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08:45:Sharp:
Visit
to the “Château de Chillon”
12:00
– 14:00:
Lunch
Break
The issue:
Comparative advantage identifies
those sectors in which a given country specializes in international trade in
view of its resource endowment. The latter may refer to primary resources
and factor endowment in terms of land, labour and capital. Comparative
advantage is a useful static approach, which explains, at any given moment, the
international division of labour.
In contrast, competitive advantage
is a dynamic concept relating to “the set of institutions and economic
policies supportive of high rates of economic growth in the medium term”
(J. Sachs et al, Global competitiveness report 2001-2002:16). It is based
on the principle that “national prosperity is created, not inherited”
(M. Porter, HBR: March April 1990:185) and focuses on the question of how to
sustain a country’s and a sector’s capacity to maintain high growth. It is a
concept that has its roots in micro-economic theory and that – in spite of a
controversial discussion – can be transposed to nations.
Moving from comparative to
competitive advantage may thus be translated as moving from a traditional export
portfolio towards trade-led economic development or, in the words of the recent
World Bank publication, how to make trade work for the poor.
The proposition:
The issue:
Trade strategy-makers and exporters have traditionally focused their attention on the issues of market access and export promotion and often purely for the purpose of finding international markets for domestic products.
However, with the evolution of trading patterns into complex value chains and increasing global product regulation, a poorly focused export strategy will lead to incorrect positioning and potential marginalisation of a developing country as just a supplier of commodities. To avoid this trap, strategy-makers and entrepreneurs must address the questions:
Strategies frequently benefit only those exporters and traders in a country that have influence at government levels. To be sustainable, trade strategy should also maximize the socio-economic value of export products. Poverty reduction, the informal sector, domestic suppliers, infrastructure and the balance of payments must all be taken into consideration. Where, and how, should a strategy-maker start to incorporate these difficult issues into the development of trade strategy?
The proposition:
We believe that a value chain approach can provide the best starting point for inclusive sector strategy formulation and capturing value from exports. It is also a robust foundation on which to build integrated national strategies to develop seamless trade processes.
A value chain extends from raw material supply through all activities of production to the delivery of finished goods and services to a consumer. When a buyer places an order, it unites many suppliers and service providers across borders into concerted action. It is international buyers that determine value and demand quality consistency, dependability, volume, traceability and speed of delivery to answer the requirements of consumers in their markets.
Information on these key "value and demand-side considerations", the structure, competitive situation and information flows in a value chain are, therefore, vital to improving the performance of exports in the short term and to developing successful trade strategies in the longer term.
Two inherent strengths of the ITC value chain approach are that it involves all "actors" and it combines a number of tools to provide an international perspective of trade sector dynamics - border in, border and border-out.
Informal clusters, non-exporting suppliers, regulatory authorities, trade finance institutions and other intermediaries all become engaged in the strategy development and export value capture process. This rapidly motivates alignment around a common supply purpose, meaningful public/private sector dialogue and working partnerships. The proposition raises a number of questions that we would like to debate during Session 2, including:
To launch the debate, we will present the proposition, illustrate the case with researched country examples and related experiences and then discuss the questions above.
The
issue:
Two critical objectives of
export strategy are to:
§
maximize local content (labour, materials, production
process, entrepreneurship, management and finance) of the existing export base;
and
§
generate business complementarities that will broaden
the export base (products and services) and lead to the emergence of new areas
of competitiveness.
Both objectives involve the
value-addition alliances within, and among local industries.
The
proposition:
Various
"value-addition" schemes have been introduced by developed and
developing countries as part of national export strategy. Some schemes work.
Others don't. Some schemes work in some countries, but not in others. What
lessons can be drawn from national experience? Are there any common do's and
don'ts that the national strategy- maker should be aware of? Are there any
"best practice" scenarios?
These questions will be the
focus of debate during this session.
The issue:
National branding can be defined as
(1) establishing an image (internally or externally) for a country based on
positive national values and perceptions and (2) emphasizing this image when
promoting exports, tourism and inward investment.
The proposition:
Due to the potential positive impact
of effective national branding, strategy-makers in developing countries should
undertake an analysis to determine if national branding would be appropriate and
beneficial to their country.
The first consideration:
Why should a country consider national branding? With globalization, an
increasing number of products and services can be purchased from a growing
number of sources. As a result, many products and services are becoming
more and more uniform in quality, design, price etc. Hence, country origin
becomes an important factor in the distinction between otherwise fairly similar
products and services. National branding is the identification and use of the
positive national values when trying to influence international buyers/importers
and potential investors.
The second consideration:
How should a country brand itself? Active national branding should be
considered when fundamental questions - related to cost/benefit and supply
capacity – can be answered positively. There are cases where national
branding might not be viable, because products, services and image might sell
better without being associated with their country of origin, or because costs
are likely to exceed benefits.
The Recommend Approach
What does it take to brand a country and what is the process? No two
cases of branding are alike, but the following basic decision-making process is
suggested:
The
issue:
Developing and transition economies find it difficult enough to prepare export strategies and work programmes, far less to engage in performance measurement and strategy evaluation. Performance measurement is generally the result of external pressure from a Ministry of Finance and Planning or from an international funding agency, which, in response to a request for funds to implement the national export strategy requires some form of justification. In many cases, it is only at this point that the export strategy stakeholders suddenly realize that performance measurement is important.
The issues then arise:
The proposition:
National export strategy, its process and implementation, its specific programmes and implementing agencies must be subject to performance measurement and evaluation, not to satisfy funding sources, but to ensure effectiveness and efficiency and as a process of constant self-improvement to remain relevant.
There are three recognised levels of performance measurement of increasing difficulty: the first focuses on inputs, the second on outputs and the third and most difficult on outcomes, or impact.
We must engage in benchmarking and seek to be aware of the tools and procedures which others use, because there is little point in re-inventing the wheel. But we must also be aware that there is no "one size fits all" and each country will have to develop systems of performance measurement and evaluation which suit their circumstances – level and stage of development.
The
intended result of the debate will be a "best practice" approach to
strategy performance measurement and evaluation.