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IP_314International Management

CentralEuropeanStudyProgramme

Ilya Bolotov, Ph.D., MBA

WEEK 4 Competitiveness in International ManagementWhich countries should MNCs do business in?Porter’s diamond model as a referenceContemporary ways of measuring the competitiveness of nationsGlobal competitiveness report (WEF), Doing business report (WB)The role of MNCs in improving countries’ competitiveness

• National competitiveness– The notion of “competitiveness”– Porter’s diamond model– Roles of chance and government– Measurement– MNCs and competitiveness

• WEF “Global Competitiveness” Report– Global Competitiveness Index (GCI)

• World “Bank Doing Business” Report• Case in point – Czech Republic in 2007

Outline

2

Notion and Definition of Competitiveness

• What is international competitiveness?

„The set of institutions, policies, and factors that determine the level of productivity of a country.“ (WEF)

– Competitiveness deals not only with economic, but also with social, political, cultural and educational aspects.

– More competitive economies tend to be able to produce higher levels of income for their citizens.

– The productivity level also determines the rates of return obtainedby investments (physical, human, and technological) in an economy.

3

• Why is the information about countries’ competitiveness useful for companies?

– Competitiveness is linked to performance, advantagesand problems of countries.

– Reports on competitiveness can bring better understanding of examined countries.

– Information helps companies to select right locations for exports and investment.

4

Michael E. Porter• “Michael E. Porter is a leading authority

on competitive strategy, the competitiveness and economic development of nations, states, and regions, and the applicationofcompetitive principles to social problems such as health care, the environment, and corporate responsibility…”

(information at http://drfd.hbs.edu)

• Porter, M. E. The Competitive Advantage of Nations. New York: Free Press, 1990. (Republished in 1998.)

(born May 23, 1947)

5

http://drfd.hbs.edu/

Michael Porter on competitiveness https://youtu.be/Ul_kXIFdwQE

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https://youtu.be/Ul_kXIFdwQE

Porter’ s Diamond of National Advantage

Firm strategy. structure and

rivalry

Demand conditions

Related and Supporting Industries

Stock of Factors of production

Role of government

Role ofchance

7

Factor conditions• BASIC FACTORS – Natural resources, climate, location

and demographics.• ADVANCED FACTORS – Communication Infrastructure,

skilled labour, Research facilities etc.• Basic factors can provide only an initial advantage.• They must be supported by advanced factors

to maintain success.E.g.• Switzerland was the first country to experience labour shortages.

They abandoned labour-intensive watches and concentratedon innovative/high-end watches.

• Japan has high priced land and so its factory space is at a premium. This lead to just-in-time inventory techniques.

• Sweden has a short building season and high construction costs. These two things combined created a need for pre-fabricated houses.

Source: [D]

8

Demand factors• Home country Demand plays an important role

in producing competitiveness.• It enables better understanding of the needs

and desires of the customers.• It shapes the attributes of domestically made products

and creates pressure for innovation and quality.E.g. 1• Italian ceramic Industry after the world war II• There was a postwar housing BOOM !!• Consumers wanted cool floors because of hot climatic conditions.E.g. 2• Japan’s knowledgeable buyers of cameras made that industry

to innovate and grow tremendously.E.g. 3• The French wine industry. The French are sophisticated wine

consumers. These consumers force and help French wineriesto produce high quality wines.

Source: [D]

9

Related and supporting industries• Benefits of investment in advanced factors

by Suppliers and related industries can spill over.• Creates clusters of supporting industries, thereby

achieving a strong competitive position internationally.

E.g.1• The enamel production unit was available.• The glazes production was also favorable.• These two were the main composition of producing tiles.• This reduces the Transportation cost.E.g. 2• Switzerland success in pharmaceutical industry is closely related

to its international success in technical dye industry.

Source: [D]

10

Firm strategy, structure and rivalry• Long term corporate vision (=> Strategy)

is a determinant of success.• Ability of the companies to develop and sustain

a competitive advantage requires the 4th attribute.• Presence of domestic rivalry improves a company’s

competitiveness.E.g. 1• Low entry barriers to market in the tile industry.• Rivalry became very intense.• Breakthroughs in both product and process technologies.E.g. 2• Japan has high priced land and so its factory space is at a premium• This lead to just-in-time inventory techniques.• (Japanese firms can’t have a lot of stock taking up space, so to cope

with the potential of not have goods around when they need it),they innovated traditional inventory techniques.

Source: [D]

11

The role of chance

Can governments forge competitive companies?

12

The role of the government• Reforming the law system and economy?• Focusing on specialized factor creation.• Avoiding interfering in factor and currency

markets.• Enforcing strict product, safety and

environmental standards.• Enforcing anti-trust laws.• Promoting goals that lead to sustained

investment.• Deregulating competition.

Source: [P]

13

Investment incentivesin the Czech Republic (1)

• Within the framework of financial support for investments, the Czech Republic provides several aid programmes for both Czech and foreign investors.

• Investment incentives are available not only to investors launching or expanding production, but also to technological centers and strategic service centers.

• On May 1, 2015 the amendment on investment incentives cameinto effect. The amendment introduces new types of incentivesand at the same time removes the current limitations in the Act on investment Incentives and connected acts.

Source: [CZI]

14

• New Incentives:– Determination of special industrial zones with a broader offer

of forms of support;– Introduction of aid for data centres and customer-support centres

(call centres);– Expansion of regions with the possibility of a cash grant for job

creation;– Increase of the cash grant for acquisition of fixed tangible and

intangible assets.• Removal of current limitations:

– Facilitation of transformation of companies in the tax-relief regime;– Possibility of renunciation the entitlement to tax relief;– Reduction of penalties for breach of the transfer-price condition;– Lowering of limits on job creation for technology centres and

business support services centres;– Others.

Investment incentivesin the Czech Republic (2)

Source: [CZI]

15

Other roles

Company’s agenda (= policies)

Leadership

16

• Based on the diamond and other models,M. Porter defined four groups of economies:– Factor-of-production-based (cheap labour, dual

economy, companies are mainly suppliersin the domestic market).

– Efficiency-based (skilled , but still cheaper labour, role of technology, companies are exporters).

– Innovation-based (advanced technologies, global strategies, optimization strategies).

– Quality-of-life-based (main sector: services, advanced technology and outsourcing).

• The classification is used by the Global Competitiveness Report published by WEF.

17

Measurement of Competitiveness

• Quantitative approach:– Indicators of input (costs, prices etc.);– Indicators of output (export, import etc.).

• Multidimensional approach:– Combinations of quantitative and qualitative

indicators;– Organizations (WEF, IMD, the Economist).

18

Quantitative indicators: INPUT• Labour costs per hour (EUR per 1 hour of labour)

• Productivity of labour (GDP per 1 hour of labour)

EUR per 1 hour of labour 2001 2002 2003 2004 2005 2006 2007 2008Western Europe:

Germany 25.60 26.20 26.80 26.90 27.10 27.60 27.80 :France 26.00 27.04 27.68 28.46 29.29 30.25 31.24 31.97

Central and Eastern Europe:Czech Republic 4.64 5.39 5.47 5.85 6.63 7.14 7.88 :Slovakia 3.26 3.59 4.02 4.41 4.80 5.33 6.41 :Poland 5.3 5.27 4.70 4.74 5.55 6.03 6.78 :Hungary 4.04 4.91 5.10 5.54 6.14 6.34 7.13 :

GDP in Purchasing Power Standards(EU-15 = 100) 2001 2002 2003 2004 2005 2006 2007 2008 2009Western Europe:

Germany 107.0 107.2 110.0 110.1 111.7 111.7 111.4 110.6 110.0France 115.7 118.9 115.6 113.3 115.0 115.4 114.5 113.2 112.9

Central and Eastern Europe:Czech Republic 47.1 47.2 49.8 51.1 51.1 51.7 53.8 54.1 56.2Slovakia 49.5 52.4 54.9 55.5 56.9 59.8 62.7 66.0 69.3Poland 39.3 41.1 42.0 43.3 43.2 42.8 43.7 44.0 46.7Hungary 45.4 47.1 48.5 49.7 49.6 49.9 50.3 52.9 53.5

Source: EUROSTAT

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Quantitative indicators: OUTPUT

• Indicators of export performance:

– Market growth indicator(= weighted average of growth of all countries exportingto a certain market, where weights represent their share in total imports).

– Export performance indicator(= share of a country’s exports to a certain market in the market growth indicator of this market).

• Certain indicators are also applicable to companies : export as % of total production, export growth rate, export per employee, value addedper employee, number patents, trademarks etc.

20

• Relative degree of specialization:

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C – Coefficient of the relative degree of specialization,Xij – Exports of good „j“ from country „i“,∑iXij – Total world exports of good „j“,Xi – Exports of manufactured goods from country „i“,∑i∑jXij – Total world exports of manufactured goods.

21

• Value-added indicators:– Transformation performance of the economy (= difference

between exports of SITC groups 5, 6, 7, 8 and the importsof SITC groups 2, 3; USD or EUR per capita).

– Kilogram prices (=synthetic indicator, includes not only inputs and used technology, but also the quality of goods in general sense; used for manufactured goods in international comparisons).

Standard International Trade Classification, SITC, Rev.3- fr. Classification type du commerce international, CTCI

0 - Food and live animals1 - Beverages and tobacco2 - Crude materials, inedible, except fuels3 - Mineral fuels, lubricants and related materials4 - Animal and vegetable oils, fats and waxes5 - Chemicals and related products, n.e.s.6 - Manufactured goods classified chiefly by material7 - Machinery and transport equipment8 - Miscellaneous manufactured articles9 - Commodities and transactions not classified elsewhere in the SITC

Source: http://unstats.un.org/unsd/cr/registry/regcst.asp?Cl=14

22

http://unstats.un.org/unsd/cr/registry/regcs.asp%3FCl=14&Lg=1&Co=0http://unstats.un.org/unsd/cr/registry/regcs.asp%3FCl=14&Lg=1&Co=1http://unstats.un.org/unsd/cr/registry/regcs.asp%3FCl=14&Lg=1&Co=2http://unstats.un.org/unsd/cr/registry/regcs.asp%3FCl=14&Lg=1&Co=3http://unstats.un.org/unsd/cr/registry/regcs.asp%3FCl=14&Lg=1&Co=4http://unstats.un.org/unsd/cr/registry/regcs.asp%3FCl=14&Lg=1&Co=5http://unstats.un.org/unsd/cr/registry/regcs.asp%3FCl=14&Lg=1&Co=6http://unstats.un.org/unsd/cr/registry/regcs.asp%3FCl=14&Lg=1&Co=7http://unstats.un.org/unsd/cr/registry/regcs.asp%3FCl=14&Lg=1&Co=8http://unstats.un.org/unsd/cr/registry/regcs.asp%3FCl=14&Lg=1&Co=9http://unstats.un.org/unsd/cr/registry/regcst.asp%3FCl=14

Multidimensional indicators

• Global Competitiveness Index (GCI)– See part II of the presentation.

• Index of Economic Freedom, the Heritage Foundation

IEF includes “ten components of economic freedom, assigninga grade in each using a scale from 0 to 100, where 100 represents the maximum freedom. The ten component scores are then averaged to give an overall economic freedom scorefor each country. “

Source: The Heritage Foundation, http://www.heritage.org/index/

23

http://www.heritage.org/index/

International organizations

• WEF - World Economic Forum, Geneva• IMD - Institute for Management Development, Lausanne• World Bank• WIIW - Vienna Institute for International Economic Studies, Vienna

• OECD – Organization for Economic Cooperation and Development

• European Commission - EUROSTAT

• The Heritage Foundation• The Economist Group

others.24

Indicators in practice

Taken from a research paperby the Federal Reserve Bank of New York

25

MNCs (FDI) and competitiveness – Pros (1)• 1. Economic Development Stimulation.

Foreign direct investment can stimulate the target country’s economic development, creating a more conducive environment for a company as the investor and benefits for the local industry.

• 2. Easy International Trade.Commonly, a country (RTA) has its own import tariff, and this is one of the reasons why trading with it is quite difficult. Also, there are industries that usually require their presence in the international markets to ensure their sales and goals willbe completely met. With FDI, all these will be made easier.

• 3. Employment and Economic Boost.Foreign direct investment creates new jobs, as investors build new companiesin the target country, create new opportunities. This leads to an increase in income and more buying power to the people, which in turn leads to an economic boost.

• 4. Development of Human Capital Resources.One big advantage brought about by FDI is the development of human capital resources, which is also often understated as it is not immediately apparent. Human capital is the competence and knowledge of those able to perform labor, more known to us as the workforce. The attributes gained by training and sharing experience would increase the education and overall human capital of a country. Its resourceis not a tangible asset that is owned by companies, but instead something thatis on loan. With this in mind, a country with FDI can benefit greatly by developingits human resources while maintaining ownership.

Source: [CUS]

26

MNCs (FDI) and competitiveness – Pros (2)• 5. Tax Incentives.

Parent enterprises would also provide foreign direct investment to get additional expertise, technology and products. As the foreign investor, a company can receive tax incentives that will be highly useful in a company’s selected field of business.

• 6. Resource Transfer.Foreign direct investment will allow resource transfer and other exchanges of knowledge, where various countries are given access to new technologies and skills.

• 7. Reduced Disparity Between Revenues and Costs.Foreign direct investment can reduce the disparity between revenues and costs.With such, countries will be able to make sure that production costs will be the same and can be sold easily.

• 8. Increased Productivity.The facilities and equipment provided by foreign investors can increase a workforce’s productivity in the target country.

• 9. Increment in Income.Another big advantage of foreign direct investment is the increase of the target country’s income. With more jobs and higher wages, the national income normally increases. As a result, economic growth is spurred. One should take note that larger corporations would usually offer higher salary levels than what a company would normally find in the target country, which can lead to increment in income.

Source: [CUS]

27

MNCs (FDI) and competitiveness – Cons (1)• 1. Hindrance to Domestic Investment.

As it focuses its resources elsewhere other than the investor’s home country, foreign direct investment can sometimes hinder domestic investment.

• 2. Risk from Political Changes. Because political issues in other countries can instantly change, foreign direct investment is more risky than domestic one. Plus, most of the risk factors thata company is going to experience are high.

• 3. Negative Influence on Exchange Rates. Foreign direct investments can occasionally affect exchange rates to the advantage of one country and the detriment of another.

• 4. Higher Costs. If a company invests in some foreign countries, it might notice that it is more expensive than when it exports goods. So, it is very imperative to prepare sufficient money to set up a company‘s operations.

Source: [CUS]

28

MNCs (FDI) and competitiveness – Cons (2)• 5. Economic Non-Viability.

Considering that foreign direct investments may be capital-intensive from the pointof view of the investor, it can sometimes be very risky or economically non-viable.

• 6. Expropriation. Political changes can also lead to expropriation, which is a scenario wherethe government will have control over a company’s property and assets.

• 7. Negative Impact on the Country’s Investment. The rules that govern foreign exchange rates and direct investments might negatively have an impact on the investing country. Investment may be banned in some foreign markets, which means that it is impossible to pursue an inviting opportunity.

• 8. Modern-Day Economic ‘Colonialism’?Many third-world countries, or at least those with history of colonialism, worry that foreign direct investment would result in some kind of modern day economic colonialism, which exposes host countries and leave them vulnerable to foreign companies’ exploitations.

Source: [CUS]

29




Outline

30

History• Multidimensional approach to competitiveness.• First published in 1979.• Introduced Global Competitiveness Index in 2005:

– Changing composition of criteria (pillars),– Now 12 criteria.

• Current report: 2018 (Methodology change!)

31

Structure of the Report• Preface of the executive chairman

(Klaus Schwab)• Part 1: Study on current economic

development• Part 2: Information about the methodology

– Global Competitiveness Index Methodology;– TOP 10 and regions’ competitiveness;– Business opinion survey.

• Part 3: Data tables– Country profiles;– Indicators.

32

Global Competitiveness Index (GCI) – OLD

• Twelve pillars (9 before 2007-2008):– Institutions– Infrastructure– Macroeconomic environment– Health and primary education– Higher education and training– Goods market efficiency– Labour market efficiency– Financial market development– Technological readiness– Market size– Business sophistication– Innovation

Each pillar is ranked from 1 to 7 according to statistical data and to the WEF’s business survey (opinions of top managers in countries).

GCI is then calculated as a weighted average from these rankings (weights depend o the level of economic development of a country); GCI also ranges from 1 to 7.

More information:http://www.weforum.org/issues/global-competitiveness/ 33

http://www.weforum.org/issues/global-competitiveness/

Source: World Economic Forum. GCR 2017-2018

Pillars and groups of countries: Compare with M. Porter’s model

34

35Source: World Economic Forum. GCR 2018

Global Competitiveness Index (GCI) – NEW

Top and bottom countries –NEW

Source: World Economic Forum. GCR 2019 39

Regional outlook

Source: World Economic Forum. GCR 2019 40

41

Chapter 2: Regional and Country Analysis

12 | The Global Competitiveness Report 2019

Cross-regional disparities are more visible across the 12 pillars (Table 1). Regional gaps in Health, ICT adoption and Infrastructure stand at 38.4, 36.2 and 34.7 points, respectively; these are significantly higher than the overall gap of 28 points between the best-performing and worst-performing countries. To some extent, some of the largest cross-regional differences are concentrated in those pillars where most regions attain median scores relatively close to the ‘frontier’ (the best possible performance). In other dimensions, such as the Innovation capability pillar, cross-regional differences are comparatively smaller since even the most innovative regions are only half-way from the frontier. High regional score variance across pillars captures how difficult it is to build and manage a competitive ecosystem and perform well on all dimensions of competitiveness at the same time.

Large regional variances are also observed in terms of changes over time (Table 2). ICT adoption stands out as the area where developing economies are catching up relatively more quickly, even if advanced economies continue to progress. When it comes to the Health pillar, Sub-Saharan Africa is making strides to catch up with other areas of the world—while most of the other regions registered a slight step backward in 2019. Further, all regions except Middle East and North Africa are somewhat less open than last year, capturing the effect of trade tensions and the possibility of a significant setback in international trade.

Figure 1: Competitiveness gap within regionsBest, median and worst GCI 4.0 2019 scores, by region

0

20

40

60

80

100

Median scoreBest performer

Worst performer

Sub-SaharanAfrica

South AsiaLatin Americaand the Caribbean

Middle Eastand North Africa

EurasiaEurope andNorth America

East Asiaand the Pacific

Nepal

India

Haiti

Chile

Yemen

Israel

Tajikistan

Russian Federation

Bosnia andHerzegovina

United States

Lao PDR

Singapore

Chad

Mauritius

Source: World Economic Forum analysis.Note: See the At a Glance section on page xiii for regional classifications. Regions are arranged according to median scores.

Score (0–100 scale)

Figure 2: Change in median competitiveness performance, by region

0.0 0.5 1.0 1.5 2.0 2.5 3.0

Middle East andNorth Africa

East Asia andthe Pacific

Latin America and the Caribbean

Eurasia

Europe andNorth America

South Asia

Sub-Saharan Africa

0.08%

2.35%

1.78%

1.38%

1.25%

0.14%

2.77%

Source: World Economic Forum analysis. Note: See the At a Glance section on page xiii for regional classifications.

Regions sorted according to median scores.

Percentage change 2018–2019

Source: World Economic Forum. GCR 2019

Case study: Visegrád Group

• The Visegrád group (V4) includes the Czech Republic, Slovakia, Hungary and Poland.

• V4 is considered to be the best-performingin the Central and Eastern Europe

x since 2016 EE countries (Russia).

• Comparison of the economies from the point of view of competitiveness.

42

Visegrád CGI Ranks Development (Historical data)

2006–2007 (of 122)

2007–2008 (of 131)

2008–2009 (of 134)

2009–2010 (of 133)

2010–2011 (of 139)

2011–2012 (of 142)

Basis change 0 9 3 -1 6 3Czech Republic 31 33 33 31 36 38Slovakia 36 41 46 47 60 69Poland 45 51 53 46 39 41Hungary 26 27 62 58 52 48

-2

0

2

4

6

8

100

10

20

30

40

50

60

70

80

Ran

king

(1–

ca. 1

40)

Basis change Czech Republic Slovakia Poland Hungary

Source: WEF 43


Country GCI Ranking Country groupAdvantages (against the

average)Main problems

CzechRepublic

31(stable) Innovation-driven

Macroeconomicenvironment,

Financial market development

Tax regulations,Government bureaucracy,

Tax ratesPolicy instability

Slovakia 59(improving) Innovation-driven

Macroeconomicenvironment,

Financial market development

Corruption, Government bureaucracy

Tax rates,Tax regulations

Poland 39(stable)Transition from

efficiency to innovation driven

Market size,Health and primary

education

Tax regulations,Tax rates,

Labor regulations,Policy instability

Hungary 60(fluctuating)

Transition from efficiency to

innovation driven

Market size,Financial market

development

Workforce qualification,Corruption,Tax rates

Tax regulations44


Source: WEF


45


46

47

Key Previous edition High-income group average Europe and North America averagePerformance Overview2019

Best

Rank /141

Score

0

10

20

30

40

50

60

70

80

90

100

OverallScore

EnablingEnvironment

HumanCapital Markets

InnovationEcosystem

SGP FIN SGP KOR (33) (4) CHE HKG SGP HKG CHN USA DEU

32nd 44th 20th 42nd 1st 48th 29th 55th 48th 47th 42nd 32nd 29th

Overall Institutions Infrastructure ICTadoption

Macro-economicstability

Health Skills Productmarket

Labourmarket

Financialsystem

Marketsize

Businessdynamism

Innovationcapability

71

61

84

68

100

86

73

57

6368

6569

57

Czech Republic 32nd / 141

Global Competitiveness Index 4.0 2019 edition Rank in 2018 edition: 29th / 140

Selected contextual indicators

Social and environmental performance

Population millions

GDP per capita US$

10-year average annual GDP growth %

GDP (PPP) % world GDP

% GDP

Renewable energy consumption share %

Unemployment rate %

Global Gender Gap Index 0-1 (gender parity)

Income Gini 0 (perfect equality) -100 (perfect inequality)

10.6

22,850.3

2.0

0.29

3.3

14.8

2.4

0.7

25.9


Economy Profiles

Source: World Economic Forum.GCR 2019


48


49

50



Best

Rank /141

Score

0

10

20

30

40

50

60

70

80

90

100

OverallScore

EnablingEnvironment


InnovationEcosystem


42nd 61st 30th 39th 1st 57th 45th 89th 64th 56th 59th 55th 44th




Labourmarket

Financialsystem

Marketsize

Businessdynamism


67

56

79

69

100

82

70

5361 64 58

63

46

Slovak Republic 42nd / 141

Global Competitiveness Index 4.0 2019 edition Rank in 2018 edition: 41st / 140



Population millions

GDP per capita US$



% GDP


Unemployment rate %



5.4

19,581.6

2.8

0.14

0.7

13.4

6.8

0.7

26.5


Economy Profiles


51


52

53



Best

Rank /141

Score

0

10

20

30

40

50

60

70

80

90

100

OverallScore

EnablingEnvironment


InnovationEcosystem


37th 60th 25th 51st 1st 54th 34th 50th 70th 57th 22nd 59th 39th




Labourmarket

Financialsystem

Marketsize

Businessdynamism


69

56

81

65

100

84

72

58 6064

74

62

50

Poland 37th / 141




Population millions

GDP per capita US$



% GDP

Environmental footprint gha/capita


Unemployment rate %



38.0

15,430.9

3.1

0.90

2.6

5.4

11.9

3.7

0.7

31.8


Economy Profiles


54


55

56



Best

Rank /141

Score

0

10

20

30

40

50

60

70

80

90

100

OverallScore

EnablingEnvironment


InnovationEcosystem


47th 63rd 27th 54th 43rd 70th 49th 91st 80th 66th 48th 83rd 41stOverall Institutions Infrastructure ICT

adoptionMacro-

economicstability


Labourmarket

Financialsystem

Marketsize

Businessdynamism


65

56

81

64

90

81

69

5259 61

6358

47

Hungary 47th / 141




Population millions

GDP per capita US$



% GDP

Environmental footprint gha/capita


Unemployment rate %



9.8

15,923.8

2.1

0.23

-0.9

4.3

15.6

3.7

0.7

30.4


Economy Profiles

• National competitiveness– The notion of “competitiveness”– Porter’s diamond model– Measurement


• World “Bank Doing Business” Report

Outline

57

• Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 190 economies—from Afghanistan to Zimbabwe –and over time.

• Doing Business measures regulations affecting11 areas of the life of a business.

Scope

58

• Ten of areas are included in 2020’ ranking on the ease of doing business: – starting a business, – dealing with construction permits, – getting electricity, – registering property, – getting credit, – protecting minority investors, – paying taxes, – trading across borders, – enforcing contracts and – resolving insolvency.

• Doing Business also measures labor market regulation, which is not included in 2020’ ranking.

Methodology

59

DOING BUSINESS 2020

Ease of doing business ranking Rank Economy DB score Rank Economy DB score Rank Economy DB score

1 New Zealand 86.8 65 Puerto Rico (U.S.) 70.1 128 Barbados 57.9 2 Singapore 86.2 66 Brunei Darussalam 70.1 129 Ecuador 57.7 3 Hong Kong SAR, China 85.3 67 Colombia 70.1 130 St. Vincent and the Grenadines 57.1 4 Denmark 85.3 68 Oman 70.0 131 Nigeria 56.9 5 Korea, Rep. 84.0 69 Uzbekistan 69.9 132 Niger 56.8 6 United States 84.0 70 Vietnam 69.8 133 Honduras 56.3 7 Georgia 83.7 71 Jamaica 69.7 134 Guyana 55.5 8 United Kingdom 83.5 72 Luxembourg 69.6 135 Belize 55.5 9 Norway 82.6 73 Indonesia 69.6 136 Solomon Islands 55.310 Sweden 82.0 74 Costa Rica 69.2 137 Cabo Verde 55.011 Lithuania 81.6 75 Jordan 69.0 138 Mozambique 55.012 Malaysia 81.5 76 Peru 68.7 139 St. Kitts and Nevis 54.613 Mauritius 81.5 77 Qatar 68.7 140 Zimbabwe 54.514 Australia 81.2 78 Tunisia 68.7 141 Tanzania 54.515 Taiwan, China 80.9 79 Greece 68.4 142 Nicaragua 54.416 United Arab Emirates 80.9 80 Kyrgyz Republic 67.8 143 Lebanon 54.317 North Macedonia 80.7 81 Mongolia 67.8 144 Cambodia 53.818 Estonia 80.6 82 Albania 67.7 145 Palau 53.719 Latvia 80.3 83 Kuwait 67.4 146 Grenada 53.420 Finland 80.2 84 South Africa 67.0 147 Maldives 53.321 Thailand 80.1 85 Zambia 66.9 148 Mali 52.922 Germany 79.7 86 Panama 66.6 149 Benin 52.423 Canada 79.6 87 Botswana 66.2 150 Bolivia 51.724 Ireland 79.6 88 Malta 66.1 151 Burkina Faso 51.425 Kazakhstan 79.6 89 Bhutan 66.0 152 Mauritania 51.126 Iceland 79.0 90 Bosnia and Herzegovina 65.4 153 Marshall Islands 50.927 Austria 78.7 91 El Salvador 65.3 154 Lao PDR 50.828 Russian Federation 78.2 92 San Marino 64.2 155 Gambia, The 50.329 Japan 78.0 93 St. Lucia 63.7 156 Guinea 49.430 Spain 77.9 94 Nepal 63.2 157 Algeria 48.631 China 77.9 95 Philippines 62.8 158 Micronesia, Fed. Sts. 48.132 France 76.8 96 Guatemala 62.6 159 Ethiopia 48.033 Turkey 76.8 97 Togo 62.3 160 Comoros 47.934 Azerbaijan 76.7 98 Samoa 62.1 161 Madagascar 47.735 Israel 76.7 99 Sri Lanka 61.8 162 Suriname 47.536 Switzerland 76.6 100 Seychelles 61.7 163 Sierra Leone 47.537 Slovenia 76.5 101 Uruguay 61.5 164 Kiribati 46.938 Rwanda 76.5 102 Fiji 61.5 165 Myanmar 46.839 Portugal 76.5 103 Tonga 61.4 166 Burundi 46.840 Poland 76.4 104 Namibia 61.4 167 Cameroon 46.141 Czech Republic 76.3 105 Trinidad and Tobago 61.3 168 Bangladesh 45.042 Netherlands 76.1 106 Tajikistan 61.3 169 Gabon 45.043 Bahrain 76.0 107 Vanuatu 61.1 170 São Tomé and Príncipe 45.044 Serbia 75.7 108 Pakistan 61.0 171 Sudan 44.845 Slovak Republic 75.6 109 Malawi 60.9 172 Iraq 44.746 Belgium 75.0 110 Côte d’Ivoire 60.7 173 Afghanistan 44.147 Armenia 74.5 111 Dominica 60.5 174 Guinea-Bissau 43.248 Moldova 74.4 112 Djibouti 60.5 175 Liberia 43.249 Belarus 74.3 113 Antigua and Barbuda 60.3 176 Syrian Arab Republic 42.050 Montenegro 73.8 114 Egypt, Arab Rep. 60.1 177 Angola 41.351 Croatia 73.6 115 Dominican Republic 60.0 178 Equatorial Guinea 41.152 Hungary 73.4 116 Uganda 60.0 179 Haiti 40.753 Morocco 73.4 117 West Bank and Gaza 60.0 180 Congo, Rep. 39.554 Cyprus 73.4 118 Ghana 60.0 181 Timor-Leste 39.455 Romania 73.3 119 Bahamas, The 59.9 182 Chad 36.956 Kenya 73.2 120 Papua New Guinea 59.8 183 Congo, Dem. Rep. 36.257 Kosovo 73.2 121 Eswatini 59.5 184 Central African Republic 35.658 Italy 72.9 122 Lesotho 59.4 185 South Sudan 34.659 Chile 72.6 123 Senegal 59.3 186 Libya 32.760 Mexico 72.4 124 Brazil 59.1 187 Yemen, Rep. 31.861 Bulgaria 72.0 125 Paraguay 59.1 188 Venezuela, RB 30.262 Saudi Arabia 71.6 126 Argentina 59.0 189 Eritrea 21.663 India 71.0 127 Iran, Islamic Rep. 58.5 190 Somalia 20.064 Ukraine 70.2

Source: Doing Business database.Note: The rankings are benchmarked to May 1, 2019, and based on the average of each economy’s ease of doing business scores for the 10 topics included in the aggregate ranking. For the economies for which the data cover two cities, scores are a population-weighted average for the two cities. Rankings are calculated on the basis of the unrounded scores, while scores with only one digit are displayed in the table.

60

Top and bottom countries

Source: Doing Business 2020


61

E D B

OECD

C H

10,625,695

C C P

41

DB RANK DB SCORE

76.3

D B - C

134

157

11

32

48

6153

1

103

16

B

D

C

GE

GC

B

EC

82.1 56.2 95.6 79.7 70.0 62.0 81.4 100.0 56.4 80.1

( ) B 134S (0-100) 82.1

P ( ) 9

T ( ) 24.5

C ( ) 1.1

P - . (% ) 0.0

( )D C 157S (0-100) 56.2

P ( ) 21

T ( ) 246

C (% ) 0.2

B (0-15) 8.0

( )G E 11S (0-100) 95.6

P ( ) 3

T ( ) 58

C (% ) 23.1

R (0-8) 8

( ) 32S (0-100) 79.7

P ( ) 4

T ( ) 27.5

C (% ) 4.0

Q (0-30) 25.0

( )G C 48S (0-100) 70.0

S (0-12) 7

D (0-8) 7

C (% ) 7.3

C (% ) 81.1

( ) 61S (0-100) 62.0

E (0-10) 2.0

E (0-10) 6.0

E (0-10) 9.0

E (0-6) 5.0

E (0-7) 5.0

E (0-7) 4.0

( ) 53S (0-100) 81.4

P ( ) 8

T ( ) 230

T (% ) 46.1

P (0-100) 90.5

( ) B 1S (0-100) 100

Time to exportD ( ) 1

B ( ) 0

Cost to exportD (USD) 0

B (USD) 0

Time to exportD ( ) 1

B ( ) 0

Cost to exportD (USD) 0

B (USD) 0

( )E C 103S (0-100) 56.4

T ( ) 678

C (% ) 33.8

Q (0-18) 9.5

( ) 16S (0-100) 80.1

R ( ) 67.5

T ( ) 2.1

C (% ) 17.0

O (0 1 )

1

S (0-16) 14.0

C D B 2020

P 4


62

E D B

OECD

I C H

5,447,011

C C B

45

DB RANK DB SCORE

75.6

D B -

118

146

54

8

48

88

55

1

46 46

B

D

C

GE

GC

I B

EC I

84.8 59.4 83.3 90.2 70.0 56.0 80.6 100.0 66.1 65.5

( ) B 118S (0-100) 84.8P ( ) 7T ( ) 21.5C ( ) 1P - . (% ) 15.4

( )D C 146S (0-100) 59.4P ( ) 14T ( ) 300C (% ) 0.2B (0-15) 8.0

( )G E 54S (0-100) 83.3P ( ) 5T ( ) 89C (% ) 219.6R (0-8) 8

( ) 8S (0-100) 90.2P ( ) 3T ( ) 16.5C (% ) 0.0Q (0-30) 25.5

( )G C 48S (0-100) 70.0S (0-12) 7D (0-8) 7C (% ) 2.0C (% ) 85.4

( ) I 88S (0-100) 56.0E (0-10) 3.0E (0-10) 4.0E (0-10) 7.0E (0-6) 5.0E (0-7) 5.0E (0-7) 4.0

( ) 55S (0-100) 80.6P ( ) 8T ( ) 192T (% ) 49.7P (0-100) 87.2

( ) B 1S (0-100) 100Time to exportD ( ) 1B ( ) 0Cost to exportD (USD) 0B (USD) 0Time to exportD ( ) 1B ( ) 0Cost to exportD (USD) 0B (USD) 0

( )E C 46S (0-100) 66.1T ( ) 775C (% ) 20.5Q (0-18) 13.5

( ) I 46S (0-100) 65.5R ( ) 46.1T ( ) 4.0C (% ) 18.0O (0 1

)1

S (0-16) 13.0

D B 2020

P 4

62


63

Ea D B OECD

I C H

37,978,548

C C Wa a

40

DB RANK DB SCORE

76.4

D B -

128

39

60

92

3751

77

1

55

25

B

D

C

GE

GC

I B

EC I

82.9 76.4 82.3 63.9 75.0 66.0 76.4 100.0 64.4 76.5

( a ) B 128S a a (0-100) 82.9P ( ) 5T ( a ) 37C ( ) 11.6Pa - . a a (% a a) 9.3

( a )D C 39S a (0-100) 76.4P ( ) 12T ( a ) 137C (% a a ) 0.3B a (0-15) 10.0

( a )G E 60S (0-100) 82.3P ( ) 4T ( a ) 113C (% a a) 16.3R a a a a a (0-8) 7

( a ) 92S (0-100) 63.9P ( ) 6T ( a ) 135C (% a ) 0.3Q a a a a (0-30) 19.0

( a )G C 37S (0-100) 75.0S a (0-12) 7D a (0-8) 8C a (% a ) 0.0C a a (% a ) 100.0

( a ) I 51S (0-100) 66.0E (0-10) 7.0E a (0-10) 2.0Ea a (0-10) 9.0E a (0-6) 5.0E a (0-7) 4.0E a a a (0-7) 6.0

( a ) 77S a a (0-100) 76.4Pa ( a ) 7T ( a ) 334T a a a a (% ) 40.8P (0-100) 77.4

( a ) B 1S a a (0-100) 100Time to exportD a a ( ) 1B a ( ) 0Cost to exportD a a (USD) 0B a (USD) 0Time to exportD a a ( ) 1B a ( ) 0Cost to exportD a a (USD) 0B a (USD) 0

( a )E C 55S a (0-100) 64.4T ( a ) 685C (% a a ) 19.4Q a a (0-18) 11.0

( a ) I 25S (0-100) 76.5R a ( a ) 60.9T ( a ) 3.0C (% a ) 15.0O (0 a a a a 1 a

)1

S a (0-16) 14.0

D B 2020

Pa 4

63


64

Ea e f D g B e OECD h gh c e

I C H gh c e

9,768,785

C C B da e

52

DB RANK DB SCORE

73.4

D B - H

87

108

125

2937

97

56

1

25

66

B

D

C

GE

GC

I B

EC I

88.2 67.0 63.3 80.1 75.0 54.0 80.6 100.0 71.0 55.0

( a ) B 87Sc e f a g a b e (0-100) 88.2P ced e ( be ) 6T e (da ) 7C ( be ) 4.5Pa d- . ca a (% f c e e ca a) 36.2

( a )D C 108Sc e f dea g h c c e (0-100) 67.0P ced e ( be ) 22T e (da ) 192.5C (% f a eh e a e) 0.6B d g a c de (0-15) 13.0

( a )G E 125Sc e f ge g e ec c (0-100) 63.3P ced e ( be ) 5T e (da ) 257C (% f c e e ca a) 74.7Re ab f a d a a e c f a ff de (0-8) 7

( a ) 29Sc e f eg e g e (0-100) 80.1P ced e ( be ) 4T e (da ) 17.5C (% f e a e) 5.0Q a f he a d ad a de (0-30) 26.0

( a )G C 37Sc e f ge g c ed (0-100) 75.0S e g h f ega gh de (0-12) 9De h f c ed f a de (0-8) 6C ed eg c e age (% f ad ) 0.0C ed b ea c e age (% f ad ) 91.1

( a ) I 97Sc e f ec g e (0-100) 54.0E e f d c e de (0-10) 2.0E e f d ec ab de (0-10) 4.0Ea e f ha eh de de (0-10) 7.0E e f ha eh de gh de (0-6) 4.0E e f e h a d c de (0-7) 5.0E e f c a e a a e c de (0-7) 5.0

( a ) 56Sc e f a g a e (0-100) 80.6Pa e ( be e ea ) 11T e (h e ea ) 277T a a a d c b a e (% f f ) 37.9P f g de (0-100) 87.5

( a ) B 1Sc e f ad g ac b de (0-100) 100Time to exportD c e a c a ce (h ) 1B de c a ce (h ) 0Cost to exportD c e a c a ce (USD) 0B de c a ce (USD) 0Time to exportD c e a c a ce (h ) 1B de c a ce (h ) 0Cost to exportD c e a c a ce (USD) 0B de c a ce (USD) 0

( a )E C 25Sc e f e f c g c ac (0-100) 71.0T e (da ) 605C (% f c a a e) 15.0Q a f d c a ce e de (0-18) 12.5

( a ) I 66Sc e f e g e c (0-100) 55.0Rec e a e (ce he d a ) 44.2T e ( ea ) 2.0C (% f e a e) 14.5O c e (0 a ece ea a e a d 1 a g gc ce )

0

S e g h f e c f a e de (0-16) 10.0

HD B 2020

Page 4

64




Outline

65

See the annex,IM_Lecture3_Annex.pdf

66

Thank you for your attention!Questions?

The slides are available athttp://cesp.vse.cz/academics/materials/

67

http://cesp.vse.cz/academics/materials/

Sources:• CULLEN, J. B. – PARBOTEEAH, P. Multinational management :

a strategic approach. 6th edition. Cincinnati, OH: South-Western/Cengage Learning, 2014. ISBN 978-1-285-09622-3.

• Porter, M. E. "The Competitive Advantage of Nations." Harvard Business Review 68, no. 2 (March–April 1990): 73–93. [P]

• Presentations from SlideShare.net:– Sine autor. Porters Final Presentation. Delhi, India. [D]

• Other:– CzechInvest. Investment Incentives. [online] [cit. 2016–03–09].

Available at http://www.czechinvest.org/en [CZI]– ConnectUS. 17 Big Advantages and Disadvantages of Foreign

Direct Investment [online] [cit. 2016–03–09]. Available at http://connectusfund.org [CUS]

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http://www.czechinvest.org/enhttp://connectusfund.org/

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