1. Business Competitiveness: A 21st Century Model for the Caribbean
Presented to the ECCU Business Symposium and Innovation Forum
St Kitts and Nevis Tuesday October 22, 2013

2. 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?

3. 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.

4. From Absolute to Comparative to Competitive Advantage
Absolute Advantage – Adam Smith 1776
Comparative Advantage – David Ricardo 1817
Competitive Advantage – Michael Porter 1990

5. 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)
Inefficiencies in production process
Results in reduced or no trade

6. Comparative Advantage
Countries should produce those items they can make most efficiently even if other countries can produce the item more efficiently.
Small economies could not be competitive
Presumes bilateral trade, full employment
Transportation Costs not included

7. Firm Level Competitiveness – Porter’s Diamond
Determinants of Global Competitive Advantage:
The Porter Diamond
Demand
Conditions
Factor
Related and
Supporting
Industries
Firm Strategy,
Structure, and
Rivalry
Source: International Business : Environments and Operations ,Daniels and Radebaugh

8. 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

9. Industry Competitiveness Porter’s Five Forces

10. What of the Caribbean?

11. Wint’s (2003) Model of Competitiveness for SIDS in the Caribbean
Alvin G. Wint, Competitiveness in Small Developing Economies, 2003 ,UWI Press

12. 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)

13. Global Competitive Report 12 Pillars of Competitiveness
Quality of Institutions
Infrastructure
Macroeconomic Environment
Health and Primary Education
Higher Education and Training
Goods Market Efficiency
Labour Market Efficiency
Financial Market Development
Technology Development
Market Size
Business Sophistication
Innovation

14. Caribbean Competitiveness
A Human Capital Development Approach

15. 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 , p. xiii)

16. 5th Pillar – Higher Education and Training - Barbados
INDICATOR
MEASURE
RANK/148
Secondary education enrollment, gross %*
103.7 23
Tertiary education enrollment, gross %
61.8 33
Quality of the educational system
5.3 6
Quality of math and science education
5.5 9
Quality of management schools
5.1 26
Internet access in schools 38
Availability of research and training services
4.7 41
Extent of staff training
4.5 32

17. 9th Pillar of GCI – Technology Development - Barbados
INDICATOR
MEASURE
RANK/148
Availability of latest technologies
5.9 28
Firm-level technology absorption
5.2 44
FDI and technology transfer
5.0 35
Individuals using Internet, %*
73.3 32
Fixed broadband Internet subscriptions/100 pop.*
23.8 27
Int’l Internet bandwidth, kb/s per user*
69.5 33
Mobile broadband subscriptions/100 pop.*
36.4

18. 12th Pillar of Competitiveness – Innovation - Barbados
INDICATOR
MEASURE
RANK/148
Capacity for innovation
3.4 81
Quality of scientific research institutions
4.2 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 63
PCT patents, applications/million pop.*
11.3 32

19. Modified Model of Competitiveness for the Caribbean
Global Competitiveness
Macroeconomic Stability
Infrastructural Development
Firm Level Competitiveness
Innovation
Higher Education and Training
Technology Development

20. The Third Prong in the Growth Strategy for the ECCU
Transportation
Energy
Environment
Education and Skills Training
Research and Development
Information Technology
Governance
Source: Hon Sir Dwight Venner, ECCB Annual Report, 2012/2013

21. 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

22. 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.

23. Do countries with higher income per capita have higher tertiary enrollment rates?
Most countries with a GNI pc higher than $20,000
have tertiary GERs higher than 50%.
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%).

24. 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.
10 Countries with the Lowest Tertiary Gross Enrollment Rates
( ) 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 10
Dominica
3.57
Source: UNESCO Institute for Statistics in EdStats, Nov. 2012
Notes: Figures are most recent year with data between Purple = 2011; Black = 2010; Blue = 2009; Green = 2008.
Data were not available for 72 of 214 countries.

26. 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

27. EPILOGUE
TESSA’S STORY

28. References
Daniels, J and Radebaugh, L (2012) International Business:Environments and Operations, Pearson.
ECCB Annual Report,
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
Wint, A (2003) Competitiveness in Small Developing Economies, UWI Press.
Harvard Business School Institute for Strategy and Competitiveness.
UNESCO, Edstats

29. THANK YOU