Can knowledge be the next comparative advantage …...Internet Users/1000 h Computers/1000 h Phone...
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Can knowledge be the next comparative advantage of transition economies? UNECE COMMITTEE FOR TRADE, INDUSTRY AND ENTERPRISE DEVELOPMENT Annual Forum, 24-25 May 2005, Geneva Bruno LANVIN Senior Advisor E-Strategies The World Bank The role of ICTs in industrial restructuring, and the next wave of outsourcing
Transcript of Can knowledge be the next comparative advantage …...Internet Users/1000 h Computers/1000 h Phone...
Can knowledge be the next comparative advantage of
transition economies?
UNECE COMMITTEE FOR TRADE, INDUSTRY AND ENTERPRISE DEVELOPMENTAnnual Forum, 24-25 May 2005, Geneva
Bruno LANVINSenior AdvisorE-Strategies
The World Bank
The role of ICTs in industrial restructuring, and the next wave of outsourcing
Source: Foreign Policy and A.T. Kearney(data for year 2003)
The four wheels of globalization
PoliticalTechnologicalPersonalEconomic
Globalization advanced briskly until 1997, when the financial crises that hit various developing regions weakened trade flows and undercut gains in global integration. So why did overall integration still increase during this period? Simple: Technology has become the engine of globalization.
Technology factors: Percentageof population online, number of internet hosts per capita, and number of secure servers per capitaNon-technology factors: Tradein goods and services, capital flows, and personal contact.
Source: Foreign Policy and A.T. Kearney
Is Globalization Slowing Down ?
Source: Foreign Policy and A.T. Kearney(data for year 2003)
The four wheels of globalization : 2003
PoliticalTechnologicalPersonalEconomic
Slovenia
Czech Republic
Singapore
IrelandSwitzerland
United States
Netherlands
CanadaDenmark
SwedenAustria
FinlandNew Zealand
United Kingdom
Australia
Norway
Czech Republic
CroatiaIsrael
FranceMalaysia
Slovenia
CZE CRO SLO
Source: Foreign Policy and A.T. Kearney(data for year 2004)
The four wheels of globalization : 2004
Socio-economic Performance
Incentives andInstitutions
Innovation
Information Infrastructure
Education andHuman Resources
Source : Knowledge Assessment Methodology(World Bank) - 2005
Knowledge and competitiveness
GDP Growth (%/year)
Human Development Index (UNDP)
Trade Barriers (T and NT)
Regulatory Framework
Rule of Law
R&D Researchers (/mn h)
Scientific and Technical articles (/mn h)
Patents granted by USPTO (/mn h)
Internet Users/1000 h
Computers/1000 h
Phone lines/1000 h (fix and mobile)
Secondary enrolment (% rag)
Literacy Rate (% of pop over 15)
Tertiary enrolment (% rag)
Source : Knowledge Assessment Methodology(World Bank) - 2005
Knowledge and competitiveness
O < KEI <= 2
2 < KEI <= 4
4 < KEI <= 6
6 < KEI <= 8
8 < KEI <= 10
No data
Knowledge Economy Index in the World (2004)
Knowledge Economy Index in Europe (2004)O < KEI <= 2
2 < KEI <= 4
4 < KEI <= 6
6 < KEI <= 8
8 < KEI <= 10
No data
GDP Growth (%/year)
Human Development Index (UNDP)
Trade Barriers (T and NT)
Regulatory Framework
Rule of Law
R&D Researchers (/mn h)
Scientific and Technical articles (/mn h)
Patents granted by USPTO (/mn h)
Internet Users/1000 h
Computers/1000 h
Phone lines/1000 h (fix and mobile)
Secondary enrolment (% rag)
Literacy Rate (% of pop over 15)
Tertiary enrolment (% rag)
TunisiaChinaFinland
Source : Knowledge Assessment Methodology(World Bank) - 2005
Knowledge and competitiveness
GDP Growth (%/year)
Human Development Index (UNDP)
Trade Barriers (T and NT)
Regulatory Framework
Rule of Law
R&D Researchers (/mn h)
Scientific and Technical articles (/mn h)
Patents granted by USPTO (/mn h)
Internet Users/1000 h
Computers/1000 h
Phone lines/1000 h (fix and mobile)
Secondary enrolment (% rag)
Literacy Rate (% of pop over 15)
Tertiary enrolment (% rag)
Source : Knowledge Assessment Methodology(World Bank) - 2005
Knowledge and competitiveness
ChinaSlovakia
Hungary
GDP Growth (%/year)
Human Development Index (UNDP)
Trade Barriers (T and NT)
Regulatory Framework
Rule of Law
R&D Researchers (/mn h)
Scientific and Technical articles (/mn h)
Patents granted by USPTO (/mn h)
Internet Users/1000 h
Computers/1000 h
Phone lines/1000 h (fix and mobile)
Secondary enrolment (% rag)
Literacy Rate (% of pop over 15)
Tertiary enrolment (% rag)
MoldovaBulgariaFinland
Source : Knowledge Assessment Methodology(World Bank) - 2005
Knowledge and competitiveness
GDP Growth (%/year)
Human Development Index (UNDP)
Trade Barriers (T and NT)
Regulatory Framework
Rule of Law
R&D Researchers (/mn h)
Scientific and Technical articles (/mn h)
Patents granted by USPTO (/mn h)
Internet Users/1000 h
Computers/1000 h
Phone lines/1000 h (fix and mobile)
Secondary enrolment (% rag)
Literacy Rate (% of pop over 15)
Tertiary enrolment (% rag)
MexicoKazakhstanGermany
Source : Knowledge Assessment Methodology(World Bank) - 2005
Knowledge and competitiveness
GITR 04-05
Network Readiness Index• 6 in top 52• 9 in bottom 52
Availability of scientists and engineers
• 12 in top 52 (SLK #11)• 5 in bottom 52
Technological sophistication• 5 in top 52 (EST 30, CZE, SLK, HUN, SLO)
• 10 in bottom 52
Sophistication of financial markets• 3 in top 52 (EST, HUN, LIT)
• 14 in bottom 52
(17 EiT ranked)
Europe and Central AsiaAlbaniaArmeniaBelarusBosnia and Herzegovina BulgariaCroatia Czech RepublicEstonia GeorgiaHungary Kazakhstan Kyrgyz RepublicLatvia Lithuania MoldovaPoland RomaniaRussiaSerbia and Montenegro SlovakiaSloveniaTajikistanTurkey Ukraine Uzbekistan
Most recent year
Knowledge Economy Index: time variations
Knowledge Economy Index: time variations
1995
Education
Knowledge Economy Index: time variations
1995
Information Infrastructure
KOR
One dimension of e-readiness: Internet Access
60
50
40
30
20
10
0
15 20 25 30 35 40 45 50 55 60 65 70
Internet subscribers per 100 inhabitants
Average cost for 20 hours(day + evening) in $ PPP
FIN
TUR
ICL
DNK
FRAGER
AUTCDN UK
USA
SWECH
NORNL
OECD
IRL
SPA
POR
MEXGRE
POL
LUXBEL
SLK
HUNCZE
The ‘Nordic’ cluster
The ‘mature markets’
cluster
The ‘Emerging Europe’cluster
Source : World Bank, based on OECD data
Internet Costs and Diffusion(OECD – 2002)
OLD (diminishing role)
NEW (increasing role)
Prod
ucer
Faci
litat
orLe
ader
Environment Readiness Usage
Provide and promote vision (KISS)• Address ‘Digital Divides’
• domestically• internationally
• Give signals to markets• ICT as a national priority• large projects or objectives
• Promote and defend national interests in international and global forums
G4
G3Education policy
• curricula/life-long learning• ICT training facilities• Wiring/networking of schools
New roles for governmentsG5
E-government• services on line• procurement• trade facilitation• civil society participation• good governance
G2Provide proper environment• Macro-economic environment• Fiscal policies (cost, innovation,
investment, VC, PPP)• Legal/regulatory environment for
ICT (competition, independent regulator, rule of law)
G1Provide access (univ serv)• Lay out ICT infrastructure• Produce ICT equipment• Finance Public R&D
8.00
Leaders
Faci
litat
ors
y = 0.6839x + 1.93992
R = 0.3991
GUA
ZIM
PAR
BOL
VENARG
HON
ECU
PAN
EGY
ELS
PHI
PER
INO
TUR
ROM
NICBAN
NIA
MAU
UKR
RUS
URU
GRE
BUL
DOM
JOR
SLK
POL
COS
COL
TRI
MEX
SAFSLV
LIT
LAT
VIE
JAM
THA
INI
CHL
ITA
BEL
GER
AUT
NOR
SRICZE
LUXHUN
CHN
IREMLT
PORBRA
NWZ
JAPEST
NETAUL
FRA
SPADEN
KOR
SWIICE
SWEUSA
HKG
UKCAN
ISR
TAI
FIN
SIN
2.00
3.00
4.00
5.00
6.00
7.00
2.00 3.00 4.00 5.00 6.00 7.00Note : the ‘Government’ variable of the GITR index has been used as proxy for Government leadership (x), whereas ‘Competition in telecoms’ has been used as an indicator of the effectiveness of Governments as facilitators (y)
First circle (top performers)
Second circle (the contestants)
Third circle (ready or not)
Competing through better government
Conclusions
•ECE was a major beneficiary of outsourcing (near-shoring as opposed to off-shoring)•Labor cost equalization (especially through UE integration) will diminish attractiveness of ECE as outsourcing territory (Eastward migration in two waves, continental and extra-continental)•High level of education, tradition in high-tech (engineering, technical universities) indicate that knowledge-intensive activities could be resilient source of CA for transition economies
The knowledge economy is an opportunity not to be missed by transition economies, especially those who were the first beneficiaries of the outsourcing wave.
What is missing ?
• Culture of innovation and risk (VC/right to fail)• Rule of law/governance (perceptions vs reality)• More champions (e.g. Estonia in e-government)• New roles for government and private sector• The A,B,C,D,E of e-based competition
Transition economies must take advantage of their strong human capacities (education, knowledge, skills, culture, enterpreneurship) by developing their information infrastructure, their network readiness and the IT-intensity of their economies.
To help achieve those goals, the following areas are top targets for improvements:
The A,B,C,D,E of e-competition
AccessBasic skillsContentDesireExcellence
- Infrastructure, costs,competition/regulation
- Basic education, vocational training, entrepreneurship
- Local value, languages
- Local will to reform, adapt and change
- In-source knowledge,outsource high costs, retain excellence
