The Challenges of competition in a globalised economy

1
The Challenges of competition in a globalised
economy

•  
• What is the knowledge economy?
• What is required for a country to be able to
  fully participate in the knowledge economy?
• The World Economic Forum Global Competitiveness
  Report
• Special Focus on Turkey

2
What is the knowledge economy?

• The knowledge economy is the use of knowledge
  technologies (such as knowledge engineering and
  knowledge management ) to produce economic
  benefits.
• Today's global economy is described as one in
  transition to a "knowledge economy", as an
  extension of an "information society".
• The transition requires that the rules and
  practices that determined success in the
  industrial economy need rewriting in an
  interconnected, globalized economy where
  knowledge resources such as know-how and
  expertise are as critical as other economic
  resources.

3
TEPEK

• TEPEK is the acronym for the title of this EU
  funded programme
• Turkeys participation in the European knowledge
  economy

4
What is required for a country to be able to
fully participate in the knowledge economy?

• The World Bank has identified Four Pillars of The
  Knowledge Economy - four critical requisites for
  a country to be able to fully participate in the
  knowledge economy. These are
• Education Training An educated and skilled
  population is needed to create, share and use
  knowledge.
• Information Infrastructure A dynamic information
  infrastructure-ranging from radio to the
  internet-is required to facilitate the effective
  communication, dissemination and processing of
  information

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Four Pillars of The Knowledge Economy contd.

• Economic Incentive Institutional Regime A
  regulatory and economic environment that enables
  the free flow of knowledge, supports investment
  in Information and Communications Technology
  (ICT), and encourages entrepreneurship is central
  to the knowledge economy
• Innovation Systems A network of research
  centres, universities, think tanks, private
  enterprises and community groups is necessary to
  tap into the growing stock of global knowledge,
  assimilate and adapt it to local needs, and
  create new knowledge

6
TEPEK

• This TEPEK project is intended to help strengthen
  these pillars in Turkey. TEPEK combines training
  with various dissemination activities including
• Action Learning
• Building local consortia
• Website
• Dissemination of project results
• Seminars for the core team members

7
The World Economic Forum Global Competitiveness
Report

• The WEF Global Competitiveness Report series has
  evolved over the last three decades into the
  world's most comprehensive assessment of
  countries' competitiveness
• Produced in collaboration with leading academics
  and research institutes, the Report provides
  users with a comprehensive assessment of their
  strengths and weaknesses related to national
  competitiveness using the Global Competitiveness
  Index as the main methodology
• In order to assess national competitiveness, WEF
  uses the Global Competitiveness Index (GCI),
  which measures the set of institutions, policies
  and factors that set the sustainable current and
  medium-term levels of economic prosperity

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WEF

• The goal of the WEFs work on competitiveness is
  to contribute to a better understanding of the
  key ingredients of economic growth and
  prosperity.
• By highlighting the strengths and weaknesses of
  an economy, policy-makers, business leaders and
  other stakeholders are offered an important tool
  for the formulation of improved economic policies
  and institutional reforms

9
WEF

• In addition to statistical data the index also
  features data from the Executive Opinion Survey
  carried out by the World Economic Forum. The 2008
  Survey captures the perceptions of over 12,000
  business leaders from the featured 134 economies.
  Turkey is ranked 63 in this years survey.

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2008-09 Top 10
1 2 3 4 5 6 7 8 9 10 US Switzerland Denmark Sweden Singapore Finland Germany Netherlands Japan Canada 5.74 5.61 5.58 5.53 5.53 5.5 5.46 5.41 5.38 5.37
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Countries rated under 12 categories or pillars

• Basic Requirements
• 1st pillar Institutions
• Public institutions Property rights, Ethics and
  Corruption, Undue influence, Government
  inefficiency, Security
• Private institutions Corporate ethics,
  Accountability
• 2nd pillar Infrastructure - General and specific
  infrastructure
• 3rd pillar Macroeconomic stability
• 4th pillar Health and primary education

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Efficiency Enhancers

• 5th pillar Higher education and training
• Quantity of education
• Quality of education
• On-the-job training
• 6th pillar Goods market efficiency
• Competition Domestic competition and Foreign
  competition
• Quality of demand conditions
• 7th pillar Labour market efficiency
• Flexibility
• Efficient use of talent

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Efficiency Enhancers 2

• 8th pillar Financial market sophistication
• Efficiency
• Trustworthiness and confidence
•  
• 9th pillar Technological readiness
•  
• 10th pillar Market size
• Domestic market size
• Foreign market size

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Innovation and Sophistication Factors

• 11th pillar Business sophistication
• Networks and supporting industries
• Sophistication of firms operations and strategy
• 12th pillar Innovation

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How these relate to economy types

• The first four are key for factor driven
  economies
• The next six pillars are key for efficiency
  driven economies
• The final two pillars are key for innovation
  driven economies

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Special Focus on Turkey

• Turkey ranked 59 in the 2006-2007 report, and was
  the focus of a special country report
• Based on its GDP per capita level, Turkey was in
  the efficiency-driven stage
• Efficiency enhancers critical for the countrys
  competitiveness (50)
• Basic requirements remain very important (40)
• Innovation and sophistication factors less
  important (10).

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The Business Sophistication Pillar

• Turkey showed a competitive advantage in this
  pillar
• Progress in business sophistication compared with
  its own performance in the other GCI pillars
• With a rank of 39 and a score of 4.58, business
  sophistication was by far the pillar in which
  Turkey did best and outperformed both the
  accession 10 average (4.46) and Bulgaria (3.59)
  and Romania (3.89).

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Other highlights

• High scores for for its cluster related
  infrastructure, including
• Local supplier quantity (29th) and quality (39th)
• Control of international distribution (29th)
• Extent of goods production higher up on the value
  chain (37th)

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Importance of Innovation

• In current knowledge-based and interconnected
  economic systems, innovation becomes the only
  sustainable driver of productivity growth for
  firms and countries alike
• Developing national dynamic competitive
  advantages allows countries to ensure increasing
  levels of prosperity and living standards for
  their citizens
• Capacity to generate endogenous innovation leads
  to sustained productivity increases and enduring
  competitiveness
• Turkey already performed better with regard to
  innovation than all accession and candidate
  countries with the exception of Croatia

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The main innovation enablers

• Government
• Business sector
• Research institutions
• Turkey scored well in
• Extent of research cooperation between the
  private sector and universities (46th)
• Availability of scientists and engineers (44th)
• Companies capacity for innovation (47th)

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Areas for Improvement

• Report notes that government-related variables,
  such as public procurement of high technology
  goods and intellectual property protection,
  remain areas of concern, with rankings of 62nd
  and 71st respectively
• Turkey ranks 70th for number of US utility
  patents granted per million inhabitants
• Domestic innovation potential has not yet been
  fully tapped with regard to development of new
  processes and products

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Conclusions

• Turkey does quite well in some of the more
  complex competitiveness dimensions such as
  business sophistication and technological
  adoption
• Continues to lag behind in some of the more basic
  requirements for competitiveness stability of
  the macroeconomic environment, the quality of
  public institutions and the educational system.
• Countrys competitive strengths are primarily in
  areas normally reserved for countries at higher
  stages of development
• Highlights the need to address some of the more
  basic issues
• Critical for enabling improvements in
  productivity and growth at the present time

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Links

• http//gcr.weforum.org/gcr/
• http//www.weforum.org/pdf/Global_Competitiveness_
  Reports/Turkey.pdf
• Thank You!
• Barbara Baker, Magpie Links Ltd