irish competitiveness: entering a new economic era files/caon...oct 09, 2003 · irish...
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1 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Irish Competitiveness:Entering a New Economic Era
Professor Michael E. PorterInstitute for Strategy and Competitiveness
Harvard Business School
IMI Top Management BriefingDublin, Ireland
9 October 2003
This presentation draws on ideas from Professor Porter’s articles and books, in particular, The Competitive Advantage of Nations (The Free Press, 1990), “Building the Microeconomic Foundations of Competitiveness,” in The Global Competitiveness Report 2003, (World Economic Forum, forthcoming 2003), “Clusters and the New Competitive Agenda for Companies and Governments” in On Competition(Harvard Business School Press, 1998), and ongoing research on clusters and competitiveness. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means - electronic, mechanical, photocopying, recording, or otherwise - without the permission of Michael E. Porter.Further information on Professor Porter’s work and the Institute for Strategy and Competitiveness is available at www.isc.hbs.edu
2 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Comparative Economic PerformanceReal GDP Growth Rates
-10%
-5%
0%
5%
10%
15%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
IrelandSingaporeS KoreaTaiwanAustraliaUSCanadaSpainGermanyUKFinlandFranceJapanSwitzerland
Source: EIU (2003)
Countries sorted by 1990-2002 annual real GDP growth rate (CAGR)
Annual growth rateof real GDP
3 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Comparative Economic Performance
15,000
20,000
25,000
30,000
35,000
0% 1% 2% 3% 4% 5% 6% 7%
CanadaIreland
South Korea
New Zealand
Singapore
Sweden
Taiwan
US
AustraliaJapan
UK
Compound annual growth rate of real GDP per capita, 1990-2002
GDP per capita (PPP
adjusted) in US-$,
2002
Spain
France
Switzerland
Germany
Source: EIU (2003)
4 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Ireland’s Economic Situation 2003
• Ireland has been one of the most dynamic and successful countries in the global economy over the last decade
– Ireland’s open economy provided an attractive platform to serve European markets
– Large inflows of foreign direct investment fuelled growth
– A flexible labor supply from returning unemployed workers and Irish emigrants kept wage growth at bay
• Ireland is now confronted with new and more challenging circumstances
– Labor supply is constrained; wage costs are rising
– Global demand is subdued, especially in sectors heavily represented in the Irish economy
– The European economic landscape is changing with Central and Eastern European countries entering the European Union
• A new economic strategy will be needed to maintain and grow Irish prosperity
5 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Foundations of Prosperity
ProductivityProductivity
Innovative CapacityInnovative CapacityInnovative Capacity
Competitiveness
ProsperityProsperityProsperity
6 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
What is Competitiveness?
• Competitiveness is determined by the productivity with which a nation uses its human, capital, and natural resources. Productivity sets a nation’s or region’s standard of living (wages, returns to capital, returns to natural resource endowments)
– Productivity depends both on the value of products and services (e.g. uniqueness, quality) as well as the efficiency with which they are produced.
– It is not what industries a nation competes in that matters for prosperity, but howfirms compete in those industries
– Productivity in a nation is a reflection of what both domestic and foreign firms choose to do in that location. The location of ownership is secondary for national prosperity.
– The productivity of “local” industries is of fundamental importance to competitiveness, not just that of traded industries
– Devaluation does not make a country more competitive
• Nations compete in offering the most productive environment for business
• The public and private sectors play different but interrelated roles in creating a productive economy
7 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Comparative Labor Productivity Performance
30,000
40,000
50,000
60,000
70,000
-1% 0% 1% 2% 3% 4% 5%
Compound annual growth rate of real GDP per employee, 1990-2002
GDP per employee
(PPP adjusted) in US-$,
2002
Note: Irish GNP per capita is about 20% lower than the reported GDP per capita figure due to large dividend outflows to foreign investors. We use GNP per capita for Ireland because it is more representative. For other countries GDP and GNP are very similar.
Source: WEO
Canada
Ireland
South Korea
New Zealand
Singapore
SwedenTaiwan
US
Australia
Japan UKSpain
France
Germany Netherlands
8 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Decomposing Irish GDP per Capita Growth
-$500
$0
$500
$1,000
$1,500
$2,000
$2,500
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Contribution to change in GDP per Capita
Labor Force Participation
Labor Productivity
Source: EIU (2003)
9 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Total Factor Productivity PerformanceSelected OECD Countries
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%
Ireland
Total Factor Productivity
Growth, 1990-98
Labor Productivity Growth, 1990-98
Australia
Finland
Sweden
USGermany
UKNew Zealand
Japan Spain
CanadaFrance
Source: IMF, 2001
10 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
0%
10%
20%
30%
40%
50%
60%
70%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Comparative Inward Foreign InvestmentSelected Advanced Economies
FDI Stocks as % of GDP, Average 1998-2000
FDI Inflows as % of Gross Fixed Capital Formation, Average 1998-2000
Sweden (18%, 89%)
Note: Germany’s FDI inflows in this period were exceptionally high due to the Vodafone-Mannesmann takeover in 2000Source: World Investment Report 2002
France Germany*
UK
USJapan
China
Australia
New Zealand Netherlands
Italy
Spain
Finland
Brazil
Ireland
11 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Ireland’s Export PerformanceWorld Export Market Shares
0.00%
0.25%
0.50%
0.75%
1.00%
1.25%
1.50%
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
GoodsServicesTotal
Source: WTO (2002)
• Ireland’s world export share has increased strongly over the last decade
World export share in %
12 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
0%
2%
4%
6%
8%
10%
12%
1999 2000 2001 2002
GDP growthGNP growth
Ireland’s Economic PerformanceGDP versus GNP
Annual growth rate
Source: EIU (2003)
Net Investment Income Outflow
as % of GDP15.6%15.6% 14.6%14.6% 14.7%14.7% 18.3%18.3%
GDP CAGR, 1998-2002: 8.6%
GNP CAGR, 1998-2002: 3.4%
13 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.pptSource: US Patent and Trademark Office (www.uspto.gov). Author’s analysis.
Annual U.S. patents per 1 million
population, 2001
Compound annual growth rate of US-registered patents, 1990 - 2001
International Patenting Output
0
50
100
150
200
250
300
350
400
0% 10% 20% 30% 40%
Australia
Canada
Germany
Japan
South Korea
New Zealand
Singapore
Sweden
Taiwan
UK
Israel
= 10,000 patents granted in 2001
USA
Finland
Ireland
14 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Labor Force Participation
30%
35%
40%
45%
50%
55%
60%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
SingaporeJapanSwitzerlandCanadaAustraliaNew ZealandUSSwedenGermanyNetherlandsUKS KoreaFinlandIrelandTaiwanFranceSpainItaly
Source: EIU (2003)
Employees as Share of Population
15 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Ireland Entering a New Era
• Recent Economic Performance
• Foundations of Microeconomic Competitiveness
• Challenges to Irish Competitiveness
16 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Microeconomic Foundations of DevelopmentMicroeconomic Foundations of Development
Quality of the Microeconomic
BusinessEnvironment
Quality of the Quality of the MicroeconomicMicroeconomic
BusinessBusinessEnvironmentEnvironment
Sophisticationof Company
Operations andStrategy
SophisticationSophisticationof Companyof Company
Operations andOperations andStrategyStrategy
Determinants of Productivity and Productivity Growth
Macroeconomic, Political, Legal, and Social Context for Development
Macroeconomic, Political, Legal, and Social Macroeconomic, Political, Legal, and Social Context for DevelopmentContext for Development
• A sound macroeconomic, political, legal, and social context creates the potential for competitiveness, but is not sufficient
• Competitiveness ultimately depends on improving the microeconomic capability of the economy and the sophistication of local companies and local competition
17 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Global Competitiveness Report 2003The Relationship Between Business Competitiveness and GDP Per Capita
USA
SwitzerlandGermanyUK
Denmark
Singapore
New Zealand
Taiwan
Norway
Iceland
Ireland*
Greece Israel
Italy
S Korea
Hungary
India
Canada
SpainCzech Rep
Slovenia
Portugal
Business Competitiveness Index
2002 GDP per Capita
(Purchasing Power Adjusted)
Brazil
Malaysia
China
Russia
VietnamJordan
UruguayArgentina South Africa
Note: For Ireland we use GNP per capita which excludes payments of foreign company subsidiaries to parent companysSource: Global Competitiveness Report 2003
Estonia
Thailand
FinlandSweden
Malta
TanzaniaKenya
Austria
18 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Context for Firm
Strategy and Rivalry
Context for Context for Firm Firm
Strategy Strategy and Rivalryand Rivalry
Related and Supporting Industries
Related and Supporting Industries
Factor(Input)
Conditions
FactorFactor(Input) (Input)
ConditionsConditionsDemand
ConditionsDemand Demand
ConditionsConditions
Productivity and the Business Environment
• Successful economic development is a process of successive economic upgrading, in which the business environment in a nation evolves to support and encourage increasingly sophisticated ways of competing
Sophisticated and demandinglocal customer(s)Local customer needs that anticipate those elsewhereUnusual local demand in specialized segments that can be served regionally and globally
Presence of high quality, specialized inputs available to firms
–Human resources–Capital resources–Physical infrastructure–Administrative infrastructure–Information infrastructure–Scientific and technological
infrastructure–Natural resources
Access to capable, locally based suppliersand firms in related fieldsPresence of clusters instead of isolated industries
A local context and rules that encourage investment and sustained upgrading
–e.g., Intellectual property protection
Meritocratic incentive system across institutionsOpen and vigorous competition among locally based rivals
19 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
The California Wine Cluster
Educational, Research, & Trade Organizations (e.g. Wine Institute,
UC Davis, Culinary Institutes)
Educational, Research, & Trade Organizations (e.g. Wine Institute,
UC Davis, Culinary Institutes)
Growers/VineyardsGrowers/Vineyards
Sources: California Wine Institute, Internet search, California State Legislature. Based on research by MBA 1997 students R. Alexander, R. Arney, N. Black, E. Frost, and A. Shivananda.
Wineries/ProcessingFacilities
Wineries/ProcessingFacilities
GrapestockGrapestock
Fertilizer, Pesticides, Herbicides
Fertilizer, Pesticides, Herbicides
Grape Harvesting Equipment
Grape Harvesting Equipment
Irrigation TechnologyIrrigation Technology
Winemaking Equipment
Winemaking Equipment
BarrelsBarrels
LabelsLabels
BottlesBottles
Caps and CorksCaps and Corks
Public Relations and Advertising
Public Relations and Advertising
Specialized Publications (e.g., Wine Spectator,
Trade Journal)
Specialized Publications (e.g., Wine Spectator,
Trade Journal)
Food ClusterFood Cluster
Tourism ClusterTourism ClusterCalifornia Agricultural Cluster
California Agricultural Cluster
State Government Agencies(e.g., Select Committee on Wine
Production and Economy)
20 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Boston Life Sciences Cluster
Research OrganizationsResearch OrganizationsResearch Organizations
Biological Products
Biological Biological ProductsProducts
Specialized Risk Capital
VC Firms, Angel Networks
Specialized Risk Capital
VC Firms, Angel Networks
Biopharma-ceutical
Products
BiopharmaBiopharma--ceutical ceutical
ProductsProducts
Specialized BusinessServices
Banking, Accounting, Legal
Specialized BusinessServices
Banking, Accounting, Legal
Specialized ResearchService Providers
Laboratory, Clinical Testing
Specialized ResearchService Providers
Laboratory, Clinical Testing
Dental Instrumentsand Suppliers
Dental Instrumentsand Suppliers
Surgical Instruments and Suppliers
Surgical Instruments and Suppliers
Diagnostic SubstancesDiagnostic Substances
ContainersContainersContainers
Medical EquipmentMedical Equipment
Ophthalmic GoodsOphthalmic Goods
Health and Beauty Products
Health and Beauty Health and Beauty ProductsProducts Teaching and Specialized
HospitalsTeaching and Specialized
Hospitals
Educational InstitutionsHarvard University, MIT, Tufts University,
Boston University, UMass
Educational InstitutionsHarvard University, MIT, Tufts University,
Boston University, UMass
Cluster OrganizationsMassMedic, MassBio, others
Cluster OrganizationsMassMedic, MassBio, others
Analytical InstrumentsAnalytical InstrumentsAnalytical Instruments
21 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Leading Footwear Clusters
Vietnam/Indonesia• OEM Production • Focus on the low cost
segment mainly for the European market
China• OEM Production• Focus on low cost
segment mainly for the US market
Portugal• Production • Focus on short-
production runs in the medium price range
Romania• Production subsidiaries
of Italian companies• Focus on lower to
medium price range
United States• Design and marketing • Focus on specific market
segments like sport and recreational shoes and boots
• Manufacturing only in selected lines such as hand-sewn casual shoes and boots
Source: Research by HBS student teams in 2002
Italy• Design, marketing,
and production of premium shoes
• Export widely to the world market
22 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Levels of Clusters
• There is often an array of clusters in a given field in different locations, each with different levels of specialization and sophistication
• Global innovation centers, such as Silicon Valley in semiconductors, are few in number. If there are multiple innovation centers, they normally specialize in different market segments
• Other clusters focus on manufacturing, outsourced service functions, or play the role of regional assembly or service centers
• Firms based in the most advanced clusters often seed or enhance clusters in other locations in order to reduce the risk of a single site, access lower cost inputs, or better serve particular regional markets
• The challenge for an economy is to move from isolated firms to an array ofclusters, and then to upgrade the breadth and sophistication of clusters to more advanced activities
23 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Institutions for CollaborationSelected Massachusetts Organizations, Life Sciences
Economic Development InitiativesEconomic Development Initiatives
Massachusetts Technology CollaborativeMass Biomedical InitiativesMass DevelopmentMassachusetts Alliance for Economic Development
Massachusetts Technology CollaborativeMass Biomedical InitiativesMass DevelopmentMassachusetts Alliance for Economic Development
Life Sciences Industry AssociationsLife Sciences Industry Associations
Massachusetts Biotechnology CouncilMassachusetts Medical Device Industry CouncilMassachusetts Hospital Association
Massachusetts Biotechnology CouncilMassachusetts Medical Device Industry CouncilMassachusetts Hospital Association
General Industry AssociationsGeneral Industry Associations
Associated Industries of MassachusettsGreater Boston Chamber of CommerceHigh Tech Council of Massachusetts
Associated Industries of MassachusettsGreater Boston Chamber of CommerceHigh Tech Council of Massachusetts
University InitiativesUniversity Initiatives
Harvard Biomedical CommunityMIT Enterprise ForumBiotech Club at Harvard Medical SchoolTechnology Transfer offices
Harvard Biomedical CommunityMIT Enterprise ForumBiotech Club at Harvard Medical SchoolTechnology Transfer offices
Informal networksInformal networks
Company alumni groupsVenture capital communityUniversity alumni groups
Company alumni groupsVenture capital communityUniversity alumni groups
Joint Research InitiativesJoint Research Initiatives
New England Healthcare InstituteWhitehead Institute For Biomedical ResearchCenter for Integration of Medicine and Innovative Technology (CIMIT)
New England Healthcare InstituteWhitehead Institute For Biomedical ResearchCenter for Integration of Medicine and Innovative Technology (CIMIT)
24 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Influences on CompetitivenessMultiple Geographic Levels
Broad Economic AreasBroad Economic Areas
Groups of Neighboring Groups of Neighboring NationsNations
States, ProvincesStates, Provinces
Cities, Metropolitan Cities, Metropolitan AreasAreas
NationsNations
World EconomyWorld Economy
25 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Specialization of Regional EconomiesSelect U.S. Geographic Areas
BostonAnalytical InstrumentsEducation and Knowledge CreationCommunications Equipment
BostonAnalytical InstrumentsEducation and Knowledge CreationCommunications Equipment
Los Angeles AreaApparelBuilding Fixtures,
Equipment and Services
Entertainment
Los Angeles AreaApparelBuilding Fixtures,
Equipment and Services
Entertainment
ChicagoCommunications EquipmentProcessed FoodHeavy Machinery
ChicagoCommunications EquipmentProcessed FoodHeavy Machinery
Denver, COLeather and Sporting GoodsOil and GasAerospace Vehicles and Defense
Denver, COLeather and Sporting GoodsOil and GasAerospace Vehicles and Defense
San DiegoLeather and Sporting GoodsPower GenerationEducation and Knowledge Creation
San DiegoLeather and Sporting GoodsPower GenerationEducation and Knowledge Creation
San Francisco-Oakland-San Jose Bay AreaCommunications EquipmentAgricultural ProductsInformation Technology
San Francisco-Oakland-San Jose Bay AreaCommunications EquipmentAgricultural ProductsInformation Technology
Seattle-Bellevue-Everett, WAAerospace Vehicles and DefenseFishing and Fishing ProductsAnalytical Instruments
Seattle-Bellevue-Everett, WAAerospace Vehicles and DefenseFishing and Fishing ProductsAnalytical Instruments
HoustonHeavy Construction ServicesOil and GasAerospace Vehicles and Defense
HoustonHeavy Construction ServicesOil and GasAerospace Vehicles and Defense
Pittsburgh, PAConstruction MaterialsMetal ManufacturingEducation and Knowledge
Creation
Pittsburgh, PAConstruction MaterialsMetal ManufacturingEducation and Knowledge
Creation
Atlanta, GAConstruction MaterialsTransportation and LogisticsBusiness Services
Atlanta, GAConstruction MaterialsTransportation and LogisticsBusiness Services
Raleigh-Durham, NCCommunications EquipmentInformation TechnologyEducation andKnowledge Creation
Raleigh-Durham, NCCommunications EquipmentInformation TechnologyEducation andKnowledge Creation
Wichita, KSAerospace Vehicles and
DefenseHeavy MachineryOil and Gas
Wichita, KSAerospace Vehicles and
DefenseHeavy MachineryOil and Gas
Note: Clusters listed are the three highest ranking clusters in terms of share of national employmentSource: Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School
26 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Shifting Responsibilities for Economic Development
Old ModelOld Model
• Government drives economic development through policy decisions and incentives
• Government drives economic development through policy decisions and incentives
New ModelNew Model
• Economic development is a collaborative process involving government at multiple levels, companies, teaching and research institutions, and institutions for collaboration
• Economic development is a collaborative process involving government at multiple levels, companies, teaching and research institutions, and institutions for collaboration
27 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Transition to a New Economic StrategyIreland: A New Era
• Recent Economic Performance
• Foundations of Microeconomic Competitiveness
• Challenges to Irish Competitiveness
28 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Ireland’s Competitive Situation 2003
• Many of Ireland’s traditional competitive advantages are eroding– Competing locations have caught up on in terms of market
opening and business friendly regulations and tax structure– With rising cost levels, Ireland’s traditional position as a low-cost
location to serve European markets becomes untenable
• Ireland faces weaknesses in supporting higher value competition and needs to develop new strengths to emerge as an innovation economy
• Ireland’s current economic policy is beginning to address some of these challenges, but progress on implementation is less clear
• There is not yet a consensus in Irish society about the problem or the solutions. Too many take Irish prosperity for granted
29 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Business Competitiveness IndexIreland’s Position over Time
1998 1999 2000 2001 2002 2003
Business Competitiveness
Index Rank
15
5
Source: Global Competitiveness Report 2003
20
25
10
GDP per capita rank, 2002: 9
30 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Global Competitiveness Report 2003The Relationship Between Business Competitiveness and GDP Per Capita
USA
SwitzerlandGermanyUK
Denmark
Singapore
New Zealand
Taiwan
Norway
Iceland
Ireland
Greece Israel
Italy
S Korea
Hungary
India
Canada
SpainCzech Rep
Slovenia
Portugal
Business Competitiveness Index
2002 GDP per Capita
(Purchasing Power Adjusted)
Brazil
Malaysia
China
Russia
VietnamJordan
UruguayArgentina South Africa
Estonia
Thailand
FinlandSweden
Malta
TanzaniaKenya
Austria
Note: For Ireland we use GNP per capita which excludes payments of foreign company subsidiaries to parent companysSource: Global Competitiveness Report 2003
31 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Competitiveness Agenda for Ireland
• Move from low cost to superior productivity– Address weaknesses in the business environment– Strengthen innovative capacity
• Develop robust clusters
• Redefine the institutional structure for economic development
• Decentralize economic policy-making
32 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Assessing the Irish Business Environment
Context for Firm
Strategy and Rivalry
Context for Context for Firm Firm
Strategy Strategy and Rivalryand Rivalry
Related and Supporting Industries
Related and Supporting Industries
Factor(Input)
Conditions
FactorFactor(Input) (Input)
ConditionsConditionsDemand
ConditionsDemand Demand
ConditionsConditions
+ Easy access to European markets
+ English language+ Increasing supply of high-
skill employees
+ Developing clusters in financial services, pharmaceuticals, chemicals, and information technology
+ Attractive tax structure+ Low level of intrusive
regulations
33 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Spain France
Australia
New ZealandIreland
Sweden
UK CanadaUS
Finland
Regulation of Product and Labor MarketsSelected OECD Countries
Denmark
Germany
GreeceItaly
Japan
Netherlands
Norway
Portugal
Switzerland
Intensity of Regulation in the Product Market
Intensity of Regulation in
the Labor Market
Low
Low
High
High
Source: Nicoletti/Scarpetta (2001), McKinsey (2001)
Belgium
Context for Firm Strategy and Rivalry
Context for Firm Strategy and Rivalry
34 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Ease of Business FormationSelected OECD Countries
0%
10%
20%
30%
40%
50%
Greece
Austria
Portug
alNeth
erlan
ds Italy
France
Switzerl
and
Spain
Irelan
dJa
pan
German
ySwed
enAus
tralia
Finlan
dCan
ada US UK
New Zea
land
Cost of Business Formation relative to GDP per capita
Source: Freeman (2001), OECD (2002)
Context for Firm Strategy and Rivalry
Context for Firm Strategy and Rivalry
35 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Share of Science & Technology graduates in the age 20 – 29
population, 2000 or latest
Source: EU Scoreboard 2002
Education in Science & Technology Selected Countries
0%
5%
10%
15%
20%
25%
Irelan
dFran
ceFinl
and
UKSlov
enia
Japa
nSwed
en USSpa
inBelg
iumLit
huan
iaIsl
and
Denmark
German
yNorw
ayAus
triaEsto
niaPort
ugal
Poland
Netherl
ands Italy
Latvi
aHun
gary
Czech
Rep
ublic
Switzerl
and
Factor(Input)
Conditions
Factor(Input)
Conditions
EU average: 10.3%
36 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Assessing the Irish Business Environment
Context for Firm
Strategy and Rivalry
Context for Context for Firm Firm
Strategy Strategy and Rivalryand Rivalry
Related and Supporting Industries
Related and Supporting Industries
Factor(Input)
Conditions
FactorFactor(Input) (Input)
ConditionsConditionsDemand
ConditionsDemand Demand
ConditionsConditions
– Insufficient transportation infrastructure
– Low R&D spending– Increasing levels of
bureaucracy– Stock of advanced
human resources is limited
– Few specialized suppliers
– Low intensity of domestic competition
– Companies concentrate on low value-added parts of the value chain
– Few Irish companies reach sufficient size to compete internationally
– Weak environmental regulations
– Most buyers not very demanding
37 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Factor (Input) ConditionsIreland’s Relative Position
Factor(Input)
Conditions
Factor(Input)
Conditions
Ease of Access to Loans 4
Venture Capital Availability 8
Quality of Educational System 10
University/Industry Research Collaboration 11
Quality of Public Schools 12
Quality of Scientific Research Institutions 14
Quality of Management Schools 16
Competitive Disadvantages Relative to GDP per Capita
Competitive Advantages Relative to GDP per Capita
Overall Infrastructure Quality 59
Railroad Infrastructure Quality 59
Port Infrastructure Quality 58
Air Transport Infrastructure Quality 47
Telephone/Fax Infrastructure Quality 41
Extent of Bureaucratic Red Tape 30
Internet users per 100 people (2002) 28
Local Equity Market Access 27
Police Protection of Businesses 26
Judicial Independence 24
Patents per million Population (2002) 23
Adequacy of Public Sector Legal 23 Recourse
Administrative Burden for Start-Ups 23
Country Ranking, Arrows indicate a change of 5 or more
ranks since 2000
Country Ranking, Arrows indicate a change of 5 or more
ranks since 2000
Note: Rank by countries; overall Ireland ranks 9 on GDP per Capita 2002Source: Global Competitiveness Report 2003
38 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Context for Firm Strategy and RivalryIreland’s Relative Position
Foreign Ownership of Companies 2
Prevalence of Mergers and Acquisitions 6
Regulation of Securities Exchanges 9
Business Costs of Corruption 16
Effectiveness of Anti-Trust Policy 17
Tariff Liberalization 17
Efficacy of Corporate Boards 17
Hidden Trade Barrier Liberalization 18
Existence of Bankruptcy Law 19
Protection of Minority Shareholders 19
Competitive Disadvantages Relative to GDP per Capita
Competitive Advantages Relative to GDP per Capita
Centralization of Economic Policy-making 75
Extent of Locally Based Competitors 36
Favoritism in Decisions of Government 35 Officials
Intensity of Local Competition 31
Extent of Distortive Government Subsidies 28
Intellectual Property Protection 25
Decentralization of Corporate Activity 25
Context for Firm Strategy and Rivalry
Context for Firm Strategy and Rivalry
Country Ranking, Arrows indicate a change of 5 or more
ranks since 2000
Country Ranking, Arrows indicate a change of 5 or more
ranks since 2000
Note: Rank by countries; overall Ireland ranks 9 on GDP per Capita 2002Source: Global Competitiveness Report 2003
39 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Recent Policy Initiatives
• Transportation infrastructure projects (Euro 5.5bn) included in the National Development Plan, 2000 – 2006
• Strengthening of the antitrust authority
• Single regulatory authority for financial markets
Issues• Limited acceptance of the relationship between local competition
and competitiveness, even in a small open economy
Source: Irish Government, Review of Industrial Performance and Policy (2003), EIU (2003)
40 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Company Operations and StrategyIreland’s Relative Position 2002
Extent of Regional Sales 5
Reliance on Professional Management 12
Extent of Incentive Compensation 14
Extent of Branding 15
Willingness to Delegate Authority 15
Competitive Disadvantages Relative to GDP per Capita
Competitive Advantages Relative to GDP per Capita
Country Ranking, Arrows indicate a change of 5 or more
ranks since 2000
Country Ranking, Arrows indicate a change of 5 or more
ranks since 2000
Degree of Customer Orientation 29
Extent of Marketing 23
Control of International Distribution 23
Breadth of International Markets 23
Extent of Staff Training 22
Note: Rank by countries; overall Ireland ranks 9 on GDP per Capita 2002Source: Global Competitiveness Report 2003
41 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Competitiveness Agenda for Ireland
• Move from low cost to superior productivity– Address weaknesses in the business environment– Strengthen innovative capacity
• Develop robust clusters
• Redefine the institutional structure for economic development
• Decentralize economic policy-making
42 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
0%
1%
2%
3%
4%
5%
6%
7%
8%
0% 5% 10% 15% 20% 25% 30% 35%
Growth Rate of GDP and PatentsSelected Countries
Real GDP Growth,1990 - 2002
Source: CHI Patent, National Science Foundation and Council on Competitiveness data. Author’s analysis.Note: * The share of a country’s patents filed between 1994 and 1998 that were highly cited in 1999.
Compound annual growth rate of US-registered patents, 1990 - 2001
Adj. R2: 0.448
Australia
CanadaGermany
Japan
South Korea
New Zealand
Singapore
Sweden
Taiwan
UK
US
Finland
Ireland
FranceItaly
NL
Switzerland
43 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Innovative Capacity Index2003 Rankings
Source: Global Competitiveness Report 2003, forthcoming
1234567891011121314151617181920212223
1234567891011121314151617181920212223
RankRank Scientists & Engineers Index
Cluster Environ-ment Index
Operations and Strategy Index
IcelandJapanFinland
USASweden
SingaporeNorway
SwitzerlandRussian Fed.
DenmarkAustraliaGermanyCanadaBelgiumFranceTaiwan
United KingdomNetherlands
AustriaKorea
New ZealandIreland
Slovenia
SingaporeLuxembourg
TaiwanFinland
USAAustraliaCanadaIsrael
FranceUnited Kingdom
GermanyNetherlands
BelgiumAustriaIrelandJapan
MalaysiaDenmarkSwedenTunisiaSpain
PortugalIceland
JapanUSA
FinlandGermany
ItalyTaiwan
DenmarkFranceCanada
SwitzerlandSingapore
United KingdomAustria
Hong KongSwedenKorea
NetherlandsMalaysiaAustralia
New ZealandSouth AfricaLuxembourg
Ireland
USAFinland
United KingdomIsrael
NetherlandsSwedenCanadaDenmarkFrance
AustraliaGermany
SwitzerlandJapan
SingaporeBelgiumIreland
New ZealandKoreaItaly
NorwayTaiwanAustriaIceland
USASwitzerland
United KingdomDenmark
JapanSingapore
FinlandGermanySweden
Hong KongFranceIsrael
TaiwanLuxembourgNetherlands
AustriaBelgiumIcelandCanadaIreland
ItalyKorea
Australia
Innovation Policy Index
Linkages Index
44 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
U.S. Patenting by OrganizationsIreland
Note: Shading indicates universities, research institutions, and other government agencies Source: US Patent and Trademark Office (www.uspto.gov). Author’s analysis.
Organization Patents Issued from 1996 to 2001 1 ANALOG DEVICES, INC. 60 2 ELAN CORPORATION P.L.C. 14 3 LOCTITE (IRELAND) LIMITED 13 4 MOLEX INCORPORATED 12 5 AVE CONNAUGHT 11 6 3COM TECHNOLOGIES 10 7 IBM CORPORATION 8 7 ELAN MEDICAL TECHNOLOGIES LIMITED 8 9 TELEFONAKTIEBOLAGET LM ERICSSON 7 9 ABBOTT LABORATORIES 7 9 PURITAN-BENNETT CORPORATION 7 12 HITACHI, LTD 6 13 BOURNS, INC 5 13 DONNELLY CORPORATION 5 13 DONNELLY MIRRORS LIMITED 5 13 BAUSCH & LOMB, INC. 5 13 DIGITAL EQUIPMENT CORPORATION 5 18 ARTESYN TECHNOLOGIES, INC. 4 18 COLLEGE OF THE HOLY AND UNDIVIDED TRINITY 4 18 CARROLL PRODUCTS AND DESIGNS LIMITED 4
45 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Organization Patents Issued from 1997 to 2001 1 MASSACHUSETTS INSTITUTE OF TECHNOLOGY 518 2 GENERAL HOSPITAL CORPORATION 296 3 EMC CORPORATION 269 4 DIGITAL EQUIPMENT CORPORATION 261 5 POLAROID CORPORATION 213 6 ANALOG DEVICES, INC. 167 7 MILLENNIUM PHARMACEUTICALS, INC. 165 8 HARVARD UNIVERSITY 150 9 COMPAQ COMPUTER CORPORATION, INC. 147 10 SUN MICROSYSTEMS, INC. 143 11 BOSTON SCIENTIFIC CORPORATION 135 12 ACUSHNET COMPANY 130 13 GENETICS INSTITUTE, INC. 127 14 GILLETTE COMPANY 112 15 BRIGHAM AND WOMEN'S HOSPITAL 107 16 RAYTHEON COMPANY 101 17 GENERAL ELECTRIC COMPANY 99 18 HEWLETT-PACKARD COMPANY 96 19 CHILDREN'S MEDICAL CENTER CORPORATION 93 20 QUANTUM CORP. (CA) 93 21 COGNEX CORPORATION 90 22 DANA-FARBER CANCER INSTITUTE 90 23 JOHNSON & JOHNSON PROFESSIONAL INC. 90 24 BOSTON UNIVERSITY 84 25 SEPRACOR INC. 84
Note: Shading indicates universities, research institutions, and other government agencies
Source: US Patent and Trademark Office (www.uspto.gov). Author’s analysis.
U.S. Patenting by OrganizationsMassachusetts
46 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Public R&D Spending as % of GDP, 2001 (or last available)
Source: EU Scoreboard
Government R&D Spending Selected European Countries
0.2%
0.3%
0.4%
0.5%
0.6%
0.7%
0.8%
0.9%
1.0%
-10% -5% 0% 5% 10% 15%
Change of Public R&D Spending as % of GDP, last three years
Germany Denmark
Sweden
UK
France
FinlandNetherlands
Slovakia
Greece
Latvia
IrelandBulgaria
SpainHungary
Poland
Estonia ItalyLithuania
Czech Rep.Belgium
PortugalSlovenia
Factor(Input)
Conditions
Factor(Input)
Conditions
47 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Private R&D Spending as % of GDP, 2001 (or last available)
Source: EU Scoreboard 2002
Private R&D Spending Selected European Countries
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
-10% 0% 10% 20% 30% 40% 50%
Change of Private R&D Spending as % of GDP, last three years
Germany
Denmark
Sweden
UK
France
Finland
Netherlands
Greece
IrelandSpain
Hungary
Estonia
Italy
Czech Rep.
Belgium
Portugal
Slovenia
48 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Demand ConditionsIreland’s Relative Position
Government Procurement of 16 Advanced Technology Products
Competitive Disadvantages Relative to GDP per Capita
Competitive Advantages Relative to GDP per Capita
Stringency of Environmental Regulations 36
Buyer Sophistication 25
Consumer Adoption of Latest Products 25
Demand ConditionsDemand
Conditions
Country Ranking, Arrows indicate a change of 5 or more
ranks since 2000
Country Ranking, Arrows indicate a change of 5 or more
ranks since 2000
Note: Rank by countries; overall Ireland ranks 9 on GDP per Capita 2002Source: Global Competitiveness Report 2003
49 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Recent Policy Initiatives
• Five-fold increase of industry-related R&D spending by the government included in the National Development Plan, 2000 –2006
• Reorganization of science-related policy institutions– Science Foundation Ireland
Issues• Lack of public understanding for the need to upgrade innovative
capacity• Focus and coherence of ramp-up in R&D spending
Source: Irish Government, Review of Industrial Performance and Policy, 2003
50 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Competitiveness Agenda for Ireland
• Move from low cost to superior productivity– Address weaknesses in the business environment– Strengthen innovative capacity
• Develop robust clusters
• Redefine the institutional structure for economic development
• Decentralize economic policy-making
51 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Related and Supporting IndustriesIreland’s Relative Position
Competitive Disadvantages Relative to GDP per Capita
Competitive Advantages Relative to GDP per Capita
Related and Supporting Industries
Related and Supporting Industries
State of Cluster Development 7
Extent of Product and Process 12 Collaboration
Country Ranking, Arrows indicate a change of 5 or more
ranks since 2000
Country Ranking, Arrows indicate a change of 5 or more
ranks since 2000
Local Supplier Quantity 36
Local Availability of Components 34 and Parts
Local Availability of Process Machinery 31
Note: Rank by countries; overall Ireland ranks 9 on GDP per Capita 2002Source: Global Competitiveness Report 2003
52 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Public / Private Cooperation in Cluster UpgradingMinnesota’s Medical Device Cluster
Context for Firm
Strategy and Rivalry
Context for Firm
Strategy and Rivalry
Related and Supporting Industries
Related and Supporting Industries
Factor(Input)
Conditions
Factor(Input)
ConditionsDemand
ConditionsDemand
Conditions
• Joint development of vocational-technical college curricula with the medical device industry
• Minnesota Project Outreach exposes businesses to resources available at university and state government agencies
• Active medical technology licensing through University of Minnesota
• State-formed Greater Minnesota Corp. to finance applied research, invest in new products, and assist in technology transfer
• State sanctioned reimbursement policiesto enable easier adoption and reimbursement for innovative products
• Aggressive trade associations(Medical Alley Association, High Tech Council)
• Effective global marketing of the cluster and of Minnesota as the “The Great State of Health”
• Full-time “Health Care Industry Specialist” in the department of Trade and Economic Development
53 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
1995 1996 1997 1998 1999 20000%
1%
2%
3%
4%
5%
6%
7%
8%
ValueMarket Share
The Australian Wine ClusterTrade Performance
Source: UN Trade Statistics
Australian Wine Exports in million US
Dollars
Australian Wine World Export Market
Share
54 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
The Australian Wine ClusterHistory
1955
Australian Wine Research Institute founded
1970
Winemaking school at Charles Sturt University founded
1980
Australian Wine and Brandy Corporation established
1965
Australian Wine Bureau established
1930
First oenology course at Roseworthy Agricultural College
1950s
Import of European winery technology
1960s
Recruiting of experienced foreign investors, e.g. Wolf Bass
1990s
Surge in exports and international acquisitions
1980s
Creation of large number of new wineries
1970s
Continued inflow of foreign capital and management
1990
Winemaker’s Federation of Australia established
1991 to 1998
New organizations created for education, research, market information, and export promotions
Source: Michael E. Porter and Örjan Sölvell, The Australian Wine Cluster – Supplement, Harvard Business School Case Study, 2002
55 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
The Australian Wine ClusterRecently founded Institutions for Collaboration
Wine Industry National Education and Training Council
Wine Industry National Education and Training Council
Established in 1995
Focus: Coordination, integration, and standard maintenance for vocational training and education
Funding: Government; other cluster organizations
Established in 1995
Focus: Coordination, integration, and standard maintenance for vocational training and education
Funding: Government; other cluster organizations
Cooperative Centre for ViticultureCooperative Centre for Viticulture
Established in 1991
Focus: Coordination of research and education policy in viticulture
Funding: other cluster organizations
Established in 1991
Focus: Coordination of research and education policy in viticulture
Funding: other cluster organizations
Australian Wine Export CouncilAustralian Wine Export Council
Established in 1992
Focus: Wine export promotion through international offices in London and San Francisco
Funding: Government; cluster organizations
Established in 1992
Focus: Wine export promotion through international offices in London and San Francisco
Funding: Government; cluster organizations
Winemakers’ Federation of AustraliaWinemakers’ Federation of Australia
Established in 1990
Focus: Public policy representation of companies in the wine cluster
Funding: Member companies
Established in 1990
Focus: Public policy representation of companies in the wine cluster
Funding: Member companies
Grape and Wine R&D CorporationGrape and Wine R&D Corporation
Established in 1991 as statutory body
Focus: Funding of research and development activities
Funding: Government; statutory levy
Established in 1991 as statutory body
Focus: Funding of research and development activities
Funding: Government; statutory levy
Wine Industry Information ServiceWine Industry Information Service
Established in 1998
Focus: Information collection, organization, and dissemination
Funding: Cluster organizations
Established in 1998
Focus: Information collection, organization, and dissemination
Funding: Cluster organizations
Source: Michael E. Porter and Örjan Sölvell, The Australian Wine Cluster – Supplement, Harvard Business School Case Study, 2002
56 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Issues in the Irish Policy DebateCluster Development
• Clusters have so far played a limited role in Irish economic development efforts– The national economy perceived as too small to support fully-
developed clusters– Clusters seen as focusing resources on some parts of the
economy while neglecting others
• Clusters are an important tool to address key competitiveness challenges that Ireland cannot afford to neglect– All clusters are good. Ireland must develop all its existing and
emerging clusters, not choose among them – Clusters enable higher levels of innovation based on spill-overs
and increased interaction– Clusters provide a fertile ground for Irish-based companies to
evolve and grow– Clusters provide a vehicle for redefining the roles of the public
and the private sector in economic development
57 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Competitiveness Agenda for Ireland
• Move from low cost to superior productivity– Address weaknesses in the business environment– Strengthen innovative capacity
• Develop robust clusters
• Redefine the institutional structure for economic development
• Decentralize economic policy-making
58 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Roles in Economic Development
GovernmentGovernment
FirmsFirms
Trade AssociationsTrade Associations
UniversitiesUniversities
Improve the macroeconomic, political, legal, and social contextUpgrade the general business environmentFacilitate cluster formation and upgradingLead a collaborative process of economic change
Take an active role in upgrading the local infrastructureNurture local suppliers and attract new supplier investments Work with government and universities in efforts to upgrade the business environmentFocus corporate philanthropy on enhancing the local business environment
Negotiate with government Provide services such as information collection and dissemination, and trainingMarket the region and the clusterDevelop platforms for joint research and procurement
Joint generation and transfer of knowledgeEngage in workforce developmentFacilitate competitiveness initiatives
59 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Issues in Ireland
• Economic development is strongly government-led
• Limited private sector engagement
• Weak Institutions for Collaboration
• Weak relationship between universities and private sector only gradually improving
Source: Irish Government, Review of Industrial Performance and Policy, 2003
60 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Competitiveness Agenda for Ireland
• Move from low cost to superior productivity– Address weaknesses in the business environment– Strengthen innovative capacity
• Develop robust clusters
• Redefine the institutional structure for economic development
• Decentralize economic policy-making
61 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.pptSource: Forfas/National Competitiveness Council: Annual Competitiveness Report 2002
Gross Value Added per Capita, Euro, 1999
Compound annual growth rate of Gross Value Added per Capita, 1995 - 1999
Regional Economic Performance
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
0% 5% 10% 15% 20%
= 100’000 people in the labor force
Dublin
MidlandsWest
BorderMid-EastMid-West
South-East
South-WestIreland: Euro 21’171
Ireland: 12.6%
62 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Issues in the Irish Policy DebateDecentralization of Economic Development Efforts
• Significant variation in the economic performance of Irish regions suggests large regional differences in competitiveness
• Yet Ireland ranks 75th out of 80 countries in the Global Competitiveness Report on the decentralization of economic policy making– Recent efforts to develop regional institutions have been a
requirement to receive EU funding, not a sign that Irish thinking is changing
• Shifting decision powers to the regional and local level are of increasing importance for the Irish economy– Address the unique challenges and opportunities of different
regions– Foster cluster development – Encourage the acceptance of responsibility at the local level
63 Copyright 2003 © Professor Michael E. PorterGCR Ireland 2003 09-30-03 CK.ppt
Ireland is Entering a New Economic Era
• The transition to an innovation economy is complex but well within reach for Ireland
• Ireland success in the past bodes well for the country’s ability to meet the new challenges
• The country has identified many of the key steps that need to betaken; now it is a matter of persistence and implementation
• Competitiveness is a marathon, not a sprint!
• It is very difficult to achieve economic change without a crisis
• A consensus about the need for a new strategy is not yet in place