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INTERNATIONAL COMPETITIVENESS

INTERNATIONAL COMPETITIVENESS. THEORY, METHODOLOGY AND REPORTS. THEORY OF INTERNATIONAL TRADE. A.SMITH -ABSOLUTE COSTS D.RICARDO-COMPARATVE COSTS HECKSHER-OHLIN :ABUNDANCE AND COST R.VERNON-PRODUCT CYCLE : DEVELOPMENT AND CHANGING FACTORS TECHNOLOGICAL FACTORS NEO-TECHNOLOGICAL FACTORS

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INTERNATIONAL COMPETITIVENESS

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  1. INTERNATIONAL COMPETITIVENESS THEORY, METHODOLOGY AND REPORTS INTERNATIONAL COMPETITIVENESS

  2. THEORY OF INTERNATIONAL TRADE • A.SMITH -ABSOLUTE COSTS • D.RICARDO-COMPARATVE COSTS • HECKSHER-OHLIN :ABUNDANCE AND COST • R.VERNON-PRODUCT CYCLE : DEVELOPMENT AND CHANGING FACTORS • TECHNOLOGICAL FACTORS • NEO-TECHNOLOGICAL FACTORS • DUNNING ECLECTIC THEOREM: SET OF FACTORS • SYSTEMS AND INTERACTIONS INTERNATIONAL COMPETITIVENESS

  3. GLOBAL COMPETITION : RULES OF THE GAME • NATIONAL SYSTEMS: OPEN VERSUS CLOSE • NATIONAL AND GLOBAL • VALUE CREATION AND DISTRIBUTION • ECONOMIC VERSUS SOCIAL SYSTEM • WORLD MARKET AND GLOBAL COMPETITION • PROBLEM OF WINNER AND LOOSER INTERNATIONAL COMPETITIVENESS

  4. ECONOMIC COMPETITIVENESSBASIC CONCEPTS • COMPETITION VS.COMPETITIVENESS • MARKET AND COMPETITIVE POSITION • CURRENT COMPETITIVENESS • COMPETITIVE POTENTIAL (ABILITY) • INTERNAL AND EXTERNAL FACTORS • COMPETITIVENESS AND VALUE CREATION • VALUE CREATION FOR CLIENT AND INVESTOR INTERNATIONAL COMPETITIVENESS

  5. FACTORS OF COMPETITIVENESS • NATURAL RESOURCES • ACCUMULATED RESOURCES : HUMAN, FINANCIAL, TECHNOLOGY,KNOW-HOW • ACCUMULATED WEALTH ,INFRASTRUCTURE • INSTITUTIONS : SYSTEM AND SOCIAL VALUE SYSTEM • INTERACTIONS AND ENTREPRENEURSHIP AND INNOVATION • MACROECONOMIC FACTORS • BUSINESS EFFICIENCY AND STRATEGY INTERNATIONAL COMPETITIVENESS

  6. COMPETITIVENESS AND STAGES OF ECONOMIC DEVELOPMENT USA FRANCE INNOVATION SPAIN QUALITY CHINA DIVERSITY COST INTERNATIONAL COMPETITIVENESS

  7. GDP GROWTH IN HISTORICAL PERSPECTIVE INTERNATIONAL COMPETITIVENESS

  8. INSTITUTIONS • LEGAL AND SOCIAL NORMS • ORGANISATIONS SUPPORTING BUSINESS ACTIVITY AND COOPERATION • AS CONSTRAINS • AND COOPERATION • AND SOCIAL BALANCE • AND NEW OPPORTUNITIES • AND EFFICIENCY, • TRANSACTION COST , RISK AND VALUE CREATION INTERNATIONAL COMPETITIVENESS

  9. INSTITUTIONS • INSTITUTIONS AND VALUE SYSTEMS • FREEDOM AND INSTITUTIONS • INSTITUTIONS AND HARMONISATION • INSTITUTIONS AND RENT-SEEKING AND PROFIT-SEEKING • QUALITY OF INSTITUTIONS • INSTITUTIONS AND VALUE CREATIONS INTERNATIONAL COMPETITIVENESS

  10. INSTITUTIONS AND ECONOMIC FREEDOM SOCIO-ECONOMIC EQUILLIBRIUM QUALITY OF INSTITUTIONS DEMOCRATIC NON DEMOCRATIC OMNIPOTENT STATE FREEDOM ANARCHY FREEDOM INTERNATIONAL COMPETITIVENESS

  11. OPENESS AND QUALITY OF INSTITUTIONS • INSTITUTIONS AND SOVREIGNITY • GLOBAL COMPETITION AND DEFICIT OF DEMOCRACY • OPENESS AND QUALITY OF INSTITUTIONS • ECONOMIC FREEDOM AND ENTERPRENERSHIP AND INNOVATION • QUALITY OF INSTITUTIONS AND VALUE CREATION INTERNATIONAL COMPETITIVENESS

  12. INSTITUTIONS AND ECONOMIC FREEDOM DEMORACY QUALITY OF INSTITUTIONS MARKET PLACE NO MARKET NO MARKET EUROPE NO DEMOCRACY NO DEMOCRACY USA OMNIPOTENT STATE ANARCHY TRANSITION CUBA CHINA SOMALIA ECONOMIC FREEDOM AND OPTIMAL INSTITUTIONS INTERNATIONAL COMPETITIVENESS

  13. ECONOMIC SYSTEM PROPERTY RIGHTS,ECONOMIC FREEDOM,COMPETITION SUBSYTEMS:FINACIAL,FISCAL,LABOR,FOREIGN RELATIONS FIRMS MECHANISM LABOR HUMAN BEHAVIOUR freedom competition OBJECTIVES cooperation CLIENTS INVESTORS MACROECONOMIC POLICY INTERNATIONAL COMPETITIVENESS

  14. COMPETITIVENESSVALUE CREATION ABILITY DIVERSITY QUALITY INNOVATION COST SUPPLY COMPETITIVENESS DEMAND STRUCTURE INCOME LEVEL NECESSITIES PREFERENCES INTERNATIONAL COMPETITIVENESS

  15. ECONOMIC SYSTEM AND COMPETITIVENESS • LEGAL ORDER: TRANSPARENCY,EFFICIENCY,STABILITY • SOCIAL HARMONY VS ECONOMIC EFFICIENCY • ECONOMIC ACTORS :TYPES,FORMS AND STRUCTURES • MECHANISM OF COORDINATION • OBJECTIVES • SYSTEM QUALITY ASSESSMENT : TRANSACTION COST AND RISK, EQUILLIBRIUM, VALUE CREATION INTERNATIONAL COMPETITIVENESS

  16. BASIC FUNCTIONS OF MARKET MECHANISM • INFORMATION • SETTING EQUILIBRIUM PRICES • MOTIVATION • SELECTION • ALLOCATION • COORDINATION OF ACTIVITIES • DISTRIBIUTION OF BENEFITS INTERNATIONAL COMPETITIVENESS

  17. INTERNATIONAL COMPETITIVENESS

  18. INTERNATIONAL COMPETITIVENESS

  19. SYSTEM OF ECONOMIC INTERACTIONS • TRADE,FINACIAL,TECHNOLOGICAL,INFORMATIONAL,ORGANIZATIONAL RELATIONS • INFORMATION INTERACTION • HUMAN INFORMATION AND MOTIVATION DISPOSITION • INTERACTIONS • COMPETITION,RIVALRY • COORDINATION,COOPERATION • CONTRACTUAL AGREEMENT • RISK AND RISK SHARING • DISTRIBUTION OF BENEFITS INTERNATIONAL COMPETITIVENESS

  20. ECONOMIC MECHANISMS • CHARACTER OF INTERACTION IN SOCIAL DIVISION OF LABOUR • MARKET,ADMINISTRATIVE AND MIXED METHODS OF COORDINATION OF SOCIAL DIVISION OF LABOUR • SCOPE OF FREEDOM AND COMPETITION ARE KEY FACTORS DETERMINION HUMAN MOTIVATION, INCOME DIVERSITY AND EFFICIENCY • ECONOMIC COORDIANTION COVERS CONSUMER GOODS AND FACTORS OF PRODUCTION • EFFICIENT MARKET MECHANISMS REDUCE TRANSACTION COSTS AND RISK INTERNATIONAL COMPETITIVENESS

  21. MECHANISMS AND THEIR FUNCTIONS • FREEDOM,COMPETITION AND EFFECTIVENESS OF ECONOMIC SYSTEM (MECHANISM) • INFORMATION • VALUATION • MOTIVATION • BALANCING SUPPLY AND DEMAND • SEKECTION • ALLOCATION • BENEFITS DISTRIBUTION INTERNATIONAL COMPETITIVENESS

  22. SYSTEMSMECHANICAL, INTELLIGENT • SIMPLE AND MULTIFUNCTIONAL SYSTEM • MECHANICAL AND INTELLIGENT • OPEN AND CLOSED SYSTEMS • STRUCTURE OF THE SYSTEM • REGULATION OF THE SYSTEM • LOGIC OF THE SYSTEM • REGULATION AND BALANCE • REGULATION AND DEVELOPMENT • ADAPTATION,STEERING OF THE SYSTEM INTERNATIONAL COMPETITIVENESS

  23. STRUCTURAL: REAL FLOWS AND RELATIONS INPUT/OUTPUT QUANTITATIVE REGULATION AND AUTOMATION AUTOMATYZM MAXIMASATION OF EFFICIENCY TARGETS OF BUSINESS ACTORS INFORMATION INTERACTION TARGET ORIENTED EFFICIENCY MARKET COMPETITION, FLEXIBILITY,COMPETITION,INNOVATION OPTIMAL VERSUS MAXIMAL ECONOMIC SYSTEM STRUCTURAL AND SUBJECTIVE APPROACH INTERNATIONAL COMPETITIVENESS

  24. ECONOMIC SYSTEM.CYBERNETICS VIEW • SYSTEM AND ENVIRONMENT • REAL AND INFORMATIONS FLOWS AND INTERACTION • SERVO-MECHANISM AND STEERING • SYSTEM AND ITS ADAPTATION ABILITY AND DEVELOPMENT POTENTIAL • SYSTEMIC AND DYNAMIC APPROACH INTERNATIONAL COMPETITIVENESS

  25. CYBERNETIC APPROACH • STRUCTURE OF SYSTEM AND WEB OF INTERACTIONS • EACH ELEMENT AND SUBSYSTEM EFFECTS THE SYSTEM • CHANGES IN THE WEB SYSTEM OF INTERACTIONS EFFECTS THE SYSTEM BEHAVIOUR • CHANGES IN THE INTENSITY AND CHARACTER OF INFORMATION FLOWS CHANGES SYSTEM BAHAVIOUR • REAL FLOWS.EQUILLIBRIUM AND ASYMETRY INTERNATIONAL COMPETITIVENESS

  26. ECONOMIC FREEDOMHERITAGE FOUNDATION • FACTORS • ROLE OF INSTITUTIONS • ECONOMIC FREEDOM: ABSENCE OF COERCION OR CONSTRAIN ON PRODUCTION AND TRADE • 10 BROAD GROUPS OF FACTORS • QUALITY OF INSTITUTIONS INTERNATIONAL COMPETITIVENESS

  27. Trade policy Fiscal Burden Government Intervention Monetary Policy Capital flows and FDI Banking and finance Wages and prices Property rights Regulation Black market ECONOMIC FREEDOM INDEX INTERNATIONAL COMPETITIVENESS

  28. GRADING SCALE • 4 BROAD LEVELS OF ECONOMIC FREEDOM AND INSTITUTIONS QUALITY • FREE : 1,95 or less • BASICLY FREE 1,95 to 2,95 • UNFREE : 3 to 3,95 • REPRESSED: over 4 INTERNATIONAL COMPETITIVENESS

  29. ECONOMIC FREEDOMProperty Rights • Freedom of judical system • Commercial code defining contracts • Possible of foreign arbitration of contract disputes • Government expropration of property • Corruption within the judiciary • Delays in receiving judical decisions • Legal protection of property rigths INTERNATIONAL COMPETITIVENESS

  30. Variables of trade policy Weighted average tariff rate Non-tariff barriers Corruption in the customs service Fiscal Burden of Government Top income tax rate Marginal rate for the average taxpayer Corporate tax rate Government expenditure in GDP ECONOMIC FREEDOM INTERNATIONAL COMPETITIVENESS

  31. Regulation Licensing to operate a business Corruption within bureaucracy Labor regulations (etsablished work weeks,paid vacations,parental leave, standard dissmisal practices, Environmental ,consumer safety,worker health That impose a burden(cost) on business Government Intervention Government consumption in GDP State ownership of business and industries Government revenues from state owned business Economic output of state sector ECONOMIC FREEDOM INTERNATIONAL COMPETITIVENESS

  32. Capital Flows and FDI Foreign Investment Code Restriction on foreign ownership of business Sectoral restriction for foreign investors Performance requirements on foreign companies Foreign ownership of land Restrictions on repatriation of earnings Banking and Finance Government ownership of banks Restrictions on opening branches and subsidiares of foreign banks Government influence over credit allocation Government regulations Freedom to offer all types of financial services ECONOMIC FREEDOM INTERNATIONAL COMPETITIVENESS

  33. Wages and Prices Minimum wage laws Freedom to set prices Extent of price administration Government subsidies to business Government role in setting wages Black market Smuggling Piracy of intellectual property Agricultural black marketing Manufacturing black marketing Services black marketing Transportation black marketing Labor black marketing ECONOMIC FREEDOM INTERNATIONAL COMPETITIVENESS

  34. INTERNATIONAL COMPETITIVENESS

  35. Changes in Economic Freedom Index INTERNATIONAL COMPETITIVENESS

  36. ECONOMIC FREEDOM OF EU NEW MEMBERS INTERNATIONAL COMPETITIVENESS

  37. ECONOMIC FREEDOM, INSTITUTIONS AND MARKET BEHAVIOUR • SOCIAL DIVISION OF LABOUR :COOPERATION AND COMPETITION • INSTITIUTIONS : LAW,ORGANIZATION AND MARKET • BEHAVIORAL FACTORS: SOCIAL NORMS, INFORMATION AND MOTIVATION OFA HUMAN INDIVIDUAL. • VALUES,ATTITUDES,CHOICE AND ECONOMIOC BEHAVIOR • INSTITUTIONS,BEHAVIOR OF ACTORS AND MARKET EFFICIENCY INTERNATIONAL COMPETITIVENESS

  38. COMPETITIVENESS • SUPPLY SUPERIORITY : COST,DIVERSITY,QUALITY AND INNOVATIVENESS • ATTRACTIVENESS OF FACTOR MARKETS AND INSTITUTIONS: R&D,HUMAN CAPITAL,VENTURE CAPITAL,LOW TRANSACTION COSTS AND RISK • SUPERIOR INVESTMENT CLIMATE • OPENESS OF SYSTEM AND POLICY • SOCIAL AND POLITICAL STABILITY INTERNATIONAL COMPETITIVENESS

  39. COMPETITIVENESS AS AN INVESTMENT CLIMATE • WORLD DEVELOPMENT OUTLOOK: FOR A BETTER INVESTMENT CLIMATE • MOBLIZATION OF RESOURCES • EFFICIENT USE OF RESOURCES • DEVELOPMENT OF RESOURCES • CHANGING STRUCTURE OF RESOURCES INTERNATIONAL COMPETITIVENESS

  40. COMPETITIVENESSPOSITION, ACTUAL AND ABILITY • Position: ex post share, relations, source of competitive advantage • Actual performance: ex post benchmarking performance • Ability : ex ante potential,openess,knowledge,creativeness,strategy,future potential cashflows,WACC and risk,investment climate INTERNATIONAL COMPETITIVENESS

  41. DOING BUSINESS THE WORLD BANK • STARTING A BUSINESS • DEALING WITH LICENSES • HIRING AND FIRING WORKERS • REGISTERING PROPERTY • GETTING CREDIT • PAYING TAXES • TRADING ACROSS BOARDERS • ENFORCING CONTRACTS • CLOSING A BUSINESS INTERNATIONAL COMPETITIVENESS

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