Download Competitiveness

European Commission
Enterprise and Industry
European Competitiveness Research
Programme and ECR 2010
Michael Peneder (WIFO)
Budapest, Institute for World Economics, 25.01.2011
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23.05.2017
Outline
 European Competitiveness Research
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History & consortium
 Competitiveness
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A “dangerous obsession”?
Firms, industries and the macro-level
 The ECR 2010
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Guiding questions
Selected findings
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European Commission
Enterprise and Industry
History of the ECR
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1994 – Decision of the Council
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1997 – First Competitiveness Report
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2005 – Refocusing more on Lisbon Agenda
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2010 – Support measure for Europe 2020
– New Framework Contract with ...
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The research consortium (a)
Total of 16 partners from 11 countries
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WIFO – Austrian Institute of Economic Research
(consortium lead, Vienna)
CEPII – Centre d’Etudes Prospectives et d’Information
Internationales (Paris)
CIREM – Centre d’Information et de Recherche sur
L’Economie Mondiale (Paris)
CPB – Netherlands Bureau for Economic Policy Analysis
(Den Haag)
ECORYS Nederland B.V. (Rotterdam)
Etlatieto Oy – The Research Inistitute of the Finnish
Economy (Helsinki)
Idea Consult (Brussels)
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The research consortium (b)
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IfW – The Kiel Institute for the World Economy
IVIE – Instituto Valenciano de Investigaciones Economicas
NIESR – National Institute of Economic and Social
Research (London)
NIFU – Nordic Institute for Studies in Innovation, Research
and Education (Oslo)
SGH – World Economy Research Institute, Warsaw
VKI – Institute for World Economics of the Hungarian
Academy of Sciences (Budapest)
VTT – Technical Research Center Finland (Helsinki)
wiiw – Vienna Institute for International Economic Studies
ZEW – Center for European Economic Studies (Mannheim)
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The research consortium (c)
Associated (subcontractors or academic advisers)
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EIM Business and Policy Research (Zoetermeer, Brussels)
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ETH Zurich – Prof. Peter Egger, Dr. Heinz Hollenstein
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Harvard Business School – Prof. Christian Ketels
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Harvard University – Prof. Dale Jorgenson
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Swansea University – Dr. Catherine Robinson
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TNO – Dr. Frans van der Zee
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University of Birmingham – Prof. Mary O’Mahony
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University of Innsbruck – Prof. Michael Pfaffermayr
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Competitiveness
a “dangerous obsession”?
 Paul Krugman (MIT Press, 1996)
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“So let’s start telling the truth: competitiveness is a
meaningless word when applied to national
economies. And the obsession with competitiveness is
both wrong and dangerous”
Main arguments
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Illusion of conflict; trade is no zero-sum-game
Domestic spending has larger impact than negative
terms of trade effects
Wages rise with productivity: low factor prices
indicate low competitiveness!
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Competitiveness
a natural concern
 Competition arises from scarcity, e.g. of
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Resources (capital, labour/skills, raw materials)
Access to markets (EU integration; international trade
agreements; transport)
Knowledge & competences (seeking rents from
high-value production)
Do these scarcities matter only for individual firms?
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Sure, enterprises are at the core, but e.g.
relative abundance of inputs affect industrial location
differences in productivity and industrial structure affect
aggregate income and the standards of living!
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Competitiveness
a refined view
 Openness: the very notion of “competitiveness”
implies the willingness and ability to face competition,
being domestic or from abroad
 Focus on productivity: the objective is to raise
incomes, not lower wages !
 Policy must define the preferences and constraints to
account for interdependencies with other goals of
society, e.g.
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Social cohesion
Sustainable environment
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Competitiveness
definitions – ECR 2010
 “Competitiveness refers to the overall economic
performance of a nation measured in terms of its
ability to provide its citizens with growing living
standards on a sustainable basis and broad access
to jobs”
 “... refers to the institutional and policy arrangements
that create the conditions under which productivity
can grow sustainably”
 “external competitiveness refers to the ability to
export goods and services in order to afford
imports”
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Competitiveness
firms
Inputs
Processes
- Labour & skills
- Entrepreneurship
- Capital
- Management
- Intermediates
- Organisation
- Raw materials
(incl. energy)
- Technology
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Outcomes
- Productivity
- Survival
- Profits
- Growth
- Market shares
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Competitiveness
industries
Inputs
Processes
Industrial
Location, e.g.
Industrial
Organisation, e.g.
 Firm entry
 Competition
 Foreign Direct
Investment
 Value chains
 Advanced
customer base
 Technological
Regimes
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Outcomes
- Productivity
- Growth
- International
market shares
- Profitability
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Competitiveness
countries & regions
Inputs
Processes
Locational
Advantages, e.g.
Regulation &
institutions , e.g.
- Relative prices &
- Efficiency of factor
markets
- Infrastructure
- Administrative
burden
abundance of inputs
- Market access
Outcomes
- Productivity
- Factor incomes
- Employment
- Growth
- National systems
of innovation
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Processes
Firms
Firm-level
inputs
Firm-level
drivers
Firm
performance
Industrial
Location
Industrial
Organisation
Industrial
performance
Countries/
Regions
Inputs
Industries
Competitiveness
an integrated puzzle
Locational
advantages
Regulation &
institutions
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Outcomes
Macroperformance
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European Commission
Enterprise and Industry
How did imbalances accumulate,
and did they affect the external
competitiveness of EU industries ?
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ECR 2010
Growing imbalances
 Accumulation of disequilibria: speculative bubble
and spiral in real estate prices >> overstated wealth
 Distorted choices: consumption vs. saving and lending
vs. borrowing
 Adjustment when bubble burst: households save more
and consume less
 Contagion of other countries (trade, financial system)
 Was there a direct impact of imbalances on EU
external competitiveness?
 no obvious indication for crowding out of
productive investments or a decline in export
performance because of wage inflation
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European Commission
Enterprise and Industry
What share of value added
does the EU capture when the
production of a single phone
is scattered all over the world?
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ECR 2010
Trade in intermediate goods
 Example of a Nokia ‘high-end’ mobile phone
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Even when assembled in China and sold to the US,
Europe captures 51% of the value
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For high-tech goods, capturing value is largely
detached from the physical flows, while attributed
mainly to R&D, design, marketing, distribution and
management
 See presentation by Mats Marcusson …
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European Commission
Enterprise and Industry
What if corporate R&D and
innovation activities are
increasingly off-shored?
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ECR 2010
Foreign R&D and innovation
Increasing internationalisation of R&D (though
traditionally less easily offshored)
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Foreign-owned firms have a
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Only 5% of all patents of EU firms are invented outside
Europe, mostly in the US
17% of EU patent inventions are foreign-owned, 9% by
non-EU organisations
lower innovation input intensity, but
similar innovation output and
similar degree of cooperation in host country
Links between EU-12 and EU-15 are rare
 Language, culture and history matter much !
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European Commission
Enterprise and Industry
Do you know which
technologies can radically
change the future of EU
manufacturing?
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ECR 2010
Key enabling technologies
 New technologies of systemic relevance that
facilitate innovation in many other industries
 Selected areas
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Nanotechnology, micro- and nanoelectronics
Industrial biotechnology
Photonics
Advanced materials
Advanced manufacturing technologies
 See presentation by Agnes Magai …
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European Commission
Enterprise and Industry
Why do activities such as media,
design, software, video games
and advertising matter so much
for economic growth?
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ECR 2010
Creative industries
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Activities at the Crossroads between the Arts,
Business and Technology
Ideas & IPRs are major input and output
Competitive edge derived from originality, service
and customization
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Concentrated in urban areas
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Promote technology diffusion & development
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Positive impact on growth of local GDP p.c.
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Thank you for your attention!
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Annex: Old and new topics
inputs
Labour
skills
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ICT
 ICT, regulation and productivity (2009)
 ICT-linked firm reorganisation and productivity
gains (2003)
 ICT, growth and productivity (2001)
 Industrial non-energy raw materials (2011)
 Intangible investments (1999)
Other
Migration, skills and productivity (2009)
Training, education and productivity (2009)
Skill problems (2007)
Human capital and productivity growth (2002)
Skill shortages in ICT (2001)
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Old and new topics
processes
International
economics
 Trade in intermediate products and
manufacturing supply chains (2010)
 EU and BRICs (2009)
 Trade costs, openness and productivity:
market access (2008)
 Challenge of a rising Chinese economy
(2004)
 EU enlargement and competitiveness of
manufacturing (2003)
 Internationalisation of EU services (2000)
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Old and new topics
processes
Innovation
 Convergence of knowledge intensive
sectors (2011)
 Foreign corporate R&D and innovation (2010)
 Key Enabling Technologies (2010)
 Financing of innovation (2006)
 Lead Markets (2006)
 Productivity and public sector R&D (2004)
 Impact of innovation (2001)
 Biotechnology (2001)
 Quality based competitiveness (2000)
 “B2B E-Commerce“ (2000)
 Technology and innovation (1998)
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Old and new topics
processes
SMEs
 Entrepreneurship and SMEs: Policy
implications for the EU (2008)
 Access to finance for SMEs (1999)
Regulation
 Microeconomic reforms (2007)
 The regulatory environment in the context of
the Strategy for Growth and Jobs (2006)
 Synergies between EU enterprise and
competition policies (2002)
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Old and new topics
outcomes
General
 Growing imbalances of EU industry (2010)
 Competitiveness and the crisis (2009)
 General developments (2008, 2007)
 Growth and standards of living (2006, 2001)
 Growth, productivity and employment (2003)
 Regional aspects of competitiveness (2003)
 Sensitivity to external shocks (1999)
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Old and new topics
outcomes
Structural
change
 Sectoral growth drivers (2008, 2007)
 The future of manufacturing (2007)
 Structural change (2000, 1999)
 External services and performance (2000)
 Firm location (1999)
 Sectoral development (1998)
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Old and new topics
other
Sector
studies
 Space Sector (2011)
 Creative Industries (2010)
 Liberalisation of Energy markets (2006)
 ICT sector (2006)
 Pharmaceutical industry (2006)
 Productivity and the public sector (2004)
 Health sector (2004)
 Automotive sector (2004)
 Productivity growth in EU services (2002)
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Old and new topics
other
Societal
goals
 EU industry in a sustainable growth
context (2011)
 Competitiveness aspects of the Sustainable
Industrial Policy (2008)
 Corporate Social Responsibility (2008)
 Sustainable development in EU manufacturing
(2002)
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