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NATIONAL COMPETITIVENESS
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IntroductionThe developing nations are not a much defined by their geographic locations as they are defined by their Gross National Income(GNI). The world bank clarification specifies the annual per capita GNI of such nations to be US$ 11, 905 and less. Affected very much by poor leadership, little innovation and even the actual embrace of such technology, the competitive levels of such nations are very much below par and inconsiderable.To meet the shortfall, such countries with small economies have taken to indulge in industrialization in the new dawn of intense globalization. To this, there are two issues that factor the aggression. On one hand, the global economic integration is connected with adjustment challenges. That arises from a concern of the declining state of the domestic, industrial enterprises. On the other hand, the nations have developed an aurier to reap the benefits of globalization. As that respond to globalization have been created and implemented in developing countries as they seek to compensate for the gap between them with the far developed nations (Farmer 1999, 25).However, the presence of such countries in the international markets is very much subject to their adaptability and industrial structure evolution. Competitiveness is ability to secure international domain just as much as the local market (Krugman 1997, 6). The developing countries always rank; they have been barely able to mount any competition and hence sell less. Moreover, that has kept their GNI at the lows. To note is the significant factor that as an international trade has grown and expanded, the developing nations have experienced foreign direct investment(FDI). As a result, their economic influence has immensely been battered and derailed. Drawn into the explanation for the competitive nature of the nations are some theories and even existing practical situations (Onyemulekwe 2005, 16).This paper examines why factor availability counts less in determination of the level of competitiveness of the developing countries. It also discusses the theories that have been fronted to explain the sluggish pace and level of development in the developing countries. Development is not the conception of the idea, but rather the influence of the wholesome conception of the idea (Haber 2004, 29). Theories that Explain the Competitiveness of the Developing NationsThe basis of derivation of the theories that explain the state of development in the developing nations are built on observable and practical situations. Two thoeries explain and anlyze the development in the developing nations; the modernization theory and the theory of dependency (He 2012, 35).I. ModernizationModernization theory became a symbol and emblem of change (Engerman 2003, 8)Around five decades ago, most of the developing nations grabbed their freedom and with the decolonization process, came the efforts to catch up with the already economically established countries. As they embarked on the varied projects, they developed export industries and stepped production for import substitute products. As the cold war took a toll on the globe, the perception that such industrialization was the key to development also gained root. That was very much a singular conception of the development, but one that saw industrialization grow into the genome that was meant to assist bridge the gap. Development involved matching the standards that had been set by the West and institutions that supported their ideologies. Moreover, the standards came hand in hand with projects that were deemed as modernization. The theory even moved from the realms of its founding to the position of a political tool used to control the cold war (Engerman 2003, 12)Succinctly defined, modernization is the representation of the transition from a more traditional and pre-modern society to a more trendy and ‘modern’ society. It is the transition from agrarian conditions to industrial conditions. Modernization as such defines the capacity of a country to compete in the global stages and the efforts employed by the underdeveloped/developing nations in a bid/attempt to catch up and match with the rest, marked efforts to be modernized (Seran 2007, 15). Origins of the theory are to be attributed to Marquis de Condorcet, a French philosopher. Moreover, the theory was developed under influence that innovations in technology and changes in economic values could inspire cultural and moral values (Aharoni 1997, 25).The theory of modernization has achieved the stature of dominance in the West, especially since the 1950’s as it assumed a central role in the study of social sciences. Humorously, the theory draws existence from sciences of biology that examined the growth and development of different species (Farmer 1999, 24). The metaphor was thus applied in economics, and developing nations equated to the recreation of animal species. In a sense, that was a naturalization of the social factors of life. Development appeared as directional flowing along in a near-perfect stream. However, the actuality of the of the whole issue was a disguised Westernization; the so-labeled naturalism linked to the European and Northern America trajectory (He 2012, 35). The blueprints to achieving the same success were derived from the paths that had been taken by the same nations.To the developing nations, industrialization was figured by marquee infrastructural changes. Also conceived in the process was social re-structuralization that involved abandonment of traditional practices and beliefs (Seran 2007, 29). Political changes to establish bureaucracy and apparatus to assist in managing the decolonized domains were also established.To some nations like India and South Africa, this theory explains their somewhat high competitive ability. In emulating the developed nations, the countries established industrial plants and Agricultural practices that have not only kept them going, but have been of significance to the whole world. Kenya for instance, supplies the world with Agricultural products like flowers, coffee, and tea. In a sense, production is subject to competition (Krugman 1997, 10)The troika strategy, underpinned by the theory projected ideologies that directly informed the choices made by such nations. Some critics and theorists emphasized the political aspects that rode along with the economic advance. They pointed the liberal democracy as modeled from the West.W. W. Rostow outlined the modernization theory in five stages. The stages of the theory were likened to a take-off, with the agrarian societies gathering momentum as they progressed to maturity in which state there was high consumption. Gathering momentum for the flight of modernization requires technological and monetary assistance and even the exposure to the new markets. The processes derive a formula. Angled in this manner, the theory is exposed with numerous insufficiencies as it fails to list the repercussions that could be possibly faced by the developing nations in any case their ambitions fail.In most manners, modernization theory demands the continued growth of the developed nations, first to sustain themselves and also to lend hands to the developing nations.The factor for steadied growth requires that developed nations keep revolutionizing their states of industrialization (Haber 2004, 19). The gap hence either widens or remains the same. Maintaining competitiveness, or achieving such by the developing nations as such become a mountain of a task.In a much as modernization has played significant roles in illuminating the developing nations, it has done little in the regards of making them worthy of any competition. Such could be because the developed nations are very much preoccupied with maintaining a state of being the most competitive. However, the nations have also done little to improve their status since decolonizing themselves five decades ago. II. Dependency Theory.Initialization of the theory paralleled the modernization theory both in time of conception and in ideologies. With its roots in the Latin America, the theory lays credence to the creation and subsequent development by several social scientists in the region. Dependency opposes the fact that economic development is the solution to meeting the human demands (Ghosh 2000, 23)With the argument that undying global poverty cannot be subject to comprehension without the ability to decipher the whole international system of economy, the theory is neither homogenous nor unified. That is because, within the school, there exist noteworthy analytical differences. The theory classifies underdevelopment and lack of competitiveness as processes of active impoverishment linked to linked to the development. As such, the situation ceases to be a condition. That is; some sections of the globe are apparently developed so because others are not so. They are hence two representations of the same aspect and not separate/different processes.The significant growth and industrialization of the already developed nations resulted in the creation of the third world and poverty in its dawn. The developing nations are not drawn to poverty as a state, but rather led to the situations as a resultant of the industrialization of the other nations (Onyemulekwe 2005, 16).The theory limits the competitiveness of the developing nations by imposing barriers of the developed nations. It projects an argument that economic industrialization era preceded the dense interconnection of the globe. The ceaseless quest for profit was a derivative of the global trot of capitalism. Colonization and Europe unequal bargain drives significantly changed and restructured the developing nations (Ghosh 2000, 25).As such, the dependency theory intuits that the developed states enriched themselves at the expenses of poorer states as there was a flow of resources from the former to the latter. The developing countries’ ability to invest in technology and innovation was hampered a great deal. Poverty in the third world is hence not accidental/traditional but a rather a necessity that had to accompany the West’s development. A deformation of the rest of the world was a resultant of the growth of industrialized nations.For instance, Britain’s growth could have the result of the quest for colony and the vast empire that she put up. In the process, slavery emerged as a way of meeting t economic demands of Britain. Thus the basis for the ‘take-off’ of the industrialization of Britain. Haiti on the other, as the poorest nation on the globe, managed to produce a staggering half of the total sugar consumed in Europe. She was also responsible for the quite a portion of France’s dominance in the overseas trade (Haber 2004, 29).To note with, the aforementioned instances illuminate a state of dependence on the developing nations by the developed nations to be where they are. The dependency drained the capacity of such nations and even utterly impoverished some like Haiti. The exchange implied that the developing nations gave much more than a fair bargain in the deal and got much less. With the deal could have a few infrastructural development but of significance was the gross inequality. Believers of the theory intuit its progression and site the international corporations positioning for strength just so to distort and create income gaps in the local economy (Ghosh 2000, 27).Considerably, the nations have grown into a state of misery and rely on the developed nations for assistance to realize any state of industrialization. Being that they lack the technical know-how to propel the factor, their overreliance on the developed nations deep them further into situations of misery. That is because the know-how is traded for some other factors that do them no good. The Marxist theory thus implies that there is a division of labor between countries at the periphery(developing) and countries at the core(developed).The competitive ability of the nations is thus subject to the power that has been ammersed by the core nations. The periphery nations are so because they have been drafted into the global economic system just but as producers of raw materials, nothing more of a competitive, productive land. That is a great contrast to the theory of modernization that intuits that development should be parallel in all nations (Haber 2004, 48).However, the emergence of India, South Africa or even Brazil to match up the competition of the developed world in various aspects contradicts the basis of the theory’s foundation. The dependency theory barely explains how the Indian society managed a state of stability, and defied odds to become one of the technologically advanced nation on the globe. Considering that India was also subject to colonization and all the aspects of deprivation that have been outlined by the theory, it should qualify to be at the position. India for instance, has modeled into one of the leading Agriculturalists on the globe and has also developed some of their facilities and infrastructure to competitive levels (Ghosh 2000, 28).Considering that the competitive ability of a country is vastly dependent o on its capacity to produce and industrialize, the theory of dependency falls short in various aspects. With the collapse of communism in the wake of the new millennium, enforcers of the theory were exposed as the perpetrators of the condemnation they preached. The theory offers no motivation for the developing nations to improve and strive to be where they deserve to be (Onyemulekwe 2005, 20). The competition posed by the developed world should push them to strive to want to be competitive, not to resign to a state of hopelessness, but rather to a state of selflessness. CompetitivenessIn the recent past, competitiveness has projected an economic paradigm shift. It engulfs awareness of both the disadvantages as well as the posed challenges in global competition. It is affected by the constraints of the county’s budgetary allocations and blockades faced by the private sector in both local and international markets. Redefined by the World Forum of Economics, it is the policies and institutions that factor the productivity level in the country. Some countries have made milestones to the extent that they have set up regulatory bodies to oversee the issues of competitiveness. The institutional models recognize political factored as the highest level of authority in the hierarchy of competitiveness.Such competitiveness is significant for open economies that have an overreliance on trade. For foreign investment(direct), it provides a scale of productivity that increases the standards of life. As such, it assumes a stature of significance as it balances the raw materials to the energy import.The developing nations have fallen short in the Global Economic Forum ranking to determine the level and ability of competitiveness of nations. The highest ranked country is Switzerland. Every country assumes the position of the corporation in competition (Krugman 1997, 4).Analyses of such competitiveness have large been empirical and have considered a qualitative description. One such study that provides ground for the ideal conception of competitive advantage is the Porter Theory.Porter’s TheoryThe theory provides a sophisticated and vital tool for analysis and evaluation of the nature of national competitiveness with considerations to all its implications. It is designed to assist in understanding and comprehending the nature of the character of the subject at the international levels of production and trade (Aharoni 1997, 37). However, in as much, the theory develops around industrial production that very much apply the principles of the subject. In essence, it is the industrial production that build up the economy of a nation. Competition on the international podiums is showcased by the presentations of the industries.The theory thus intuits that national competitiveness has its determinant factors as the industrial strength and vice versa. The interdependence thus calls for the consideration of all the facets of competition in the entire nation to assist in drawing conclusions.Michael Porter terms the subject to be developed around four determinants; conditions of demand, factor conditions, supporting and related firms and firm structure, strategy and rivalry (Aharoni 1997, 38).Factor conditions include resources like human/labor, physical, knowledge, infrastructural and capital resourcesHuman ResourcesThis is angled in various means. The first is the quantity of the labor. Labor should be able to match up with the factors of production t keep up with the flow. If the labor cannot match the production, the level of productivity will hit the lows thus reducing the competitive standard of a nation. Labor is very much dependent on the population levels in a country with the balance to the targeted levels of production. Considering the vast populations of the developing nations, the aspect is very sorted as they have a population that steer the production and provide local markets.The second aspect that matters in the factor of human resources is the level of skill and technical know-how available within the nation. Skill keeps up with the innovation and steers production for the desired quality that is required for competitiveness. For instance, Zimbabwe in Africa had its competitive ability significantly reduced after the political regime ordered the expulsion of all foreign investors and labor. The natives who took over the reins of the industrial production, with little to no skill in production, could not keep the quality, and productivity levels required for competition.The last aspect of the factor is the cost of skill/labor, ranging from management to manual laborers. Cheap human resource gives room for cheap production that modifies competition as products and services are sold cheaply. In this aspect again, the developing nations have an upper hand as the vast populations that they do have provided the eloquence for cheap labor.The detriment that is faced by the nations is skill, which they can make up for by putting up education institutions that churn out professionals. Considering that the nations have been uncompetitive for almost five decades, that is one thing that they should have sorted out. However, little efforts have been put up by such countries as they wallow in a state of desperation.Physical ResourcesThese are weighed in terms of accumulated land, mineral deposits, water and fishing grounds, geothermal power or even timber deposits and other varied physical traits (Reinert et al. 2009, 56).The factor is analyzed in three aspects;Abundance of the physical resources creates an abundance raw materials. The primary foundation of production is raw materials and with an abundance of such comes a steadied production that is both cheap and quantified. For instance, many rivers would assist in the production of more geothermal power that would provide cheap energy for production. On the other hand, more mineral deposits and more mining would propel the competitive nature of a developing nation. South Africa stands second place in the ranks among African Nations in competitiveness majorly because of the vast mineral deposits of gold, diamond and diatomite. Most of the developing nations, especially those from Africa, have an abundance of physical resources that should make production cheap and bolster their competitiveness (Reinert et al. 2009, 56).Quality of the resources also count in their consideration of production (Cook 2004, 45). For example, quality of the Kenyan soil makes the tea and coffee produced in the country very marketable, increasing the productivity of the country. A combination of the vast land and the quality of the soil make the country one of the renowned tea producers in the world (Reinert et al. 2009, 56).Physical resources should be easily accessible to reduce the production cost. More finances are dug into production if access of the raw materials is complicated. Exploitation of minerals easily found near the surfaces of the earth would be cheaper compared to minerals that have to be mined deep into the earth. Establishing trenches and mines in such situations would be both laborious and time-consuming and hence draw a direct repercussion on the selling prices that affect competitiveness (Reinert et al. 2009, 56).The last aspect of physical resources is the cost of the same. Expensive resources have gross effects on the competitive ability of a nation as it fails to set a price that factors its competition. Abundance of the resources would reduce their cost (D’Souza, Upadhyaya and Kumar 1997, 54). The other factor that affects the cost is accessibility and demand. Considering the abundance of the resources in the developing countries, the coat of physical resources should be small to help improve their competitive levels. However, mismanagement of the industries in the nations bar the production leveled from becoming cheap.Infrastructural ResourcesIt is a characteristic of the already competitive developing nations to develop and recreate their infrastructure to ease production. Production is very much reliant on infrastructure for effectivity (Tempel 2001, 22). Good infrastructure, for example good roads reduces the transport costs and enables timely supply of the products in the market to fit into the competitive nature of the market (TASK FORCE ON MANAGEMENT OF TECHNOLOGY 1987, 43).Poorly maintained infrastructure as is the norm in most developing nations, increases the cost of using them. Poor roads, for example, may require a company that deals in perishable products to seek alternatives like air that are in the long run more expensive and less cost-effective.If facilities are varied, it gives producers/industries the advantage of choice. Hence, they pick on the more cost-effective and reliable means that assist in improving their competitiveness (D’Souza, Upadhyaya and Kumar 1997, 54).Equitable distribution of resources also makes most places accessible, even for the physical resources. A network of accessibility may inspire activities that include processing on site. The network hence not only reduce the production cost but also inspire cheap sales that in turn increase competitiveness.The competitiveness of the developed nations is very much affected by the above factors that have well been utilized. They can as such manage cheap sales of quality products (TASK FORCE ON MANAGEMENT OF TECHNOLOGY 1987, 43).Capital ResourcesThis is very much reliant on the stock available and its cost (Tempel 2001, 23). Capital cost is the amount of cash used to keep a business/industrial production going. It is dependable on the finacing mode used. Most industries use a combination of equity and debt.However, the developing nations have been mired in corruption as most of the capital is politically misappropriated leaving them in debt and incapable of using equity. To cover up for the debt, the industries have to inflate their selling prices, and resultantly lose a competitive edge on rivals (Pereira 2010, 23).Without misappropriation, such nations lie in the possession of some of the greatest levels of capital resources, with which they would grow to significant levels. Much time is spent servicing the lips of autocrats that ammersing proper capital resource (Tempel 2001, 24). Knowledge ResourcesThis makes reference to the accumulated technical and scientific know-how that lies in the possession of countries resources. Knowledge would lead to innovation and subsequently act as a stepping stone. It could be the point that batters most the developing nations considering their low levels of education. However, the recent development in Kenya that witnessed the evolution of their phone technology to include monetary services significantly contradicts this. The nation left behind the rest of the world as they became the first to start the transfer of money through the mobile phones. The factor lays credence to the fact that there could be significant resources of knowledge in the nations. The problem could be an inspiration to reach out to the Knowledge(Schmeisser, Krimphove and Popp 2013, 24).The nations have also done little to stop the brain drain that has been affecting them as they lose their knowledge banks to the developed nations who are willing to pay them the much they deserve.Knowledge not only bolsters productivity, it also provides the ability to navigate the corridors of the international markets and present a nation with the best of deals (Aydogan 2009, 33). Demand ConditionsProduction in every country is subject to the available market. Producing goods that are not in demand in any place would be disastrous to the country and result in economic losses (Pereira 2010, 27). For instance, creation of the millennium dome by the United Kingdom resulted in total failure, and there were efforts by the government to rid of the project before it subjected the country into an abyss od loses.The factor of demand conditions plays a significant role in influencing competitive advantage as the direction of production is subject to the needs of the buyers.Demand can either be domestic or international. India, for instance, does most of its production to target of the local market. Domestic consumption determines the perception that is conceived by producers on a particular product (Murmann 2003, 24). There are factors that determine competitive advantage for a nation dependable on the local consumption. Among them is the segmented structure which is favorable as it enhances the subject of competition. It represents a significant amount of home demand but internationally, it accounts for less of the shares. The next factor is projected as the sophistication and preferance of the buyer. It stems from the basis that sophisticated consumers pressurize firms to make excellence in quality production. The last of the attributes is the anticipated consumer needs that make companies prioritize and have an edge over their international rivals by giving and early indication of the future (Jaffe and Nebenzahl 2006, 27).In as much as the source that creates national advantage is attached to home demand, its sustainability is dictated by the home demand growth and size. This attribute makes reference to existing multinational domestic consumers that creates an edge for a countries industries and firms because domestic consumers are also foreign (Aydogan 2009, 34).However, considering that some nations have vast populations from which they can derive and create a domestic market yet they wallow in despair contradicts this factor. The domestic market lays the basis for strength and competitiveness. Failure to tap into this resource would utterly reduce the level of competitiveness of the country. Nigeria in the developing nations, for example, stands as the most populous nation in Africa, but the order of competitiveness excludes it from the top five. Mauritius comes first in Africa, followed by S. Africa, Rwanda, Kenya, and Egypt respectively (Murmann 2003, 23).Firm StrategyThe context of the creation, organization and management of firms also determine the level of competitiveness. Setting of objectives within firms is always largely controlled and influenced by circumstances at the national level. Attaining national advantage is dependent on the choices that correspond to advantage of competitiveness in the industry (Jaffe and Nebenzahl 2006, 31).Firm structure and strategy are projections individual goals national prestige and priority. Company objectives are subject to the structure of ownership and motivation. As long as the individual goals satisfy the company expectations, success looms and that translates to the national levels. To achieve the latter, there lies the need for individual motivation to extend the effort very much necessary for success and competitive advantage (Murmann 2003, 24).Nations sometimes set targets for their industrial pieces in a notion to improve and bolster their productivity together with competitiveness. However, achieving such can be elusive if the most factors associated with productivity are not considered. At times, the individual interests overshadow the set objectives that could help in realizing competitiveness (Jaffe and Nebenzahl 2006, 31).ConclusionThe level of industrialization and productivity determines the competitive ability of a country. Securing a steady market, both internationally and at the local level to boost competitiveness follows the procedurals that have been taken to ensure a steadfast technological production. The economic destiny of a nation is subject to competition(Krugman 1997, XIII).Competitiveness is the determinant factor in judging the economic growth and stability of the country. A strong economy is capable of meeting the local demands and supplies the international market as well. Some developing nations have managed overcome the setbacks of colonization to be able to boost their productivity to meet the local demands and serve the international market as well (Aydogan 2009, 36). However, the stagnation of most developing nations despite abundance of ability and capacity is a pointer to just how much factor availability can play little in the evolution of meeting competitiveness.Competitiveness and productivity are determined by factors that include resources, finance, management, and market. Considering the abundance of most of the factors in the developing world, there is little reason that can explain their inability to score high in the international competition (Aydogan 2009, 36).As such, competitiveness lays little credence to the availability of factors that act to favor production (Cook 2004, 56). For instance, the most competitive country as at now on the globe, Switzerland, has most of its products produced and powered by organic fuel. To note is the fact one of the largest producers of organic fuel is Nigeria that cannot match the competitiveness of the country.Though when well utilized, the factors can push the competitive ability/advantage of a nation to the extremes, it has been proven that availability of the advantages/resources does really not matter (Pereira 2010, 23).To sum up, from the experiences of the developing nations, factor availability has ceased to become a coherent explanation for the development and industrialization of nations. Competitiveness if like a drive that is also steered by proper management. Most of the resources relied upon by numerous nations world over are in the developing countries. However, their inability to utilize the same and reach the standards already reached by the rest of the world has kept at an all time low (Jaffe and Nebenzahl 2006, 34).
The total output that can be gotten from a worker builds the broader projection of national productivity. The standard of lives in a country also determine the productivity of the country. As had been examined earlier, competitiveness is subject to productivity. The developing nations have low output per laborer despite the advantage of cheap labor that they profess. Some of the countries that have achieved significant states of industrialization access labor and other resources very expensively. However, that has not deterred them from exemplary performance and competitiveness.
Finally, recreation of the developing world to match the level of competitiveness that has been achieved by the already developed nations will take time despite their ability. Nations that will have a break-through must put up several factors that are not just limited to factor availability.
Reference List
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AYDOGAN-DUDA, N. (2009). Innovation policies, business creation and economic development: a comparative approach. New York, Springer.
COOK, P. (2004). Leading issues in competition, regulation, and development. Cheltenham, UK, E. Elgar Pub. http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=108909.
D’SOUZA, K. C., UPADHYAYA, G., & KUMAR, R. (1997). Empowering workers through human resource development. New Delhi, Allied Publ