Presentation done by Michael Enright
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The document discusses global competitiveness challenges and the role of clusters. It summarizes that the rise of emerging markets, global macroeconomic crisis, and shifting trade balances have disrupted traditional clusters and global competitiveness measures. However, clusters remain important for economic development worldwide and initiatives must understand macro trends and how they interact with clusters. Successful initiatives target market failures and leverage location-based advantages through collaboration.
Presentation done by Michael Enright
- 2. Global Competitiveness: Challenges and the Role of Clusters © Copyright Michael J. Enright, 2010 2 Professor Michael J. Enright Enright, Scott & Associates, Ltd. University of Hong Kong TCI Annual Conference Delhi 2010 December 1, 2010
- 3. Or Competitiveness and Clusters in the New World Disorder © Copyright Michael J. Enright, 2010 3December 1, 2010
- 4. Challenges • Global macro crisis • Rise of emerging markets • Global rebalancing • Disruption of traditional clusters • Lack of relevance of some competitiveness• Lack of relevance of some competitiveness measures and approaches • Have cluster initiatives lost relevance in the present situation? And if so why? © Copyright Michael J. Enright, 2010 4December 1, 2010
- 5. The New Normal, GDP 60.000 80.000 100.000 120.000 US$Billion From 2009-2015, we will lose US$115 trillion in GDP from prior trend 0 20.000 40.000 60.000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 US$Billion Old GDP New GDP 5 Sources: IMF and Enright, Scott & Associates © Copyright Michael J. Enright, 2010December 1, 2010
- 6. The New Normal, Exports 25.000 30.000 35.000 40.000 45.000 50.000 US$Billion From 2009-2015, we will lose US$76 trillion in Exports from prior trend 0 5.000 10.000 15.000 20.000 25.000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 US$Billion Old Exports New Exports 6 Sources: IMF and Enright, Scott & Associates © Copyright Michael J. Enright, 2010December 1, 2010
- 7. US$ Versus Major Currencies 1,0 1,1 1,2 1,3 EUR 0,6 0,7 0,8 0,9 ene-00 jul-00 ene-01 jul-01 ene-02 jul-02 ene-03 jul-03 ene-04 jul-04 ene-05 jul-05 ene-06 jul-06 ene-07 jul-07 ene-08 jul-08 ene-09 jul-09 ene-10 jul-10 EUR GBP JPY 7 Sources: OANDA and Enright, Scott & Associates © Copyright Michael J. Enright, 2010December 1, 2010
- 8. Global GDP Distribution Projections 50% 60% 70% 80% 90% 100% NAMER WEUR AFME CEEUR CSAMER 0% 10% 20% 30% 40% 50% 2008 2010 2015 2020 2025 CSAMER CASIA ANZOC SOASIA SEASIA NEASIA 8 Sources: IMF, Enright, Scott & Associates © Copyright Michael J. Enright, 2010December 1, 2010
- 9. Global GDP Growth Distribution Projections 50% 60% 70% 80% 90% 100% NAMER WEUR AFME CEEUR CSAMER 0% 10% 20% 30% 40% 50% 2000-2010 2010-2025 CSAMER CASIA ANZOC SOASIA SEASIA NEASIA 9 Sources: IMF, Enright, Scott & Associates © Copyright Michael J. Enright, 2010December 1, 2010
- 10. Projected Consumption 40% 60% 80% 100% Other Eur 5 NAmer ASEAN4 NIE4 0% 20% 2008 2009 2010 2013 2015 2018 2020 2023 2025 Japan India China 10 Notes: ASEAN4= Indonesia, Malaysia, Philippines, Thailand NIE4= Hong Kong, Korea, Singapore, Taiwan EUR5= Germany, UK, France, Italy, Spain NAmer= US, Canada Sources: IMF, CEIC, Credit Suisse © Copyright Michael J. Enright, 2010December 1, 2010
- 11. China Projected Consumption (billion 2000 RMB) 12000 14000 16000 18000 20000 Household Products Apparel Housing and Utilities Education and Recreation 0 2000 4000 6000 8000 10000 2005 2025 Education and Recreation Personal Products and Services Healthcare Food Trans and Comm Source: MGI 11© Copyright Michael J. Enright, 2010December 1, 2010
- 12. India Projected Consumption (billion 2000 rupees) 50000 60000 70000 80000 Household Products Apparel Communication 0 10000 20000 30000 40000 2005 2025 Housing and Utilities Education and Recreation Personal Products and Services Healthcare Food Transportation Source: MGI 12© Copyright Michael J. Enright, 2010December 1, 2010
- 13. China and India were the world’s leading economies until the 19th century Percent of Global GDP: 0-2008 A.D. ROW Japan Germany USA 100 80 60 Source: Angus Maddison; Smith Barney; Enright, Scott & Associates 0 1000 1500 1600 1700 1820 1870 1913 1950 1973 1998 2008 India China 40 20 0 13© Copyright Michael J. Enright, 2010December 1, 2010
- 14. Asia at Night 14© Copyright Michael J. Enright, 2010December 1, 2010
- 15. Isn’t competitiveness supposed to be about standards of living and productivity? Country WEF WB PC GDP ESA LPr ESA CPr Singapore 3 31 26 94 Malaysia 26 74 64 91 Brunei 28 38 28 - Thailand 38 105 102 115 Indonesia 44 129 110 105Indonesia 44 129 110 105 Vietnam 59 151 136 109 Philippines 85 134 113 57 Cambodia 109 167 143 - Sample 139 192 167 131 © Copyright Michael J. Enright, 2010 15 Sources: WEF, WB, Enright, Scott & Associates Traditional competitiveness indices are problematic and tend to be misused. December 1, 2010
- 16. So how are competitiveness and clusters relevant? • With macro forces dominating the headlines and policy-maker concerns… • With the “macro” rise of emerging markets and the “flat world” rebalancing the global economy… • With many traditionally admired clusters dying or being whipsawed by macro and competitive forces… • With traditional competitiveness measures less persuasive… • Even though clusters are ubiquitous and cluster initiatives are becoming ubiquitous, the cluster community is often not represented in critical debates… © Copyright Michael J. Enright, 2010 16December 1, 2010
- 17. Clusters and a Focus on Competitiveness Dominate Major Emerging Economies, i.e. China • Firms: 173,000+ firms with sales > RMB 5 million • Industries: 4 digit national classification ~ ISIC • Municipalities : 286, median size 13,000 sq km • Agglomeration: PSij≥ X • Cluster: PSij≥ X plus one or more vertically or horizontally related industry with PSij≥ X PSij≥0.10 PSij≥0.06 PSij≥0.03 AGGLOMERATION -% of national sales - % of firms 23.0% 9.5% 37.0% 18.1% 56.1% 31.9% CLUSTER -% of national sales - % of firms 14.8% 6.8% 28.6% 15.2% 47.5% 28.4% industry with PSij≥ X 17© Copyright Michael J. Enright, 2010December 1, 2010
- 18. Cities with Industrial Agglomerations in China 18© Copyright Michael J. Enright, 2010December 1, 2010
- 19. Industrial Agglomerations in China The number of agglomerated industries in each city at AGG10 19© Copyright Michael J. Enright, 2010December 1, 2010
- 20. Industrial Agglomerations in China The number of agglomerated industries in each city at AGG6 20© Copyright Michael J. Enright, 2010December 1, 2010
- 21. Industrial Agglomerations in China The number of agglomerated industries in each city at AGG3 21© Copyright Michael J. Enright, 2010December 1, 2010
- 22. Cities with Clusters in China 22© Copyright Michael J. Enright, 2010December 1, 2010
- 23. Clusters in China The number of clustered industries in each city at AGG10 23 Shanghai © Copyright Michael J. Enright, 2010December 1, 2010
- 24. Clusters in China The number of clustered industries in each city at AGG6 24 Shanghai © Copyright Michael J. Enright, 2010December 1, 2010
- 25. Clusters in China The number of clustered industries in each city at AGG3 25© Copyright Michael J. Enright, 2010December 1, 2010
- 26. The Motor Vehicle Sector Chinese cities with clustered MV industries at AGG10 26© Copyright Michael J. Enright, 2010December 1, 2010
- 27. The Motor Vehicle Sector Chinese cities with clustered MV industries at AGG6 27© Copyright Michael J. Enright, 2010December 1, 2010
- 28. Chinese cities with clustered MV industries at AGG3 The Motor Vehicle Sector 28© Copyright Michael J. Enright, 2010December 1, 2010
- 29. The Electronics Sector Chinese cities with clustered Electronics industries at AGG10 29© Copyright Michael J. Enright, 2010December 1, 2010
- 30. The Electronics Sector Chinese cities with clustered Electronics industries at AGG6 30© Copyright Michael J. Enright, 2010December 1, 2010
- 31. The Electronics Sector Chinese cities with clustered Electronics industries at AGG3 31© Copyright Michael J. Enright, 2010December 1, 2010
- 32. What do we know? (1) • Clusters are everywhere – Virtually every economy – Virtually every type of industry • There are different types of clusters and different policy mixes – Clusters differ along several dimensions – Locations differ in terms of what they can achieve– Locations differ in terms of what they can achieve • Particular forces cause the start and later development of clusters – Resources, marketplaces, spillovers, discoveries, entrepreneurs, g overnment impetus – Capabilities, labor/ supplier/ buyer pools, competition, cooperation, examples, spinoffs, external economies • Clusters enhance innovative investment and performance – Incentive, direction, focus of innovative investment – Information, unplanned communication, feedback loops, capabilities, focal points for investments © Copyright Michael J. Enright, 2010 32December 1, 2010
- 33. What do we know? (2) • Cluster initiatives go beyond “traditional” policies in some areas – Cluster specific information provision, skills building, business services, linkage programs, social capital building – Clusters can articulate demand that improves policies • Successful cluster programs target market failures – Impacted information, managerial myopia– Impacted information, managerial myopia – Lack of sufficient public goods, coordination failure • Clustering is crucial to economic development – Economies develop through clusters – Clusters can leverage location-based advantages, reduce location- based disadvantages – This is why clustering has become an integral part of economic policymaking around the world © Copyright Michael J. Enright, 2010 33December 1, 2010
- 34. What to do? • Understand macro forces and how their interaction with clusters and competitiveness. Otherwise, we cannot participate in important discussions. • Don’t be satisfied with superficial competitiveness analyses and inappropriate benchmarks. • If you can’t beat them, join them. If the world is becoming flat, be the flattener not the flattenee.the flattener not the flattenee. • Remember that emerging markets are markets too. • Realize that clusters are still the most effective means of fostering development in local economies. • Understand that initiatives will need to couple deeper and broader analysis with collaboration and joint action. • Remember collaboration is a means not an end, competitiveness is the end. 34© Copyright Michael J. Enright, 2010December 1, 2010
- 35. Roles of Clusters • Engines of economic development • Developers and repositories of skills • Locus of cooperation and competition • Promoters of regional / national economic interests • Projectors of regional / national capabilities• Projectors of regional / national capabilities • Focal points for policy and development initiatives • Articulators of demand for policy • Focal points for business-business, business- government, business-academic, etc. interaction © Copyright Michael J. Enright, 2010 35December 1, 2010
- 36. Requirements for Competitiveness • Must create value for customers • Must be different than the competition • Must be better than the competition • Must be better than the competition in ways that create value for customers © Copyright Michael J. Enright, 2010 36 create value for customers • Must bring something unique to the table that is valuable, difficult to replace, difficult to imitate • Must develop the activities, resources, knowledge to pull this off in a cost-effective manner • Must get the cluster to pull together to carry this out December 1, 2010
- 37. Avenues of Innovation in Clusters • New technologies • New applications of technologies • New geographic, product, service markets • New business models • New management tools and techniques © Copyright Michael J. Enright, 2010 37 • New management tools and techniques • New ways of carrying out activities • New organizational forms • New forms of collaboration • New generation of public goods • New ways of communicating inside and outside the cluster • New linkages with other clusters December 1, 2010
- 38. What are we working on today? • Indentifying critical macro, cluster, industry, firm linkages and their implications for governments, firms, clusters • Comprehensive, multidimensional competitiveness analysis, reverse-engineering true sources of competitiveness • Introducing more sophisticated benchmarking tools • Cost-effective, replicable industry and cluster-level competitiveness assessments / recommendations • SME strategy toolkit, cluster intelligence systems • Linking firms and clusters in the developed world with those in the developing world • Identifying opportunities to be the “flattener” not the “flattenee” for firms, industries, clusters © Copyright Michael J. Enright, 2010 38December 1, 2010
- 39. The TCI Conference • Think in terms of examples and ideas, not recipes • Triangulate “solutions” with your own context • Remember one size does not fit all • Seek out people with similar situations and issues, or interesting insights and perspectivesinteresting insights and perspectives • Use the “downtime” as “uptime” • Ask questions, share experiences • Learn, learn, learn • Afterwards: Follow up, follow up, follow up / Use the TCI network © Copyright Michael J. Enright, 2010 39December 1, 2010
- 40. Contact information: Thank you © Copyright Michael J. Enright, 2010 40 Professor Michael Enright Enright, Scott & Associates, Ltd. Suite 1001, Wellington Place 2-8 Wellington Street Central, Hong Kong Phone: +852-3101-8650 Fax: +852-3101-9635 Email: mail@enrightscott.com Professor Michael Enright Enright, Scott & Associates (Singapore), Pte., Ltd. 23/F Chevron House 30 Raffles Place Singapore 048622 Phone: +65-6233-6885 Fax: +65-6314-5102 Email: mail@enrightscott.com December 1, 2010