Chasing the myth of Competitiveness

Source: Mr George Mangion¸ PKF Malta

As published in the Malta Independent on the 1st September 2012

Meet the new buzzword¸ competitiveness. In an era when so many EU countries are showing sluggish growth or as in Malta’s case facing a recession¸ Governments are trying to lift the mysterious veil concealing the myth of competitiveness. This is the new quest for the Holy Grail. Politicians have been waxing lyrical about the golden path to achieve better results but really and truly the journey is long and rewards elusive. Globalization has sharpened competition. As a general comment¸ one can state that due to the effect of globalisation¸ organizations in all spheres must compete to deliver value. Many ask what can Malta Enterprise (ME) do to lift the country out of the comparatively low standing in the global competitiveness index? The answer is simple: there is a lot to do both by the private sector and at State level. The elusive answer is to cut down on bureaucracy which by EU rules had to be trimmed down by year. For the cynical the answer may be that the decision by ME to renovate a reception and administration block (costing Euro 4m) right in the precinct of a sprawling geriatric hospital was a bogus move. The rumours have it that meetings with potential foreign entrepreneurs are being held outside the ME headquarters mostly in hotel lobbies. But to continue on the subject of competitiveness there is no magic solution to ease the hard work needed to improve operational efficiency and perk up our comparative low standing. It is best to stop and ask ourselves what constitutes competitiveness and for this purpose one can define it as a quality usually equated with solving macroeconomic issues (such as changes in interest rates¸ inflation or taxes) or microeconomic issues (such as an a low quality of entrepreneurship and excessive bureaucratic regulations on business). Both macro and micro issues need to be effectively tackled in the best way possible. To respond effectively to the exigencies of global market¸ firms need to develop a range of export capabilities in the areas of technology¸ marketing¸ management¸ human resources and finance¸ and continuously upgrade them over time. However¸ nurturing competitiveness — particularly for export markets — also has to involve both governments and trade support institutions in a cohesive partnership. Only this way can a coherent competitiveness strategy¸ tailor-made to national circumstances be born. This has a major influence in the creation of business competitiveness in a globalised environment. More then ever¸ there exist powerful factors which are driving globalization such as falling trade barriers; fast-paced technological advances; declining communications and transport costs; international migration; and highly mobile investment. The cliché goes that during a recession firms are facing many demands pointing them to improve their value chain. At this stage one can comment that adding “Value “is the ability to meet or exceed the needs of customers¸ and do so efficiently. Firms have to deliver value to their customers by way of services or products and countries have to deliver value as business locations. Reading textbooks about competitiveness we recall authors telling us that a close and active business-government partnership is the linchpin of a well-managed national competitiveness strategy. Is this happening in Malta? Not to a great extent with exception in the tourism sect