Download here - Rybinski.eu

Achieving sustainable growth
Will new Europe fly or crawl in the 21st
century global knowledge economy
Symposium: „The Future of Europe.
Sustainable Development and Economic Growth?”
Vienna
September 12-13, 2007
Dr Krzysztof Rybiński*
National Bank of Poland
Deputy Governor
Email: [email protected]
Blog: www.rybinski.eu
* Views presented here are my own and they do not necessarily represent the
official position of the National Bank of Poland or the Financial Services Authority.
Presentation based on paper Radzikowski, Rybiński (2007)
Economic growth in the long run…
GDP per capita in 1990 US$ (converted at Geary Khamis
PPPs, US=100)
100
90
80
70
60
50
40
30
20
10
EU-15
USA
NIE's
04
01
20
98
20
95
19
92
19
89
Latin America
19
86
19
83
19
80
19
77
19
74
19
71
19
68
CEE-4
19
65
19
62
19
59
19
56
19
53
19
19
19
50
0
China
Source: Groningen Growth and Development Centre and
the Conference Board, Total Economy Database, January
2007, http://www.ggdc.net.
 From the middle of the
70’s there has not been
much convergence of
Western Europe towards
the U.S.
 NIEs recorded an
enormous acceleration
from the end of the 60’s.
 China woke up in the 80’s.
 After an initial decline in
the beginning of the 90’s,
CEE-4 had to start their
convergence actually from
scratch.
www.rybinski.eu
…and in the medium run
GDP per capita in 1990 US$ (converted at Geary Khamis
PPPs, 1989=100)
340
300
260
220
180
140
100
NIE's
06
05
20
04
20
03
20
02
20
01
Latin America
20
00
20
99
20
98
19
97
USA
19
96
19
95
CEE-4
19
94
19
93
19
92
EU-15
19
91
19
90
19
19
19
89
60
 Although CEE-4 are the
most successful group
among the postcommunist countries, their
growth since 1989 has
been negligible when
compared to NIEs and
China.
China
Source: Groningen Growth and Development Centre and
the Conference Board, Total Economy Database, January
2007, http://www.ggdc.net.
www.rybinski.eu
Institutional factors and policy-mix
Index of economic freedom in 1990
Size of Government
10
9
8
7
6
5
4
Regulation
3
2
Legal System &
Property Rights
1
0
EU-15
CEE-4
USA
Freedom to Trade
Internationally
 In the beginning of the
transition most institutions
in CEE-4 were yet
fledgling.
 Policies were being
transformed from centrally
planned into market
oriented.
Latin America
& the Carribean
NIEs
Sound Money
China
Source: Fraser Institute.
www.rybinski.eu
Institutional factors and policy-mix
Index of economic freedom in 2004
Size of Government
10
9
8
7
6
5
4
Regulation
3
2
Legal System &
Property Rights
1
0
EU-15
CEE-4
USA
Freedom to Trade
Internationally
 Since then many
institutions have been
founded and policies
improved but…
 Some maintained weak.
 Others converged to the
EU’s welfare state model.
Latin America
& Carribean
NIEs
Sound Money
China
Source: Fraser Institute.
www.rybinski.eu
Social development
Poverty headcount ratio at $2 a day (PPP)
(% of population)
80
70
60
50
40
30
20
10
Korea, Rep.
Source: World Development Indicators 2007.
04
03
20
02
20
01
20
00
20
99
20
98
Latin America & Caribbean
19
97
19
96
19
95
19
94
19
19
93
92
CEE-4
19
91
19
19
90
19
19
89
0
China
 “The key to solving the
problem of crisis-induced
poverty lies in
guaranteeing stable
economic growth and
creating new jobs (Górniak
2001).”
 The UN’s goal of halving
the world’s poverty by
2015 from its 1990 level is
likely to be reached mainly
due to a spectacular and
sustained growth recorded
by East Asia and the
Pacific and South Asia.
www.rybinski.eu
Income inequality
 It is important to stress that
globalization reduces
60
250
inequality, as documented
in Sala-i-Martin (2006).
50
200
 However, while
40
150
globalization allows poor
30
countries to catch up,
100
20
which reduces
50
10
international income
0
0
inequality, at the same
time there is a trend of
rising intra-country
Source: WIDER World Income Inequality Database; World
inequalities.
Development Indicators 2007; U.S. Census Bureau; Korean
Decile dispersion ratio (10th income decile/1st income
decile)
48.0
200
38.8
154
143
125
124
123
109
18.5
11.9
7.1
8.7
3.8
EU-15
5.4
Hungary
1989-91
11.1
10.1
5.9
Poland
2002-2005
USA
7.4
9.9
9.3
Latin
Korea
America &
Carribean
6.4
Taiwan
China
Percent change (1989-91=100, right scale)
Statistical Information Service; Report on The Survey of
Family Income and Expenditure in Taiwan Area, National
Statistics Republic of China (Taiwan).
www.rybinski.eu
Income distribution
Compensation of employees (in % of GDP)
70
102
96
99
96
89
60
82
58
59
57
54
52
50
93
52
52
50
49
48
42
43
40
51
44
41
37
36
32
29
30
20
EU-15
Czech Slovakia
(excl.
Republic
Portugal,
Ireland)
1990
2000
Poland
(20002005)
2006
USA
Japan
India Singapore*
(20002004)
 In many countries
compensation of
100
employees as a share of
80
GDP declined.
60
 It suggests, that
40
globalization of the labor
20
market was accompanied
by the rising bargaining
0
power of corporations.
Percent change (2000=100)
* Data on Singapore refer to earnings and exclude employer
social contributions.
Source: Ecowin Databases: Ecowin Economic and OECD
QNA.
www.rybinski.eu
Health
Life expectancy at birth, total (years)
82
80
79.6
79.3
107
77.7
78
76
106
75.8
75.2
74.4
74
105
72
74.3
105
72.5
70.6
71.8
104
70
103
68
68.9
68.1
66
64
62
EU-15
CEE-4
1990
2005
USA
Latin America NIE's (excl.
& Caribbean
Taiwan)
China
Percent change (1990=100, right scale)
Source: World Development Indicators 2007.
 The 70’s saw a major
deterioration in health
108
trends in all CEE-4.
107
 It reflected an overall
106
negative situation of health
105
in communist states.
104
 Although many common
103
health problems in CEE-4
102
still remain more prevalent
101
than in the EU, overall
health conditions have
improved dramatically.
www.rybinski.eu
Health
Infant mortality rate (per 1,000 live births)
45
42.8
64
40
38.0 61
61
35
54
52
30
26.1
40
25
23.0
20
5
40
30
14.2
15
10
 While these trends in
CEE-4 are highly positive
70
the superior performance
60
of NIEs in this area is also
50
meaningful.
20
9.4
7.8
5.8
4.0
6.0
7.3
10
4.0
0
0
EU-15
CEE-4
1990
2005
USA
Latin America NIE's (excl.
& Caribbean Taiwan &
Hong Kong)
China
Percent change (1990=100, right scale)
Source: World Development Indicators 2007.
www.rybinski.eu
Environmental protection
CO2 emissions (kg per 2000 PPP $ of GDP)
1.4
1.32
90
1.2
83
78
1.0
0.86 67
67
60
0.8
0.68
0.58
0.6
0.60
0.56
0.43
0.4
 The communist economies
led to an intensive and
100
90
excessive use of natural
80
resources.
70
0.65
50
40
0.38
0.34
0.33
49
0.40
30
20
0.2
10
0.0
0
EU-15
1990
CEE-4
2003
USA
Latin America NIE's (excl.
& Caribbean
Taiwan)
China
Percent change (1990=100, right scale)
Source: World Development Indicators 2007.
www.rybinski.eu
Environmental protection
CO2 emissions (metric tons per capita)
25
152
19.3
20
19.9
103
103
15
106
102
80
10
9.3 9.6
10.1
8.3
8.0
8.8
5
2.4 2.4
3.2
2.1
0
 The transition process
itself as well as the mixture
160
of pressure and incentives
140
from the West brought
120
about a number of
100
80
significant changes (e.g. a
60
switch to less share of
40
heavy industry in the
20
economy).
0
EU-15
CEE-4
1990
2003
USA
Latin America NIE's (excl.
& Caribbean
Taiwan)
China
Percent change (1990=100, right scale)
Source: World Development Indicators 2007.
www.rybinski.eu
Environmental protection
CO2 emissions (million kt)
7
173
6
173
180
160
5.79
140
4.82
5
125
120
4
4.14
102
120
100
3.12 3.19
83
3
80
 As a consequence CO2
emissions slumped.
 CEE-4 was the only group
of countries that managed
to reduce the absolute
amount of CO2 emissions.
2.40
60
2
1.30
1.04
1
0.62
0.52
40
0.54
0.31
20
0
0
EU-15
CEE-4
1990
2003
USA
Latin America NIE's (excl.
& Caribbean
Taiwan)
China
Percent change (1990=100, right scale)
Source: World Development Indicators 2007.
www.rybinski.eu
Environmental protection
Electricity production from coal sources (% of total)
80
77.9
71.2
70
49.8
50
66
53.1
50.4
95
42.2
57.5
53.7
109
93
84
40
30
126
59.1
60
27.8
20
10
3.8 4.7
0
 Market energy prices
broke the tradition of
160
140
excessive coal
120
consumption in favor of,
100
less harmful to the
80
environment, energy
60
40
sources such as oil and
20
gas.
0
EU-15
CEE-4
1990
2004
USA
Latin America NIE's (excl.
& Caribbean Taiwan &
Singapore)
China
Percent change (1990=100, right scale)
Source: World Development Indicators 2007.
www.rybinski.eu
Environmental protection
 Exposure of companies
transmitting and
120
distributing energy to
100
market competition as well
80
as liberalization and partial
60
privatization reduced
40
wasteful practices.
20
Electric power transmission and distribution losses (% of
output)
116
18
16.7
106
16
14.3
92
87
14
80
12
69
10
8
6
9.0
7.7
9.3
7.9
6.4
6.1
6.9 7.3
6.9
6.3
4
2
0
0
EU-15
1990
CEE-4
2004
USA
Latin America NIE's (excl.
& Caribbean
Taiwan)
China
Percent change (1990=100, right scale)
Source: World Development Indicators 2007.
www.rybinski.eu
What matters?
 Romer (1986) argued that one of key factors of economic
progress are innovations, ideas or more broadly
knowledge.
 His second observation was non-rivalry of ideas, which has
a number of important consequences.
 Knowledge, however, is only one of the three components
of intellectual capital. Structural and relationship capital are
the other two.
 The ability to source knowledge globally has become a key
advantage that can be exploited by small countries with
excellent knowledge infrastructure (such as Finland or
Ireland).
 It can be used to leverage growth by large corporations or
small companies.
 Thus knowledge economy seems to be the growth engine
in the 21st century.
www.rybinski.eu
Large corporations did better …
Employment and profit share of the 150 largest corporations
listed in the U.S., 1994 and 2004.
100%
80%
54
61
60%
72
71
28
29
40%
20%
48
39
0%
1994
2004
1994
2004
100%=570 bn
100%=1393 bn
100%=33.8 bn
100%=59.6 bn
Profit share
150 largest corporations
Employment share
Corporations ranked 151-2000 in size
 In 10 years the share of
largest firms in
employment remained
unchanged while their
share in profits rose.
 What contributed to this
massive increase of profit
per employee?
 Is this question valid for
entire countries or
regions?
Source: Bryan, Zanini (2005).
www.rybinski.eu
… amid development of IC
The share of intellectual capital in the market value of
corporations listed in the U.S. (in US$ trillion)
100%
36
80%
60%
48
60
75
40%
64
52
20%
40
25
0%
1994
2004
1994
2004
100%=1.8 tr
100%=11.9 tr
100%=2.5 tr
100%=10.8 tr
150 largest corporations
Remaining market value
Source: Bryan, Zanini (2005).
Corporations ranked
151-2000 in size
Book value
 Partial answer to this
question is that in the case
of largest corporations the
value of intangibles rose at
a very fast pace.
 Although there could be
several explanations, the
most plausible one is that
the level of intellectual
capital in large
corporations exceeds that
in the medium ones, which
is adequately priced by the
financial markets.
www.rybinski.eu
Globalization strategies adopted by
new global challengers
Model 1: Taking RDE brands global
Model 2: Turning RDE engineering into global innovation
Model 3: Assuming global category leadership
Model 4: Monetizing RDE natural resources
Model 5: Rolling out new business models to multiple markets
Model 6: Acquiring natural resources
Source: Aguiar et al. (2006), The Boston Consulting Group.
www.rybinski.eu
Higher education important for
knowledge potential
School enrollment, tertiary (% gross)
90
80
70
60
50
40
30
20
10
EU-15
CEE-4
USA
Latin America & Caribbean
Source: World Development Indicators 2007.
04
20
03
20
02
20
01
20
00
20
99
19
19
91
0
Korea
 Tertiary enrollment is an
important indicator of
future knowledge potential.
 The gap between U.S. and
other regions has
narrowed.
 Interestingly, South Korea
has become the leader.
 China is closing its gap
China
with the Latin America.
 CEE countries last year
reached 50% ratio.
www.rybinski.eu
Higher education – absolute values
are important too
Higher education students (incl. universities) in thousands
30000
25000
20000
15000
10000
5000
EU-15*
USA
06
05
NIE's
20
04
20
03
Latin America & Caribbean
20
02
20
01
20
00
20
99
20
98
19
97
19
96
19
95
19
94
19
93
CEE-4*
19
92
19
91
19
19
19
90
0
China
* Data for Germany are available from 1992 and for the
Czech Republic and Slovakia from 1993.
Source: Euromonitor International from national
statistics/UNESCO.
 Bearing in mind that the
quality of education is not
similar in all regions it is
also worth to look at the
absolute numbers as it
may be a good proxy for
the future number of
domestic researchers.
 Recent years have
witnessed an important
shift in this area.
www.rybinski.eu
Higher education – absolute values
are important too
University students in thousands
14000
12000
10000
8000
6000
4000
2000
EU-15*
USA
06
05
NIE's
20
04
20
03
Latin America & Caribbean
20
02
20
01
20
00
20
99
20
98
19
97
19
96
19
95
19
94
19
93
CEE-4*
19
92
19
91
19
19
19
90
0
China
* Data for Germany are available from 1992, for
Luxembourg from 1999 and for the Czech Republic and
Slovakia from 1993.
Source: Euromonitor International from national
statistics/UNESCO.
 We can safely predict that
the number of students will
increase further in China.
 The absolute number of
students in CEE-4 has
also increased
significantly, but the gap
with NIEs remained.
 It is also worth noticing
that LAC countries make
steady progress.
www.rybinski.eu
Current ability to innovate
Researchers in R&D (per million people)
5000
4500
4000
3500
3000
2500
2000
1500
1000
500
Latin America & Caribbean
04
20
03
20
02
20
01
20
00
99
98
USA
20
CEE-4
19
EU-15
19
19
97
19
96
0
NIE's (excl. Taiwan & Hong Kong)
Source: World Development Indicators 2007.
China
 The current ability to
innovate can be assessed
by the number of
researchers.
 The U.S. continues to
dominate the world both in
terms of researchers
intensity and absolute
number of researchers in
R&D.
 However in terms of
researchers’ intensity both
the EU-15 and the NIEs
are closing the gap.
www.rybinski.eu
Current ability to innovate
Researchers in R&D in thousands
1600
1400
1200
1000
800
600
400
200
EU-15
CEE-4
USA
Latin America & Caribbean
04
20
03
20
02
20
01
20
00
20
99
19
98
19
97
19
19
96
0
NIE's (excl. Taiwan & Hong Kong)
Source: World Development Indicators 2007.
China
 In absolute number of
researchers China is the
third biggest in the world,
although the quality of
researchers there may not
be as good as in the U.S.
or the EU.
 It is evident that in the last
ten years the research gap
between the NIEs and the
CEE-4 has been growing.
www.rybinski.eu
How much on R&D and ICT
Research and development expenditure (% of GDP)
3.0
2.5
2.0
1.5
1.0
0.5
Latin America & Caribbean
04
20
03
20
02
20
01
20
00
99
98
USA
20
CEE-4
19
EU-15
19
19
97
19
96
0.0
NIE's (excl. Taiwan & Hong Kong)
Source: World Development Indicators 2007.
China
 R&D expenditure
measures funding
available to people with
great ideas.
 The EU has been closing
the gap with the U.S. in
terms of R&D spending as
a ratio of GDP.
 In the last ten years there
was no improvement in
R&D spending in CEE-4
countries; it lags badly
behind China.
www.rybinski.eu
How much on R&D and ICT
Information and communication technology expenditure
(% of GDP)
10
9
8
7
6
5
4
EU-15
CEE-4
USA
Latin America & Caribbean
20
05
20
04
20
03
20
02
20
01
20
00
3
NIE's (excl. Taiwan)*
Source: World Development Indicators 2007.
China
 ICT expenditure is a proxy
for country ability to source
knowledge globally.
 ICT is likely to facilitate
factors that are important in
achieving technical progress.
 The EU lags badly behind
the U.S. in terms of ICT
expenditures. With growing
importance of ICT using
industries for productivity
growth it may signal the
Europe’s troubles lying
ahead, despite its
improvement in R&D
spending.
www.rybinski.eu
How much on R&D and ICT
Total R&D spending per capita (in ECU/euro)
630.2
.8x +
y = 33
1.7
+ 38
2.3x
4
=
y
1200
1000
800
600
6.1
y = 16.1x + 25
 In terms of absolute levels
of spending per capita
U.S. and Japan still top the
league and exhibit similar
volatility pattern.
400
200
EU-15
Liniowy (Japan)
05
20
04
Japan
Liniowy (CEE-4)
20
03
20
02
20
01
20
00
USA
Liniowy (EU-15)
20
99
20
98
19
97
19
96
CEE-4
Liniowy (USA)
19
95
19
94
19
93
19
92
19
91
19
19
19
90
0
06
y = 3.4x + 8.6
y = 1.3x - 4.2
China
Liniowy (China)
Source: Eurostat, CEIC Data ISI Securities China Premium
Database.
www.rybinski.eu
How much on R&D and ICT
Total R&D spending per capita (in ECU/euro, 1991=100)
1200
1000
800
600
400
200
EU-15
CEE-4
USA
Japan
06
05
20
04
20
03
20
02
20
01
20
20
00
99
20
98
19
97
19
96
19
95
19
19
94
93
19
92
19
19
19
91
0
 While U.S. and NIEs are
world leaders in terms of
R&D and ICT spending,
China has made an
enormous progress,
raising R&D spending per
capita 12 times over the
last 15 years.
China
Source: Eurostat, CEIC Data ISI Securities China Premium
Database.
www.rybinski.eu
Now the outcomes
Scientific and technical journal articles per million people
800
700
600
500
400
300
200
100
EU-15
CEE-4
USA
Latin America & Caribbean
NIE's (excl. Taiwan)*
* From 2000 data for NIEs exclude Hong Kong
Source: World Development Indicators 2007.
03
20
02
20
01
20
00
20
99
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
91
19
19
90
0
China
 Similar picture emerges
when one looks at the
outcomes, e.g. number of
scientific and technical
journal publications.
 The U.S. and EU-15
dominate the world in
terms of publication
intensity.
 In early 1990s CEE-4
published twice as many
papers per million of
citizens than NIEs, but in
recent years these
proportions have changed
dramatically.
www.rybinski.eu
Now the outcomes
Patent filings by office in 2005 in thousands
400
381.5
359.4
352.4
350
300
250
202.8
200
179.0
100
50
150.4
149.7
150
133.2
122.5
94.2
93.2
40.0
27.9
24.0
3.5
0
EU-15*
0.4
4.4
3.9
CEE-4
USA
4.1
Latin
America-6*
residents
22.1
8.4
NIE's (excl.
Taiwan)
non-residents
China
total
Japan
 The statistics showing patent
filing do paint an interesting
picture.
 Japan and the U.S. are the
leaders, while China, NIEs
and EU-15 are high in rank.
 CEE-4 does not exist on the
world patent map.
 Instead of focusing on
generating more innovations
companies, regions and
countries should find and
analyze their weakest links in
the innovation value chain,
and take corrective actions.
* Data for EU-15 are the sum of patent filings from national patent offices and the European Patent
Office. According to WIPO, EPO patent filings in 2005 amounted to 60.8 thousands. The total number of
patent filings for EU-15 may be overstated as the EPO grants patents on behalf of the member states of
the European Patent Convention (EPC), the membership of which is larger than that of the European
Union because some EPC member states are not members of the European Union. Furthermore many
European patent applicants seek patent protection in multiple EPC member States, therefore, nonresident patent filings by Europeans in other EPC member State offices and at the EPO have become
common. For the same reasons the total number of patent filings for CEE-4 may be underrated. Data for
Italy are not available. Latin America-6 includes: Brazil, Chile, Colombia, Cuba, Ecuador and Peru.
Source: World Intellectual Property Organization.
www.rybinski.eu
Now the outcomes
Researchers in R&D and total number of patents filed
No. of total patent filings by office
in 2005 in thousands
400
USA
350
300
250
200
NIE's (excl.
Taiwan)
150
EU-15*
China
100
50
0
CEE-4 Latin America-6*
0
200
400
600
800
1000
Researchers in R&D in thousands
(average in the years 1996-2004)
1200
* Data for EU-15 are the sum of patent filings from national patent offices and the European Patent
Office. According to WIPO, EPO patent filings in 2005 amounted to 60.8 thousands. The total number of
patent filings for EU-15 may be overstated as the EPO grants patents on behalf of the member states of
the European Patent Convention (EPC), the membership of which is larger than that of the European
Union because some EPC member states are not members of the European Union. Furthermore many
European patent applicants seek patent protection in multiple EPC member States, therefore, nonresident patent filings by Europeans in other EPC member State offices and at the EPO have become
common. For the same reasons the total number of patent filings for CEE-4 may be underrated. Data for
Italy are not available. Latin America-6 includes: Brazil, Chile, Colombia, Cuba, Ecuador and Peru.
Source: World Intellectual Property Organization.
 The U.S. has only
marginally higher number
of researchers than EU-15,
but records twice as many
patent filings.
 NIEs are much more
effective that China, but
smaller number of
researchers produces
almost as many patents as
EU-15.
 It does indicate many
weak links in the
innovation generation
process in Europe.
www.rybinski.eu
Now the outcomes
R&D spending and total number of patents filed
No. of total patent filings by office
in 2005 in thousands
400
USA
350
300
250
200
150
China
EU-15*
NIE's (excl.
Taiwan)
100
50
Latin America-6* CEE-4
0
0.0
0.5
1.0
1.5
2.0
2.5
Research and development expenditure (% of GDP)
(average in the years 1996-2004)
3.0
 When the effectiveness of
money spent on R&D is
taken into account we see
that the U.S. holds a
supreme position.
 China files almost as many
patents as EU-15 with half of
the EU-15’s level of R&D
expenditure as a share of
GDP.
 CEE-4 spend much more on
R&D than LAC countries,
and produce fewer patents.
Both regions hardly exist on
the world R&D map.
* Data for EU-15 are the sum of patent filings from national patent offices and the European Patent
Office. According to WIPO, EPO patent filings in 2005 amounted to 60.8 thousands. The total number of
patent filings for EU-15 may be overstated as the EPO grants patents on behalf of the member states of
the European Patent Convention (EPC), the membership of which is larger than that of the European
Union because some EPC member states are not members of the European Union. Furthermore many
European patent applicants seek patent protection in multiple EPC member States, therefore, nonresident patent filings by Europeans in other EPC member State offices and at the EPO have become
common. For the same reasons the total number of patent filings for CEE-4 may be underrated. Data for
Italy are not available. Latin America-6 includes: Brazil, Chile, Colombia, Cuba, Ecuador and Peru.
Source: World Intellectual Property Organization.
www.rybinski.eu
FDI may help…
Inward FDI stock (in % of GDP)
60
50
40
30
20
10
USA
Source: UNCTAD, World Economic Outlook.
05
04
NIE's
20
20
03
02
Latin America & Caribbean
20
01
20
20
99
98
00
20
19
19
97
96
19
19
95
94
CEE-4
19
93
19
19
92
91
EU-15
19
19
19
90
0
China
 As documented above
CEE-4 countries lack
ability to generate great
ideas and to transform
them into new products or
services.
 Therefore it appears that
foreign direct investments
become the most
important modernization
channel.
 Indeed CEE-4 became a
very large recipient of FDI.
www.rybinski.eu
FDI may help…
 Only NIEs economies
managed to attract higher
FDI stock in relation to
GDP and enjoy higher FDI
annual inflows.
FDI, net inflows (% of GDP)
20
18
16
14
12
10
8
6
4
2
EU-15 (excl. Luxembourg)
CEE-4
USA
Latin America & Caribbean
05
04
20
03
20
02
20
20
01
00
20
99
20
19
98
97
19
96
19
19
95
94
19
93
19
19
92
91
19
19
19
90
0
NIE's (excl. Taiwan)
China
Source: World Development Indicators 2007.
www.rybinski.eu
…if well-targeted
High-technology* exports (% of manufactured exports)
45
40
35
30
25
20
15
10
5
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
0
EU-15
CEE-4
USA
Latin America & Caribbean
NIE's (excl. Taiwan)*
China
* High-technology exports are products with high R&D
intensity, such as in aerospace, computers,
pharmaceuticals, scientific instruments, and electrical
machinery. Data for Hong Kong are included from 1992.
Source: World Development Indicators 2007.
 However, in the global
knowledge economy it is
important to attract high
foreign direct investments
to sectors that can become
globally competitive.
 While CEE-4 significantly
improved the structure of
exports, the high-tech
goods account for only 12
percent of manufactured
exports, which is the
world’s worst result.
www.rybinski.eu
Who will be thought, innovation and
idea leaders?
 The 21st century will see a new paradigm. Data shown
above suggest that China and NIEs will become thought,
innovation and idea leaders.
 A very fine summary of this line of thought was offered by
Hexter, Woetzel (2007):
“In such a competitive hothouse, adapted practices will
evolve quickly, and as China merges into the world
economy best practice there will become best practice
globally. More products developed in China will become
global products; more industrial processes developed in
China will become global processes. The ability to develop
a Chinese talent pool will therefore be critical across all
functions. Learning how to execute in China – the world’s
most competitive market – will teach companies how to
compete more aggressively elsewhere”.
www.rybinski.eu
Why not us?
 The last few years were very good for CEE-4 countries.
However, the analysis presented in this section identified
important structural deficiencies of CEE-4 knowledge
economies. In particular they lack the ability to generate
innovations. Although they have attracted large pool of FDI
it seems to have been located in relatively low value added
industries. It suggests that, after a period of EU-accession
positive output shock, CEE-4 may find it difficult to maintain
fast and sustainable growth path.
 Another major deficiency of Europe, which was inherited by
new Europe as well, is the lack of ability to create shared
and ambitious vision, strategic goals and successful
implementation of strategic plans.
 Last but not least, new Europe is struggling with massive
emigration to Western Europe which has become a
significant „brain drain”. No action has been taken so far to
convert it to „intellectual capital gain”.
www.rybinski.eu
Conclusions
Data presented in this paper suggest that the ability to retain
technological leadership by the U.S. and especially by the EU
is rapidly vanishing because:
 Population of present and future innovators in Asia (China
and NIEs) is rapidly enlarging;
 Environment is much more competitive in many Asian
markets than in Europe or the U.S., and tough competition
breeds success;
 Sharply increasing return to education (white-collar wages)
will lead to even faster closing of the technology and
innovation gap between the U.S. and China or NIEs;
 Biggest developed world democracies, the EU and the
U.S. lack clear vision and strategy;
 Western world has failed to understand the importance of
intellectual capital to future prosperity.
www.rybinski.eu
Recommendations
 Abolish present “destructive creation”.
 Create long-term vision reaching out to 2050.
 This vision has to be universally shared by citizens and
politicians, based on this vision strategic action plans have
to be developed.
 Analyze what assets are needed to fulfill that vision, invest
to create these assets.
 Conduct a careful analysis of strategies developed and
implemented by most successful global corporations,
especially those from emerging markets.
 There will be no success in the 21st century without
courage or luck. Do not bet your future on being lucky!
 Innovation cannot emerge without reaching an adequate
level of intellectual capital. The quest for intellectual capital
of the 21st century has already begun. Both the old and the
new Europe have to wake up and join the race.
www.rybinski.eu
Thank you
Comments and questions most
welcome!!!
Dr Krzysztof Rybiński
National Bank of Poland
Deputy Governor
Email: [email protected]
Blog: www.rybinski.eu