Magazine article International Trade Forum
Sharpening Your Competitive Edge
Traditional approaches to Competitiveness do not fully address today's business realities.
In the globalizing world of today, export constraints are diminishing: falling trade barriers; declining transport costs; new information and communications technologies; international migration; and fluid investment flows create new business prospects and bring skilled players into new markets.
At the same time, products and services - and demand for them - are changing rapidly.
New opportunities are matched by new challenges: keeping up with snappy innovation in products and services; intense price wars that squeeze out production inefficiencies and transform supplier relations; soaring quality requirements that weed out those unable to meet them; and new competition on the domestic front, with more imports and locally-based multinationals.
With fiercer competition, the winners are those with the sharpest competitive edge. What sets them apart?
In ITC's view, being competitive hinges on "supply capacity" - producing competitive goods and services, and having the ability to export them. Building supply capacity doesn't happen by itself: it requires a complete shift, away from export promotion, where the focus is on getting visibility for existing exports in foreign markets. Countries need to move to export development and look at competitiveness from a "border-in", rather than the traditional "border-out", perspective. They must help their firms develop the capacity to innovate, ensure supply to new markets, develop relations with new business partners and anticipate new opportunities.
This complements classic approaches to raising competitiveness, relying on macroeconomics ("depreciate the exchange rate"); microeconomics ("cut red tape"); comparative advantage (exports based on natural resources, labour costs and available capital); or market access, particularly for the agricultural products that many developing countries supply.
Businesses need help to process more market information than before; to grasp quickly areas with potential, such as South-South trade or services; to sharpen their use of technology; and to match new environmental, and other, standards. They also need modern legal and financial systems, business-friendly regulations and open trade regimes, which help draw business and investment partners. …