision and strategy, co-ordination
of different parts and continuous monitoring -- which have to be undertaken to ensure sound
management of the strategy.
A well-designed and managed competitiveness strategy is necessary but not sufficient for
industrial success in developing countries. Even the best managed competitiveness
strategies can fail due to a variety of factors and the developing world contains examples of
success as well as failures.
The following factors might increase the likelihood of industrial success in the wake of a wellmanaged and coherent industrial competitiveness strategies:
political stability;
sound macroeconomic management and a stable, transparent macroeconomic
environment;
strong government capabilities to manage strategy;
sustained government commitment to strategy implementation;
good private sector capabilities and relations with government;
Limited exposure to external shocks (e.g. sudden fluctuations in world demand, world
interest rates and oil prices).
Size
(a)
21 Large Firms
19 SMEs
0.51
0.17
0.53
0.20
0.37
0.23
0.40
0.04
(a) SMEs have <100 employees, large firms have >100 employees.
Source: Wignaraja (2002).
Regression analysis confirms the validity and usefulness of the TI measure. For instance, in
the Mauritius sample, firm size, the share of engineering and technical manpower in
employment, training expenditures as a percentage of sales and the number of times a firm
used external technical assistance (foreign consultant or technology institution) have positive
and significant relations with TI (Wignaraja, 2002). This confirms that investments in human
capital and seeking information, both facilitated by size, improve technical performance. This
is strengthened by the finding that TI and foreign ownership (the share of foreign equity) have
positive and statistically significant effects on export performance by each firm. Simple as this
method is, it has great promise as a practical and efficient tool for preliminary benchmarking.
Source: Ganeshan Wignaraja (2002), Firm Size, Technological Capabilities and MarketOriented Policies in Mauritius, Oxford Development Studies, Vol. 30, No. 1, pp. 87-104.
Evaluate
EPZ
incentives
against
competitors and change offer to attract
flagship multinationals
Industrial
High interest rates and an Manage prudent monetary policies and
Finance
oligopolistic banking system
introduce competition into the banking
sector
Anti-SME bias in credit Promote training for bank staff on
allocation by banks
assessing SME credit, specialist SME
funding
windows
and
micro -finance
schemes
Infrastructure
High costs of sea and air Liberalise air and sea cargo entry to foreign
freight
operators
Long delays in accessing Consider commercialisation/privatisation of
utilities connections
infrastructure parastatals with an effective
regulatory framework
Source: Ganeshan Wignaraja (forthcoming 2002), Competitiveness Analysis and Strategy in
Ganeshan Wignaraja (edited), Competitiveness Strategy in Developing Countries, London:
Routledge
Country
MECI
Index
1
2
3
4
5
6
7
0.93
0.82
0.79
0.78
0.76
0.74
0.73
Singapore
Malaysia
Taiwan
Philippines
Korea, Rep.
Mexico
Israel
TechnologyManufactures
Manufactured
intensive exports (%
exports per capitaexport
growth,of total merchandise
(US$), 1999 (a) (c)
1980-1999, % (c) exports), 1998 (b)
Value
Rank
Value
Rank Value
Rank
25039
1
13.4
13
70
1
2988
5
19.2
3
55
4
5477
3
9.4
31
58
3
204
31
14.2
11
67
2
2825
6
11.9
17
54
5
1206
11
23.4
1
40
9
3936
4
9.2
33
49
6
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
Thailand
0.71
Hong
Kong,
China
0.70
Hungary
0.67
Costa Rica
0.60
China
0.55
Portugal
0.54
Tunisia
0.53
Trinidad
and
Tobago
0.52
Indonesia
0.51
Turkey
0.50
Morocco
0.47
Chile
0.47
Poland
0.47
Bolivia
0.46
South Africa
0.46
Brazil
0.45
Mauritius
0.45
Oman
0.45
Cyprus
0.45
Saudi Arabia
0.44
Sri Lanka
0.44
Greece
0.43
Bahrain
0.42
Argentina
0.41
Bulgaria
0.40
Venezuela, RB
0.39
Romania
0.39
Zimbabwe
0.39
Colombia
0.39
India
0.38
Dominica
0.38
Kuwait
0.38
Uruguay
0.37
Jordan
0.37
Nepal
0.36
El Salvador
0.36
Bangladesh
0.35
Jamaica
0.35
Guatemala
0.35
Senegal
0.35
Ghana
0.34
Pakistan
0.34
St.
Kitts
and
0.33
Nevis
Panama
0.33
Honduras
0.33
Egypt, Arab Rep. 0.33
Ecuador
0.32
719
14
18.8
42
24651
2121
1246
137
2071
498
2
7
10
36
8
20
11.9
7.3
15.6
15.1
10.2
9.9
16
41
8
10
26
27
32
45
24
27
19
24
10
7
12
11
19
12
645
128
317
127
173
545
52
349
155
984
520
684
262
183
525
953
202
363
98
297
48
85
26
393
1289
258
217
19
95
37
377
74
62
20
55
16
37
25
38
34
17
48
24
35
12
19
15
28
33
18
13
32
23
39
27
51
42
56
21
9
29
30
61
40
54
22
43
45
59
47
7.7
23.2
18.7
11.0
10.5
3.8
15.5
6.2
6.8
12.8
13.6
3.1
11.7
16.3
4.4
11.6
7.5
-4.2
10.8
-0.1
0.6
8.3
9.4
9.2
1.0
4.1
9.5
17.2
2.8
13.1
2.8
4.3
11.5
6.0
9.8
37
2
5
22
25
56
9
47
45
15
12
62
18
7
53
19
38
77
23
70
68
35
30
34
66
55
29
6
63
14
64
54
20
49
28
23
10
10
19
18
20
16
18
20
3
5
17
10
05
13
0
10
20
7
15
23
10
13
0
4
7
0
1
11
2
3
9
0
12
2
14
30
30
19
21
16
24
21
16
43
40
23
30
40
26
65
30
16
37
25
14
30
26
65
42
37
65
58
29
49
43
35
65
28
49
300
48
63
21
32
26
50
44
57
55
3.8
7.9
7.3
7.5
9.2
57
36
40
39
32
0
3
2
7
2
65
43
49
37
49
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
Grenada
0.31
Algeria
0.30
Peru
0.30
Belize
0.29
Paraguay
0.28
Kenya
0.28
Guyana
0.27
Central
African
Republic
0.26
Syrian
Arab
Republic
0.26
Cameroon
0.26
Cote d'Ivoire
0.25
Madagascar
0.25
Tonga
0.24
Gabon
0.24
Uganda
0.23
Nicaragua
0.21
Haiti
0.21
Malawi
0.21
Mozambique
0.20
Tanzania
0.19
Congo, Rep.
0.19
Sudan
0.18
Zambia
0.17
Congo,
Dem.
0.15
Rep.
Nigeria
0.13
Yemen, Rep.
0.00
45
11
51
86
21
14
37
52
67
49
41
58
64
53
7.2
11.2
3.6
0.4
6.1
5.5
0.9
42
21
59
69
48
51
67
0
1
3
2
1
3
3
65
58
43
49
58
43
43
19
60
4.6
52
65
16
10
18
6
6
57
1
9
13
3
2
3
12
1
8
63
68
62
71
72
46
77
69
65
73
75
74
66
79
70
3.3
6.5
3.6
7.2
5.9
-3.2
10.6
-1.5
-2.0
3.7
-2.9
1.1
-4.2
7.1
-6.7
61
46
60
43
50
76
24
72
73
58
75
65
78
44
79
2
0
0
0
0
0
2
2
1
0
9
1
0
0
2
49
65
65
65
65
65
49
49
58
65
35
58
65
65
49
1
1
1
76
80
78
-2.1
-1.2
-18.0
74
71
80
1
1
0
58
58
65
Notes:
(a) Manufactured exports defined by World Bank World Development Indicators as SITC 5 (chemicals),
6 (basic manufactured) , 7 (machinery and transport), 8 (miscellaneous manufactured goods) minus 68
(nonferrous metals).
(b) Technology -intensive manufactured exports (as a % of total merchandise exports for 1998) are
defined by UNCTAD/WTO International Trade Centre following UNCTADs SITC 3 digit classification by
factor intensity.
(c) Data on manufactured exports per capita are for 1999 while manufactured exports growth in current
US$ are for 1990-1999
Data Sources: Data on manufactured exports and population are from World Bank, World Development
Indicators, various, Asian Development Bank, Key Indicators of Developing Asian and Pacific Countries,
various and Wignaraja (1999) while data on technology -intensive exports as percentage of total
merchandise exports are from the ITC web site (www.itc.org) and Wignaraja (1999). Data for Taiwan
and 1980 data for China are from ADB Key Indicators of Developing Asian and Pacific Countries,
various.
Source: Ganeshan Wignaraja and Ashley Taylor (forthcoming 2002), Benchmarking Competitiveness:
A First Look at the MECI in Ganeshan Wignaraja (edited), Competitiveness Strategy in Developing
Countries, London: Routledge.
The country-level results reveal an interesting picture of competitiveness performance in the developing
world over the last two decades.
Countries in the East Asia and Pacific region accounts for seven out of the top ten countries and have
particularly strong performance on the technology-intensive exports sub-index. Singapore has the
highest MECI level, reflecting the fact that it has the highest proportion of technology -intensive exports
and the highest manufactured exports per capita in the whole sample. Malaysia, Taiwan, Philippines
and Korea (with significant shares of high technology exports and good export growth rates) closely
follow Singapore.
Interestingly, the East Asian economies performed better than European and Central Asian economies
owing to their better high technology shares of exports and, possibly, somewhat higher export growth.
th
th
Hungary is just in the top 10 performers and along with Portugal and Turkey (ranked 13 and 17 ) leads
the European and Central Asian grouping.
Mexico is the highest performer from the Americas, ranked six, and had the samples highest
manufactured export growth rate over the period. Costa Rica, Trinidad and Tobago and Chile come next
in this region whose members are largely concentrated in the top half of the sample of 80 countries. At
th
st
the tail end of the American region come Nicaragua and Haiti (ranking 70 and 71 , respectively).
Strong performance in different sub-factors can offset poor performance in others, for example Chinas
strong export growth and relatively high proportion of technology -intensive exports more than outweighs
th
its relatively low manufactured exports per capita. Thus, China ranks 12 in the overall list. On the other
hand, Kuwait, for example, although having the ninth highest manufactured exports per capita performs
poorly on export growth and technology-intensive exports and so has an overall ranking of 39.
South Asian economies are mainly in the middle of the rankings. Typically, these economies are
characterised by reasonable manufactured export growth rates but with relatively small shares of high
technology exports and low per capita manufactured export values. Sri Lanka, at 28th in the overall list,
is the leading South Asian economy owing to its manufactured export growth rate and value of per
capita manufactured exports. India (37th) comes next and has the highest share of high technology
exports in the South Asian region.
Greater variation is found in the case of Sub-Saharan African economies. South Africa (ranking 22nd)
th
and Mauritius (ranking 24 ) are the best performers in this region. By regional standards, South Africa
has the largest export base and a reasonable share of high technology exports while Mauritius has
strong manufactured export growth rates with a limited high technology content of exports.
Notwithstanding these exceptions, Sub-Saharan African countries dominate the lower rankings, for
example, occupying 8 of the bottom 10 positions.
While Mauritius and Trinidad and Tobago are among the top 25 performers, small developing
economies (largely in the Caribbean and the Pacific) such as Jamaica, St. Kitts and Nevis, Grenada,
Belize and Tonga are typically scattered throughout the bottom half of the whole sample. This indicates
that small states seem to have done less well on MECI performance than larger economies.
The preliminary results from the exercise seem to broadly accord with intuitive perceptions of crosscountry industrial competitiveness performance in the developing world. Further work is being done to
refine the method used, incorporate new data sources and to update the MECI.