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2002

Executive Forum on National Export Strategies

Mana ging Co mpetitive Ad vanta ge: The Values of National Strateg y


CREATING VALUE: FROM COMPARATIVE TO COMPETITIVE
ADVANTAGE
Competitiveness Strategy in Developing Countries
Contributed by: Mr Ganeshan Wignaraja, Managing Economist,
Maxwell Stamp PLC
1. Introduction
Developing countries today face a new manufacturing context. Progressive and irreversible
globalization driven by falling trade barriers, increasing technological progress, declining
transport and communications costs and highly mobile multinational corporations has
revolutionary implications for industrial development. Globalization offers developing countries
the prospect of faster industrial growth and greater economic prosperity than ever before
through unparalleled access to new markets, new technologies, new skills and new capital.
Yet available evidence suggests that developing countries have witnessed a mixed industrial
response to globalization over the last two decades. The developing world is increasingly
polarized into those that have succeeded in becoming industrially competitive in an open,
international economy and those have not done so to date. The prospect of industrial
marginalization is a persistent worry in policy circles in the developing world. There is an
urgent need for change in government and private sector attitudes and strategies. Change is
no longer an option but a survival algorithm.
Concerns about the process of industrial restructuring in an integrated global economy have
sparked widespread interest in the concept of competitiveness as applied to national
economies and firms within them. There is a growing literature on competitiveness in
economics and business studies but there is little agreement on what it means, what affects it
and the role of public policies. The notion of competitiveness is likely to be shrouded in
academic controversy for the foreseeable future. At the same time, it is being applied in
different forms to examine the behaviour of countries and enterprises and to guide policymaking in developed and developing countries. Whilst the output of these exercises is of
variable quality, a carefully defined concept of competitiveness remains useful for analyzing
comparative performance and formulating policies for industrialization in the developing world.
Against this background, this note briefly deals with the following issues:
(a)
(b)
(c)
(d)

Mentions different approaches to competitiveness;


Outlines the core elements of a good practice competitiveness strategy;
Looks at some issues pertaining to the management of competitiveness strategy;
Charts out cross-country competitiveness performance in the developing world using the
newly developed manufacturing export competitiveness index (MECI). The MECI is
presented in Annex 3.

These issues and the MECI are covered in more detail in Ganeshan Wignaraja (edited),
Competitiveness Strategy in Developing Countries, London: Routledge, forthcoming
December 2002. (ISBN: 0-415-22836-0). This volume seeks to generalise the lessons across
developing country and enterprise cases, and sheds light on which trade and industrial
strategies work best, and which do not work in relation to industrial competitiveness.

2. Different Approaches to Competitiveness


Three distinct views on competitiveness can be conveniently distinguished in the economics
and business strategy literature as follows:
(a) A macroeconomic perspective, which is firmly rooted in standard macroeconomic theory
and policy. It deals with internal and external balance at country-level and focuses on real
exchange rate management as the principal tool for enhancing competitiveness
particularly in the short run. This perspective highlights the links between changes in the
balance of payments, movements in the real exchange rate, shifts in resource allocation
between economic activities and changes in competitiveness. In a nutshell, it associates
an appreciating real exchange rate with a loss of competitiveness and a depreciating real
exchange rate with a gain in competitiveness. The macroeconomic perspective -- with its
heavy reliance on a single instrument (the real exchange rate) -- has been extensively
used to examine competitiveness issues in both developed and developing countries.
(b) A business strategy perspective that comes from the literature on business studies and is
concerned with issues of business strategy and the approaches that enterprises employ
in competing with each other (notably cost leadership, differentiation and focus. Most of
this literature is concerned with manipulating the nuts and bolts of business activity (e.g.
marketing, human resources, finance, organization and technology) to handle inter-firm
competition in industries and has not moved beyond these issues. However, a few
business strategists (notably, Michael Porter) have applied micro-level business strategy
concepts to studying the international economic relations of nations. According to Porter,
inter-country differences in competitiveness can be attributed to four elements of his
diamond framework: factor conditions; demand conditions; related and supporting
industries; and firm strategy & rivalry. Among other insights, the business strategy
literature typically suggests that public policies have a rather limited and indirect role in
influencing competitiveness at the national level. This work has been widely applied by
management consultants to the analysis of competitiveness issues facing industries as
well as nations. While the bulk of the analysis has focussed on developed countries, there
are a growing number of studies on developing countries.
(c) A technology and innovation perspective that is based on the recent developments in the
microeconomics of technical change. Technology has long been regarded as an
important determinant of competitive advantage in world markets. This is the main driver
of competitive advantage in the Schumpeterian approach as well as the so-called
neotechnology theories of comparative advantage. Influenced by this tradition, the
technology and innovation perspective stems from recent literature on technological
capabilities (TCs) in developing countries and a related literature on national innovation
systems (NIS). This perspective emphasizes innovation and learning at the enterprise
and national-levels and active public policies for creating competitiveness. This
perspective emphasizes that enterprises in developing countries have access to a global
pool of technologies and are typically users of imported technology rather than producers.
The distinctive feature of this perspective is its focus on manufacturing enterprises as the
main actors in the process of innovation and learning. Annex 1 contains evidence from
the Mauritius garment industry on patterns of firm-level learning. Success in innovation
and learning translates into shifts in competitive advantage and supportive institutions and
active public policies assist this process. The technology and innovation approach thus
offers a more holistic strategy to competitiveness in the developing world than previous
perspectives.
While the macroeconomic and business strategy perspectives offer some insights into
competitiveness issues in the developing world, detailed examination suggest that they
provide an incomplete framework for designing appropriate public policies. For instance,
empirical evidence suggests that real exchange rates alone are not a panacea for industrial
competitiveness and micro-level factors such as technological capabilities and the ability to
compete on delivery may be more important. Furthermore, the limited and indirect role for
public policies in promoting competitiveness suggested by many business strategists seems
to lack economic rationale.

By comparison, the technology and innovation perspective seems to provide the optimal
framework for evaluating competitiveness performance and designing policy remedies. The
technology and innovation perspective emphasizes that enterprises have to undertake
conscious investments to convert imported technologies into productive use and they interact
with different kinds of institutions within a national innovation system (NIS). In turn, sustained
collective learning is associated with enhanced industrial competitiveness in existing
industries and the creation of new competitive advantages. The process of collective learning
is itself affected by systemic weaknesses in NIS (e.g. market imperfections, systems failures
and poor incentive and regulatory policies) and leads to inter-country differences in collective
learning and competitiveness records. Remedying systemic weaknesses is the principal aim
of an industrial competitiveness strategy.
3. Core Elements of Competitiveness Strategy
The core elements of an industrial competitiveness strategy suggested by the technology and
innovation perspective are as follows:
(a) a national partnership involving complementary actions by the government and the
private sector;
(b) a liberalisation plus approach involving a mix of incentive and supply-side policy
measures; and
(c) where appropriate on economic grounds, policies to promote the competitiveness of
particular industrial clusters.
An important qualification needs to be made, however, about the application of these
elements to economic policy in developing countries. Developing countries differ in their size,
geographical location, history and initial economic and political conditions. The design of a
competitiveness strategy must reflect this diversity and be tailored to the unique historical,
geographical, economic and political circumstances of particular developing countries.
Experience suggests that A one size fits all competitiveness strategy has less chance of
success than a tailor-made approach.
Incentive and Supply-Side Policies
Bearing in mind the need to tailor a strategy to country circumstances, the experience of
successful developing countries suggests that the following incentive and supply-side
measures are pertinent to a liberalization plus approach:

a stable, predictable macroeconomic environment characterized by low budget deficits,


tight inflation control and competitive real exchange rates;
an outward-oriented, market-friendly trade regime emphasizing the dismantling of import
controls and tariffs to send signals to industry to restructure, a strong export push (dutyfree access to raw materials and export marketing support) and good international
negotiations capabilities to gain market access;
an effective domestic competition regime with free entry and exit at industry-level, a
carefully managed programme of privatizing state-owned enterprises and a strong
regulatory authority to deal with anti-competitive practices.
a pro-active foreign investment strategy which emphasizes the targeting of a few realistic
sectors and host countries, overseas promotion offices as public-private partnerships,
competitive investment incentives and radically streaming investment approval
processes;
sustained investments in human capital at all levels (particularly tertiary-level scientific,
information technology and engineering education) and increased enterprise training
including (assistance for industry associations to launch training schemes, an information
campaign to educate firms about the benefits of training and tax breaks for training);
comprehensive technology support for quality management, productivity improvement,
metrology and technical services for small and medium enterprises (including grants for
SMEs to obtain ISO9000 certification, creating productivity centres and commercialization
of public technology institutions);

access to ample industrial finance at competitive interest rates through prudent monetary
policy management, competition in the banking sector, training for bank staff in assessing
SME lending risks and specialist soft loans for SMEs;
an efficient and cost-competitive infrastructure with respect to air and sea cargo,
telecommunications, Internet access and electricity.
an apex public-private sector body to formulate competitiveness strategy and monitor its
implementation.

Some of these measures such as macroeconomic management, outward-orientation and


privatization are a part of standard structural adjustment programmes (SAPs). Others -- such
as human development, technology support, targeted foreign investment promotion and
comprehensive SME policies -- go beyond SAPs but are still consistent with a market-friendly
approach to industrial competitiveness. Annex 2 extends this discussion by illustrating the
typical constraints faced by developing countries to improving their competitiveness and some
policy suggestions.
Cluster Policies
Cluster policies emphasize detailed actions to improve the competitiveness of specific
industrial clusters within a market-oriented development strategy. These policies aim to
stimulate the emergence of production networks among firms and increase value added in
particular industrial sectors and geographical locations within countries. As a result, cluster
policy is sometimes equated with an old style industrial policy of providing subsidies to
inefficient industries in a protected domestic market. However, this is rarely the case in
practice at least in developed countries. Most cluster policies are implemented in a more
market-oriented policy framework characterized by a liberal trade regime and few barriers to
entry and exit. Thus, competitive pressures typically form the backdrop for the operation of
cluster policy.
Interventions at the micro-level are often directed towards acquiring technological capabilities,
promoting upgrading and improving links between different parts of the cluster. Public policies
might range from industry-specific tax measures to the provision of specialized institutional
support facilities for a particular cluster. Joint actions (e.g. setting up a specialized training
school) between a business association in the cluster and an aid donor or a government
agency are also commonplace.
Whilst cluster policies offer a means to enhance the competitiveness of particular industrial
sectors and geographical locations, they should not be applied in an ad hoc manner in
developing countries, as there is high risk of government failure. Experience suggests that
several good practice principles might be guide cluster policy in developing countries. The
use of cluster policies should be guided by near future comparative advantage, be at a broad
industry-level, be strictly time-bound and be measured by clearly defined performance criteria.
Equally important is that cluster policy should take place in a market-oriented regime so that
competitive pressures influence resource allocation and economy activity.
Role of the Private Sector
In a market economy, the main role for the private sector is to become productive and
generate national wealth. Business associations assist industry by advocating the case for
business and deregulation. With a rising share of private sector activity in GDP and a
declining state share, however, the private sector needs to move beyond its traditional
function of wealth creation and advocating the case for business. The private sector itself
(particularly business associations) can make an important contribution to designing and
implementing national competitiveness strategies in developing countries. This pro-active role
can include:
helping government to plug information gaps through active private sector participation in
national policy making bodies (e.g. pre-budgetary consultations, economic advisory
councils to the head of state and competitiveness councils) and international trade
negotiations (bilateral, regional and multilateral negotiations);

augmenting government capabilities via short-term secondment programmes of private


sector managers to key government departments such as ministries of finance as well as
trade and industry;
participating
in
large
and
complex
infrastructure
projects
(particularly,
telecommunications, roads and seaport development) through joint finance and
management skills;
helping weaker firms to help themselves via creating industry-specific training centres,
carrying out productivity benchmarking exercises and facilitating marketing linkages
between local suppliers and foreign buyers.

4. Management of Competitiveness Strategy


The effective management of an industrial competitiveness strategy is itself quite a
demanding exercise but this aspect is often neglected in developing countries. The requisite
management needs can be broken into three inter-related phases:

assessing competitiveness performance and the policy framework;


designing a new set of policies; and
implementing the new policies.

Each of these headings involves a variety sub-tasks --such as diagnostic studies, regular
consultation with key stakeholders, developing a common vision and strategy, co-ordination
of different parts and continuous monitoring -- which have to be undertaken to ensure sound
management of the strategy.
A well-designed and managed competitiveness strategy is necessary but not sufficient for
industrial success in developing countries. Even the best managed competitiveness
strategies can fail due to a variety of factors and the developing world contains examples of
success as well as failures.
The following factors might increase the likelihood of industrial success in the wake of a wellmanaged and coherent industrial competitiveness strategies:

political stability;
sound macroeconomic management and a stable, transparent macroeconomic
environment;
strong government capabilities to manage strategy;
sustained government commitment to strategy implementation;
good private sector capabilities and relations with government;
Limited exposure to external shocks (e.g. sudden fluctuations in world demand, world
interest rates and oil prices).

Annex 1: Learning in the Mauritius Garment Industry


Measuring Capabilities in Manufacturing Enterprises
Comparisons of the capabilities of enterprises relative to best practice levels are useful to
indicate critical gaps in manufacturing capabilities in developing countries. For instance, a
comparison of local enterprises with multinational affiliates in the Thai automobile
components industry could reveal weaknesses in the ability to design new products and
manage process quality in the former. Similarly, an evaluation of large and small local firms in
the food processing industry in Nigeria might show up differences in capabilities to maintain
production equipment and test raw materials. More important, such assessments can also
show how firms compare with international best practice, a critical element in developing
competitive capabilities.
It is not easy to benchmark enterprise capabilities a proper evaluation can be extremely
intensive in information and skills. However, it is possible to devise shortcuts that yield useful
results. One is to define the essential technical functions performed by enterprises and give
each a subjective ranking indicating levels of competence. The basic assumption is that firms
that perform these essential functions well also perform well on the larger spectrum of
technological activity. It allows for a quick and cheap method of benchmarking that gives
plausible rankings. The average capability score can be aggregated in various ways, for
instance by ownership groups (local and foreign firms), size (SMEs and large firms) or
market-orientation (domestic market and export market) within an industry. The scores can
also be related to performance in terms of growth, profitability or exports. The results are of
obvious interest to technology development and policy.
A recent study uses this approach to assess the capabilities of Mauritian garment enterprises
( see Wignaraja, 2002). It calculates a technology index (TI) for each firm based on two
categories of technical functions: production and linkages with other firms. The larger
category, production, is captured by ten technical functions, ranging from process engineering
tasks like quality management (measured by internal reject rates and ISO 9000 accreditation)
to product engineering (like copying existing products, improving existing products and
introducing new products). Linkages are captured by technology transfers through two types
of intra-firm relationships sub-contracting and marketing relationships with overseas buyers
of output. Each of the twelve technical activities is graded at different levels (0, 1 and 2) to
represent different levels of competence within that function. Thus, a firm is ranked out of a
total capability score of 24 and the result is normalised to give a value between 0 and 1. The
table shows the average TI scores (overall capabilities and separately, for process, product
and linkages capabilities) by firm size in the Mauritian sample. It shows that average
capabilities in large firms are significantly higher than in SMEs.

Size
(a)

Average TI Scores for Large Firms and SMEs in Mauritius


category TI score
Process
Product
Linkages score
engineering
engineering
score
score

21 Large Firms
19 SMEs

0.51
0.17

0.53
0.20

0.37
0.23

0.40
0.04

(a) SMEs have <100 employees, large firms have >100 employees.
Source: Wignaraja (2002).
Regression analysis confirms the validity and usefulness of the TI measure. For instance, in
the Mauritius sample, firm size, the share of engineering and technical manpower in
employment, training expenditures as a percentage of sales and the number of times a firm
used external technical assistance (foreign consultant or technology institution) have positive
and significant relations with TI (Wignaraja, 2002). This confirms that investments in human

capital and seeking information, both facilitated by size, improve technical performance. This
is strengthened by the finding that TI and foreign ownership (the share of foreign equity) have
positive and statistically significant effects on export performance by each firm. Simple as this
method is, it has great promise as a practical and efficient tool for preliminary benchmarking.
Source: Ganeshan Wignaraja (2002), Firm Size, Technological Capabilities and MarketOriented Policies in Mauritius, Oxford Development Studies, Vol. 30, No. 1, pp. 87-104.

Annex 2: Government Policies for Competitiveness in Developing Countries


Table 1: Government Actions for Competitiveness in a Developing Economy
Policy Area
Constraint
Suggestion
Policy
Lack of a co-ordinating vision Establish a national competitiveness
Management
and mechanism
council to formulate strategy and monitor
implementation
INCENTIVE POLICIES
Macroeconomic High inflation & large fiscal Develop a plan to reduce fiscal deficit
policy
deficit
within a specified time period
Appreciating real exchange Adopt a more aggressive approach to
rate
exchange rate management
Lack of policy credibility
Implement reforms and involve private
sector in pre-budget consultations
Trade policy
High and variable effective Persist with import liberalisation to achieve
protection
low, uniform effective protection
Weak export drive
Revamp trade promotion organisation to
become more pro-active and allocate more
funds for overseas marketing
Long delays in refunds on Streamline bureaucratic procedures and
imported inputs
introduce computerisation at customs
Ad hoc participation in the Develop trade negotiations capabilities
WTO and passive role in within government, co-opt leading trade
international
trade lawyers into trade delegations and set up
negotiations
an embassy at the WTO
Competition
Domination of key industries Conduct a study of SOEs and implement a
policy
and by inefficient state-owned privatisation programme
privatisation
enterprises
No framework for regulating Pass a competition law and set up an
anti-competitive practices
enforcement agency (e.g. a monopolies
and mergers commission)
SUPPLY-SIDE POLICIES
Human
Skill gaps in potential areas Conduct a survey of future skill needs
Resources
of comparative advantage
benchmarked against competitors and
prioritise future skill needs
Inefficient
public
sector Introduce partial cost recovery of services
training institutions
for public institutions and assist industry
associations to launch training centres
Limited enterprise training
Introduce an information campaign to
educate enterprises about skill gaps and a
tax deduction for training investments
Technology
Weak quality standards in Provide part -grants for SMEs to obtain
Support
industry
ISO9000 certification
Low industrial productivity
Establish a productivity centre to improve
industrial productivity to world standards
Inadequate linkages between Introduce partial cost recovery of service
technology institutions and for public institutions and an aggressive
industry
marketing campaign
Foreign
Unfocussed
foreign Develop a pro-active foreign investment
Investment
investment
promotion promotion strategy which targets a few
Policy
strategy
realistic sectors and host countries
Poor international image/lack Establish overseas investment promotion
of contact with potential offices as a joint venture with the private
investors
sector

Uncompetitive EPZ package

Evaluate
EPZ
incentives
against
competitors and change offer to attract
flagship multinationals
Industrial
High interest rates and an Manage prudent monetary policies and
Finance
oligopolistic banking system
introduce competition into the banking
sector
Anti-SME bias in credit Promote training for bank staff on
allocation by banks
assessing SME credit, specialist SME
funding
windows
and
micro -finance
schemes
Infrastructure
High costs of sea and air Liberalise air and sea cargo entry to foreign
freight
operators
Long delays in accessing Consider commercialisation/privatisation of
utilities connections
infrastructure parastatals with an effective
regulatory framework
Source: Ganeshan Wignaraja (forthcoming 2002), Competitiveness Analysis and Strategy in
Ganeshan Wignaraja (edited), Competitiveness Strategy in Developing Countries, London:
Routledge

Annex 3: The Manufacturing Export Competitiveness Index (MECI)


There is growing interest in policy circles in the developing world in comparing competitive performance
across countries and obtaining guidelines for strategy. Policy makers are typically concerned with how
their economy has been performing in relation to: (a) countries at a similar level of economic
development (or within the region) which they would like to outperform; and (b) countries at a higher
level of economic development (for example, Newly Industrializing Economies (NIEs) in East Asia)
whose strategies they would like to emulate. Similarly, multinational companies constantly research the
costs and benefits of production locations on a world-wide basis. This interest has fuelled several
attempts to devise a competitiveness indicator at the national level, a composite measure ranking
countries according to particular criteria. The number of rankings (published and unpublished) of
national competitiveness prepared by governments, consultants, and research organisations is growing
and becoming increasingly influential in policy formulation.
In this vein, the newly developed Manufactured Export Competitiveness Index (MECI) focuses on the
ability of countries to produce manufactures according to world market standards. It is obviously very
difficult to identify a suitable proxy to capture this concept yet manufactured exports seems to offer a
convenient yardstick. The MECI was constructed from three measures of manufactured export
performance:
(a) Manufactured export value per capita in 1999 (US$);
(b) Average manufactured export growth per annum 1990-1999;
(c) Technology-intensive manufactures exports as a % of total merchandise exports in 1998.
Thus the MECI incorporates the current position of a developing country in export markets (scaled by
population), the long -term export growth that led to this position and the extent to which the developing
countrys exports are technology-intensive. A more competitive developing country is characterized by
rapid manufactured export growth combined with sustained technological upgrading and diversification
from a reasonable export base. The MECI takes values of between 0 and 1 with higher values indicating
greater levels of competitiveness at macro level. For instance, Korea with an MECI of 0.76, is perceived
to be more competitive than Nigeria (0.13) in Table 2.
Using the simple approach illustrated above the MECI was calculated for a sample of 80 countries. The
sample is dominated by developing countries and transition economies of Eastern Europe. A novel
feature is the inclusion of poor countries (particular in Sub-Saharan Africa) not normally covered by
other competitiveness indicies. Some countries usually classified as high-income have been included in
the sample for further interest, for example Cyprus, Greece, Hong Kong, Israel, Korea, Kuwait, Portugal
and Singapore.
Table 2 provides the MECI ranks of the sample countries, the component indices and underlying data.
Table 2: MECI ranking by country

Country

MECI
Index

1
2
3
4
5
6
7

0.93
0.82
0.79
0.78
0.76
0.74
0.73

Singapore
Malaysia
Taiwan
Philippines
Korea, Rep.
Mexico
Israel

TechnologyManufactures
Manufactured
intensive exports (%
exports per capitaexport
growth,of total merchandise
(US$), 1999 (a) (c)
1980-1999, % (c) exports), 1998 (b)
Value
Rank
Value
Rank Value
Rank
25039
1
13.4
13
70
1
2988
5
19.2
3
55
4
5477
3
9.4
31
58
3
204
31
14.2
11
67
2
2825
6
11.9
17
54
5
1206
11
23.4
1
40
9
3936
4
9.2
33
49
6

8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54

Thailand
0.71
Hong
Kong,
China
0.70
Hungary
0.67
Costa Rica
0.60
China
0.55
Portugal
0.54
Tunisia
0.53
Trinidad
and
Tobago
0.52
Indonesia
0.51
Turkey
0.50
Morocco
0.47
Chile
0.47
Poland
0.47
Bolivia
0.46
South Africa
0.46
Brazil
0.45
Mauritius
0.45
Oman
0.45
Cyprus
0.45
Saudi Arabia
0.44
Sri Lanka
0.44
Greece
0.43
Bahrain
0.42
Argentina
0.41
Bulgaria
0.40
Venezuela, RB
0.39
Romania
0.39
Zimbabwe
0.39
Colombia
0.39
India
0.38
Dominica
0.38
Kuwait
0.38
Uruguay
0.37
Jordan
0.37
Nepal
0.36
El Salvador
0.36
Bangladesh
0.35
Jamaica
0.35
Guatemala
0.35
Senegal
0.35
Ghana
0.34
Pakistan
0.34
St.
Kitts
and
0.33
Nevis
Panama
0.33
Honduras
0.33
Egypt, Arab Rep. 0.33
Ecuador
0.32

719

14

18.8

42

24651
2121
1246
137
2071
498

2
7
10
36
8
20

11.9
7.3
15.6
15.1
10.2
9.9

16
41
8
10
26
27

32
45
24
27
19
24

10
7
12
11
19
12

645
128
317
127
173
545
52
349
155
984
520
684
262
183
525
953
202
363
98
297
48
85
26
393
1289
258
217
19
95
37
377
74
62
20
55

16
37
25
38
34
17
48
24
35
12
19
15
28
33
18
13
32
23
39
27
51
42
56
21
9
29
30
61
40
54
22
43
45
59
47

7.7
23.2
18.7
11.0
10.5
3.8
15.5
6.2
6.8
12.8
13.6
3.1
11.7
16.3
4.4
11.6
7.5
-4.2
10.8
-0.1
0.6
8.3
9.4
9.2
1.0
4.1
9.5
17.2
2.8
13.1
2.8
4.3
11.5
6.0
9.8

37
2
5
22
25
56
9
47
45
15
12
62
18
7
53
19
38
77
23
70
68
35
30
34
66
55
29
6
63
14
64
54
20
49
28

23
10
10
19
18
20
16
18
20
3
5
17
10
05
13
0
10
20
7
15
23
10
13
0
4
7
0
1
11
2
3
9
0
12
2

14
30
30
19
21
16
24
21
16
43
40
23
30
40
26
65
30
16
37
25
14
30
26
65
42
37
65
58
29
49
43
35
65
28
49

300
48
63
21
32

26
50
44
57
55

3.8
7.9
7.3
7.5
9.2

57
36
40
39
32

0
3
2
7
2

65
43
49
37
49

55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80

Grenada
0.31
Algeria
0.30
Peru
0.30
Belize
0.29
Paraguay
0.28
Kenya
0.28
Guyana
0.27
Central
African
Republic
0.26
Syrian
Arab
Republic
0.26
Cameroon
0.26
Cote d'Ivoire
0.25
Madagascar
0.25
Tonga
0.24
Gabon
0.24
Uganda
0.23
Nicaragua
0.21
Haiti
0.21
Malawi
0.21
Mozambique
0.20
Tanzania
0.19
Congo, Rep.
0.19
Sudan
0.18
Zambia
0.17
Congo,
Dem.
0.15
Rep.
Nigeria
0.13
Yemen, Rep.
0.00

45
11
51
86
21
14
37

52
67
49
41
58
64
53

7.2
11.2
3.6
0.4
6.1
5.5
0.9

42
21
59
69
48
51
67

0
1
3
2
1
3
3

65
58
43
49
58
43
43

19

60

4.6

52

65

16
10
18
6
6
57
1
9
13
3
2
3
12
1
8

63
68
62
71
72
46
77
69
65
73
75
74
66
79
70

3.3
6.5
3.6
7.2
5.9
-3.2
10.6
-1.5
-2.0
3.7
-2.9
1.1
-4.2
7.1
-6.7

61
46
60
43
50
76
24
72
73
58
75
65
78
44
79

2
0
0
0
0
0
2
2
1
0
9
1
0
0
2

49
65
65
65
65
65
49
49
58
65
35
58
65
65
49

1
1
1

76
80
78

-2.1
-1.2
-18.0

74
71
80

1
1
0

58
58
65

Notes:
(a) Manufactured exports defined by World Bank World Development Indicators as SITC 5 (chemicals),
6 (basic manufactured) , 7 (machinery and transport), 8 (miscellaneous manufactured goods) minus 68
(nonferrous metals).
(b) Technology -intensive manufactured exports (as a % of total merchandise exports for 1998) are
defined by UNCTAD/WTO International Trade Centre following UNCTADs SITC 3 digit classification by
factor intensity.
(c) Data on manufactured exports per capita are for 1999 while manufactured exports growth in current
US$ are for 1990-1999
Data Sources: Data on manufactured exports and population are from World Bank, World Development
Indicators, various, Asian Development Bank, Key Indicators of Developing Asian and Pacific Countries,
various and Wignaraja (1999) while data on technology -intensive exports as percentage of total
merchandise exports are from the ITC web site (www.itc.org) and Wignaraja (1999). Data for Taiwan
and 1980 data for China are from ADB Key Indicators of Developing Asian and Pacific Countries,
various.
Source: Ganeshan Wignaraja and Ashley Taylor (forthcoming 2002), Benchmarking Competitiveness:
A First Look at the MECI in Ganeshan Wignaraja (edited), Competitiveness Strategy in Developing
Countries, London: Routledge.
The country-level results reveal an interesting picture of competitiveness performance in the developing
world over the last two decades.
Countries in the East Asia and Pacific region accounts for seven out of the top ten countries and have
particularly strong performance on the technology-intensive exports sub-index. Singapore has the

highest MECI level, reflecting the fact that it has the highest proportion of technology -intensive exports
and the highest manufactured exports per capita in the whole sample. Malaysia, Taiwan, Philippines
and Korea (with significant shares of high technology exports and good export growth rates) closely
follow Singapore.
Interestingly, the East Asian economies performed better than European and Central Asian economies
owing to their better high technology shares of exports and, possibly, somewhat higher export growth.
th
th
Hungary is just in the top 10 performers and along with Portugal and Turkey (ranked 13 and 17 ) leads
the European and Central Asian grouping.
Mexico is the highest performer from the Americas, ranked six, and had the samples highest
manufactured export growth rate over the period. Costa Rica, Trinidad and Tobago and Chile come next
in this region whose members are largely concentrated in the top half of the sample of 80 countries. At
th
st
the tail end of the American region come Nicaragua and Haiti (ranking 70 and 71 , respectively).
Strong performance in different sub-factors can offset poor performance in others, for example Chinas
strong export growth and relatively high proportion of technology -intensive exports more than outweighs
th
its relatively low manufactured exports per capita. Thus, China ranks 12 in the overall list. On the other
hand, Kuwait, for example, although having the ninth highest manufactured exports per capita performs
poorly on export growth and technology-intensive exports and so has an overall ranking of 39.
South Asian economies are mainly in the middle of the rankings. Typically, these economies are
characterised by reasonable manufactured export growth rates but with relatively small shares of high
technology exports and low per capita manufactured export values. Sri Lanka, at 28th in the overall list,
is the leading South Asian economy owing to its manufactured export growth rate and value of per
capita manufactured exports. India (37th) comes next and has the highest share of high technology
exports in the South Asian region.
Greater variation is found in the case of Sub-Saharan African economies. South Africa (ranking 22nd)
th
and Mauritius (ranking 24 ) are the best performers in this region. By regional standards, South Africa
has the largest export base and a reasonable share of high technology exports while Mauritius has
strong manufactured export growth rates with a limited high technology content of exports.
Notwithstanding these exceptions, Sub-Saharan African countries dominate the lower rankings, for
example, occupying 8 of the bottom 10 positions.
While Mauritius and Trinidad and Tobago are among the top 25 performers, small developing
economies (largely in the Caribbean and the Pacific) such as Jamaica, St. Kitts and Nevis, Grenada,
Belize and Tonga are typically scattered throughout the bottom half of the whole sample. This indicates
that small states seem to have done less well on MECI performance than larger economies.
The preliminary results from the exercise seem to broadly accord with intuitive perceptions of crosscountry industrial competitiveness performance in the developing world. Further work is being done to
refine the method used, incorporate new data sources and to update the MECI.