urgent imperative for sme's to contribute to the national growth and development agenda
TRANSCRIPT
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
1/32
The Urgent Imperative for SMEsto contribute to
Silburn Clarke, FRICS
Chairman, Jamaica Business Development Corporation
ByGrowing the GDP
&
Improving the Current Account Deficit
The National Growth and Development Agenda
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
2/32
a. Macroeconomic Challenges and the SMEs Role in Export and Economic Stability
b. Nature of Global Knowledge Economy
c. The InnovationProductivityCompetitivenessConnexions
e. A Sustainable Competitive Advantage Model
f. Findings on Motivation from US High-Tech firms
f. Case Study: Born Globals / International New Ventures
g. Case study: Jamaicas first Global Enterprise
h. Take Home Messages
PRESENTATION OUTLINE
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
3/32
The world is betting that Jamaicawill fail !!
Jamaica is in a high-risk programme, a last-
ditch effort to avoid a massive adjustment,
even a collapse.
Financial Times, May 2013
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
4/32
The Urgent National Export Imperative
Radical Reversal of Persistent Unsustainable Trade & Services Deficits
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
5/32
Current Account Deficit is Staggering
Avg 5yr CA deficit : US$1.8bln
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
6/32
Output must grow by 6% minimum to
maintain economic stability
Planned Primary Surplus for 2012/2013 5.2% of GDP
New Taxes 1.3%
NHT Contributions 0.8%
Planned Primary Surplus (post-implementation) 7.3%
Interest Cost on Debt -8.2%
NDX Interest Savings 1.3%
Cost of Principal Repayment -6.5%
Net Primary Surplus -6.1%
Minimum GDP Growth Required 6.1%
Source: Caribbean Association of Actuaries
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
7/32
Economic Stability Model
In stableeconomies;
Debt Primary Surplus
approximates to ________
GDP Long Term Interest Rate
The higher the tendency to a level of equality is the more stable the economy is.
but in unstable economies ;
Debt Primary Surplus
is not equal to __________
GDP Long Term Interest Rate
Source: Caribbean Association of Actuaries
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
8/32
The higher the level of disequilibrium is thehigher the tendency to instability
In Jamaicas case: Our Debt to GDP ratio isseverely out of alignment with our ratio ofPrimary Surplus to LT Interest Rates
The numbers: 140% to 67%
Source: Caribbean Association of Actuaries
Economic Stability Model
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
9/32
Innovation drives Productivity
JPC: 2001-2010 period
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
10/32
Contribution of Industrial Sectors to Overall Performance
GDP Performance 2002-2011
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
11/32
Henrekson, Stockholm School of Economics
Growth Drivers and Firm Types
Replicative Firms
Efficiency Factors
Innovating
Firms
Small
Businesses
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
12/32
SMEs are VITAL to Countrys Survival
Imagine 1000 SMEs exporting US$1million in goods and services:Thats US$1.0billion contributing to our Current Account
Now imagine 2000SMEs exporting US$1million in goods andservices:
SMEs combined would add US$2.0billion and so
CLOSE OUR CURRENT ACCOUNT DEFICIT
GROW OUR GDP
STABILISE OUR ECONOMY
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
13/32
The models of the last 2 eras (agricultural and industrial ) rested on Land,Labour (low-cost) and Capital (LLC) as key factors of economic production
In the current period Knowledge is the main resource
The Global Knowledge Economy
Umemoto 2006
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
14/32
Global economy has been in transition since the 1980s to what is variously termed a
New Economy, Digital Economy or a Knowledge Economy
THE NEW KNOWLEDGE ECONOMY
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
15/32
Global Shift to the Knowledge Economy
(variance in GDP explained by KEI in model)
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
16/32
RESOURCE-BASED ECONOMIES EFFICIENCY-BASED ECONOMIES INNOVATION ECONOMIES
Transition
I to II
Jamaica
Guyana
Transition
II to III
Trinidad
Barbados
Stage II
Dom Rep
Panama
Costa Rica
Stage III
???
Stage I
Honduras
Nicaragua
Countries compete based on their factor
endowments: primarily unskilled labour
and natural resources.
Compete on the basis of price and sell
basic products or commodities, with
their low productivity reflected in lowwages.
Countries begin to develop more efficient
production processes and increase product
quality.
Competitiveness is increasingly driven by higher
education and training.
Wages have risen and they cannot increase
prices
Companies must compete by producing new
and different goods using the most
sophisticated production processes and
through innovation.
Wages will have risen by so much that they
are only able to sustain those higher wagesand the associated standard of living by
higher value production
The Shift to Knowledge and Innovation
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
17/32
Thoughts on Innovation
Pronounced uniform regional group inflexion
i i i
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
18/32
Mission: To create new Innovation
Outcomes for Firms
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
19/32
What is Innovation
Innovation....
Creation of added-value from new or Improved products, processes,methodologies, services, business models, or markets
Schumpeter 1934
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
20/32
The Innovation-Productivity-Competitiveness-
Export Link
Innovative Capacity
Competitiveness Improvement
Competitive Global Marketspaces
Begins with
knowledgeable
engaged motivated
human resources
Increased
Productivity
Export Entry
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
21/32
NATIONAL INNOVATION BEGINS WITH INDIVIDUAL INNOVATION
Clarke 2012
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
22/32
Going Global
Typically the most productive local firms are the
earliest to go global:
a. The firm has the confidencethat they can play onthe global stage
a. Having maxed out markets domestically, theyneed the global marketspace in order to
maintain their growth trajectory
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
23/32
GROWING SUSTAINABLE COMPETITIVE ADVANTAGE
Is the resource or
capability VALUABLE?
Is it homogeneously
distributed across
all firms ?
Ie RARE
Is resource or capability
IMPERFECTLY mobile ?
Competitive
disadvantage
Competitive
parity
Sustained
Competitive
Advantage
Temporary
Competitive
Advantage
YES
NO
YES
NO
YES
NO
Mata, Feurst, Barney (1995)
Acquired /Imported
Innovations
Indigenous
Innovations
Is the ORGANISATIONAL
model embedded
?
YES
V.R.I.O MODEL
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
24/32
Study of IWB of Employees in
US High-Tech Services Firms
Organisational
Context
Individual
Motivation
Employee
Innovative
Behaviour
in
Workplace
Intrinsic
Motivation
Integrated
Motivation
Identified
Motivation
Organisational Context =0.327 =0.267 =0.195
Model explains (Rsq) 24% 21% 14%
Employee Innovative Work Behaviour
Autonomous Motivation Explains 36.1%
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
25/32
Four 17 year olds straight out of school
(Campion) decided on recording career
Travelling, performing and harvesting
revenues globally within 3 years of start-up
Classic INV firm
SCA based on their unique content and
singing style (VRIO)
Recently completed a multi-year deal forThe Voice / Guiding Light to be on Japan
Air Line (JAL) playlist for inter-continental
and domestic flights
Born Globals / International New Ventures (INV)
T. O. K.
Case Study #1
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
26/32
Jamaicas first global enterprise ?
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
27/32
At its peak in the 1920 the UNIA had over
Divisions : 1,900
Countries : 40 globally
including : United States, Cuba, Panama, CostaRica, Ecuador, Venezuela, Ghana, Sierra Leone,
Liberia, India, Australia, Nigeria, Namibia, Canada,
Nigeria and South Africa.
The first Jamaican Global Enterprise
The UNIA
If you have not confidence in self, you are twice defeated in the race of life.With confidence, you have won even before you have started.
Case Study
http://en.wikipedia.org/wiki/Panamahttp://en.wikipedia.org/wiki/Costa_Ricahttp://en.wikipedia.org/wiki/Costa_Ricahttp://en.wikipedia.org/wiki/Ecuadorhttp://en.wikipedia.org/wiki/Venezuelahttp://en.wikipedia.org/wiki/Ghanahttp://en.wikipedia.org/wiki/Sierra_Leonehttp://en.wikipedia.org/wiki/Liberiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Australiahttp://en.wikipedia.org/wiki/Nigeriahttp://en.wikipedia.org/wiki/Namibiahttp://en.wikipedia.org/wiki/South_Africahttp://en.wikipedia.org/wiki/South_Africahttp://en.wikipedia.org/wiki/Namibiahttp://en.wikipedia.org/wiki/Nigeriahttp://en.wikipedia.org/wiki/Australiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Liberiahttp://en.wikipedia.org/wiki/Sierra_Leonehttp://en.wikipedia.org/wiki/Ghanahttp://en.wikipedia.org/wiki/Venezuelahttp://en.wikipedia.org/wiki/Ecuadorhttp://en.wikipedia.org/wiki/Costa_Ricahttp://en.wikipedia.org/wiki/Costa_Ricahttp://en.wikipedia.org/wiki/Panama -
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
28/32
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
29/32
eCLIPSE
Enhancing Competitiveness throughLeadership, Innovation, Productivity, Self-Determinism and Entrepreneurship.
Complements business planning, accounting,budgeting training with,
Global mindset orientation, innovation,creative problem-solving
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
30/32
GoJ / IMF mandate for JBDC and SMEs and as part of the GrowthAgenda
MSME and Entrepreneurship Policy tabled in May and passed this
week in Parliament
Legislative Agenda: Secured Interests Personal Property , Insolvency ,
Copyright, Trademark, Companies Act, Superform
$63million of Capital Support from MIIC in 2013/2014 for Creative
Industries and Business Incubation and Acceleration
$2billion in loan support to micro-enterprise sector ($700million)
and SME sector ($1.3billion)
HISTORIC SME POLICY SUPPORT FRAMEWORK
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
31/32
Need to structure economic payoffs to favour innovators and the
innovating firms in order to drive sustainability, resilience, flexibility,
competitiveness, export growth and prosperity
SMEs are vital to increasing exports and stabilising the economy
Jamaica cannot assert any globally distinctive VRIO resources or
capabilities from factors derived from and structurally bounded to
the old agro-industrial era
Your mental models, global mindset, confidence, persistence,
motivation are critical factors for taking your firm global
With confidence you are a winner before you get started (Garvey)
MESSAGES TO TAKE HOME
-
8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda
32/32
THANK YOU !
Silburn Clarke, FRICS