Transcript George Quigley Lecture - The Centre for Cross Border Studies

Competitiveness on the Island of Ireland
Frances Ruane
15 June 2016
Sir George Quigley Memorial Lecture
George Quigley and Competitiveness
• 1992 Sir Charles Carter lecture
– Draws parallel between Carter (1960) and Porter (1990)
– Proposed theme for NI Agenda: “innovation geared to
competitiveness and growth”
– Outward view: NI needs “to relate directly to the global
economy”
• 1999 IPA Lecture
– ‘It has been said that competitiveness has become to
economics what gravity is to physics’
– ‘Every organisation needs to be the most persistent and
rigorous challenger of its own performance’
• 1995 Conference Keynote Address
– ‘The Island Economy’
– Business and the Public sector
Outline
1. Global Focus on National Competitiveness (NC)
2. Competitiveness Concepts and Measures
3. Global Competitiveness Focus
– in ROI
– In NI
4. ROI and NI – a first Comparison of Indicators
5. Where to next?
1. Global Focus on NC (1)
• Move to freer trade, capital mobility, migration
– Globalisation
– European Single Market
• Evolution of theory on international economics
from
– Static, sectoral, resources (capital/labour) focus
– Simple concepts of technology and competition
• over two decades to
– More dynamic, enterprise level focus
– More realistic versions of technology and competition
1. Global Focus on NC (2)
• Why interest in national competitiveness?
– Increased capacity to globalise activities
– Implications of globalisation for jobs
– Developments in Economics
• Porter (1990): The Competitive Advantage of Nations
• Lundvall/Nelson (1992/3) National Innovation System
– EU Policy focus on Development Strategies /
Knowledge Society / Social Cohesion / Competition
– Data / Information Revolution – WWW
– ICT revolution – new evidence and analysis
2. National Competitiveness Concepts (1)
• Evolving concepts
– Traditional: macro policies; resources
• Contributions by Michael Porter
– New focus on Nature of Business Environment
– Diamond: factor conditions; demand conditions;
context for strategy /rivalry; industry context
– Clusters and Global Value Chain
– Cities and Regions
– Combining social and economic goals
• Key focus: Productivity > Costs
2. National Competitiveness Concepts (2)
• Framework > Model
• Developing > Finalised
– Structure – relationship between elements?
– Content – wider than economic?
– Metrics – more granular, capturing differences
– Look separately at sectors and regions
• Relationship with other Frameworks (e.g. Risk)
• Competitiveness as a diagnostic tool
2. Global Competitiveness Measures (1)
• Context:
– Era of ‘international benchmarking’
– Focus on evidence-informed policy making
– Growth of interest of international agencies
• How are countries/regions/cities performing?
– Across an increased number of measures
– Over time relative to others
– Compared to relevant neighbours / competitors
2. Global Competitiveness Measures (2)
• Players:
–
–
–
–
World Economic Forum/IMD
Regional Blocks: EU; OECD
Countries: UK, ROI; Singapore; EU
Sub-national: cities; regions
• Data Sources:
–
–
–
–
International data (IMF; World Bank; UNCTAD; etc)
Data from interviews with ‘leaders’ ; ‘experts’
Local data sources: EU bodies ; NI/UK (ONS);
Commercial data sources
3. Global Competitiveness Focus - ROI
• Performance context
– inflation; low growth; high unemployment
• Policy context
– Culliton Report; social partnership
• Formalisation
– National Competitiveness Council (NCC) in 1997
– Reporting to Taoiseach and Government (whole of
government) via relevant Minister
– High degree of independence – reports noted and
published
NCC Terms of Reference (Summary)
• Two annual reports
(i) benchmarking competitiveness of business
sector against international peer countries, and
(ii) outlining key competitiveness challenges facing
business, and policy responses needed
• Also
– other independent reports on competitiveness
issues, with recommendations on measures
required to improve competitiveness.
– other functions suggested by relevant Minister
Ireland: The NCC Competitiveness Pyramid
Source: Dept of Jobs, Enterprise and Innovation
Current Status
• Publication of annual scorecard
• Publication of annual report
• Formal review of existing framework currently
underway
– Review paper
– Consultation process
• New policy landscape in ROI?
3. Global Competitiveness Focus – NI
• Economic Advisory Group led initiative
• WEF comparators for NI (SQW/CE) Report - 2013
• First NI Competitiveness Scorecard - 2016
• New Data Source – Massive Task
• UU Economic Policy Centre (UUEPC)
• Measures NI competitiveness in broad context using
hybrid NCC model:
• Wide range of metrics including Quality of Life
• International: e.g. EU (28)/ UK regional (12)
• Sectoral dimensions / Regional dimensions
Northern Ireland: UUEPC Competitiveness Scorecard
Source: UUEPC
4. ROI and NI – Comparison of Scorecards
• Data
• UUEPC data base for Competitiveness Scorecard
• UK data used where no NI data available
• Limited to international measures
• Look at
• ROI and NI Current (~2015) and five year change
• Spider Diagrams to contrast NI and ROI positions and
policy challenges
• Context for five year performance ..
UK, NI & ROI: Quarterly Economic Growth
The Northern Ireland Composite Economic Index (NICEI) is an experimental quarterly measure of the performance of the NI
economy based on available official statistics. This measure of output allows comparison of GDP in the UK and the Republic of
Ireland.
Source: UUEPC; Data: DETI
UK, NI & ROI: Job Growth
Source: UUEPC; Data: ONS (UK & NI) & CSO (RoI)
NI Relative Competitive Performance Over Time
Pillar
Business performance
Physical infrastructure
Macro and fiscal
Prices and costs
Environmental sustainability
Quality of life
Business environment
Innovation, research and development
Productivity
Education and skills
Employment & labour supply
Overall average
5 years
previous
7.2
6.3
7.6
6.6
6.5
5.3
4.8
6.4
8.0
5.4
6.8
6.2
Current
5.8
5.9
7.2
6.3
6.5
5.3
4.8
6.4
8.0
5.9
7.3
6.1
Conclusion: Very little change over past five years
Change in
decile
1.4
0.4
0.4
0.3
0.0
0.0
0.0
0.0
0.0
-0.5
-0.5
0.1
Source: UUEPC
ROI Relative Competitive Performance Over Time
Pillar
Macro and fiscal
Quality of life
Environmental sustainability
Business performance
Productivity
Prices and costs
Employment & labour supply
Business environment
Physical infrastructure
Education and skills
Innovation, research and development
Overall average
5 years
previous
6.6
6.7
7.2
4.2
3.0
7.8
6.8
4.5
7.1
6.3
5.4
6.1
Change in
decile
5.8
0.8
5.8
0.8
7.0
0.2
5.0
-0.8
3.0
0.0
6.1
1.7
7.1
-0.3
4.3
0.3
6.5
0.6
4.8
1.5
5.0
0.4
5.5
0.6
Source: UUEPC
Current
Conclusion: Signs of improvement exiting GFC
Spider Diagrams
Macro and fiscal
Innovation, research
and development
10
9
The closer to the
centre the better
Quality of life
8
7
6
Education and skills
5
4
Environmental
sustainability
3
2
1
Physical
infrastructure
Business
performance
Business
environment
Productivity
Employment &
labour supply
Sustainable growth
Prices and costs
Essential
conditions
Policy inputs
Northern Ireland
NI
Macro and fiscal
Innovation, research
and development
10
Quality of life
9
8
7
6
Education and skills
Environmental
sustainability
5
4
3
2
1
Physical
infrastructure
Business
performance
Business
environment
Employment &
labour supply
= Sustainable growth
Productivity
Prices and costs
= Essential conditions
= Policy inputs
NI and ROI
RoI
NI
Macro and fiscal
* Innovation, research
and development
10
Quality of life
9
8
7
6
Education and skills
Environmental
sustainability
5
4
3
2
1
Physical *
Business
performance
infrastructure
Business
environment
*
Employment &
labour supply
= Sustainable growth
Productivity
Prices and costs
= Essential conditions
= Policy inputs
Detailed Indicators
• Policy Input domain – what can be improved
• Three examples
– Business environment
– Physical Infrastructure
– Innovation and R&D
• Importance of an unbiased perspective
• Real value in showing context
• Current indicators – to be monitored/refined
Northern Ireland: UUEPC Competitiveness Scorecard
Blood tests
Condition of organs
Life habits;
Medication
Source: UUEPC
Business Environment (NI)
UK
Regulation of professional
services (Engineering)
Private equity investment (%
of GDP)
10
Time to comply with tax
payments (hours per year)
9
8
Venture Capital Investment (%
of GDP)
7
Product market regulation
6
5
4
Income tax + employee
contributions as a % of GW
(Married, 2 CD, 100% AW)
3
Ease of doing business
2
1
Income tax + employee
contributions as a % of GW
(Married, 2 CD, 167% AW)
Regulation of professional
services (Legal)
Regulation of professional
services (Accounting)
Total entrepreneurial activity
Regulation of professional
services (Architect)
Barriers to entrepreneurship
NI
Business Environment (ROI)
Regulation of professional
services (Engineering)
Private equity investment (%
of GDP)
10
Time to comply with tax
payments (hours per year)
9
8
Venture Capital Investment (%
of GDP)
7
Product market regulation
6
5
4
Income tax + employee
contributions as a % of GW
(Married, 2 CD, 100% AW)
3
Ease of doing business
2
1
Income tax + employee
contributions as a % of GW
(Married, 2 CD, 167% AW)
Regulation of professional
services (Legal)
Regulation of professional
services (Accounting)
Total entrepreneurial activity
Regulation of professional
services (Architect)
Barriers to entrepreneurship
RoI
Business Environment (NI/ROI)
Regulation of professional
services (Engineering)
Private equity investment (%
of GDP)
10
Time to comply with tax
payments (hours per year)
9
8
Venture Capital Investment (%
of GDP)
7
Product market regulation
6
5
4
Income tax + employee
contributions as a % of GW
(Married, 2 CD, 100% AW)
3
Ease of doing business
2
1
Income tax + employee
contributions as a % of GW
(Married, 2 CD, 167% AW)
Regulation of professional
services (Legal)
Regulation of professional
services (Accounting)
Total entrepreneurial activity
Regulation of professional
services (Architect)
Barriers to entrepreneurship
RoI
NI
Physical Infrastructure (NI)
% of households with
broadband internet
10
Traffic congestion index
Air transport of passengers
per capita
9
8
7
6
Energy import dependency
% of households with access
to the internet
5
4
3
2
1
% of individuals who have
never used a computer
Number of shipping routes
Number of air routes
(countries) available
Motorisation rate - cars per
1000 inhabitants
Percentage of households with
Internet access at home
Motorway Km per 1000 sq
KM’s
NI
Physical Infrastructure (ROI)
% of households with
broadband internet
10
Traffic congestion index
Air transport of passengers
per capita
9
8
7
6
Energy import dependency
% of households with access
to the internet
5
4
3
2
1
% of individuals who have
never used a computer
Number of shipping routes
Number of air routes
(countries) available
Motorisation rate - cars per
1000 inhabitants
Percentage of households with
Internet access at home
Motorway Km per 1000 sq
KM’s
RoI
Physical Infrastructure (NI/ROI)
% of households with
broadband internet
10
Traffic congestion index
Air transport of passengers
per capita
9
8
7
6
Energy import dependency
% of households with access
to the internet
5
4
3
2
1
% of individuals who have
never used a computer
Number of shipping routes
Number of air routes
(countries) available
Motorisation rate - cars per
1000 inhabitants
Percentage of households with
Internet access at home
Motorway Km per 1000 sq
KM’s
Comment: Interpretation of indicator must be set in context
RoI
NI
Innovation, Research and Development (NI)
Percentage of firms engaged
in innovative activity
(industry)
Researchers per 1,000 in total
employment, (Gov't)
10
PhD graduates per 1,000 of
population (aged 15-64)
9
8
Expenditure on R&D as a
percentage of GDP (GOVerd)
Persons with tertiary
education (ISCED) and/or
employed in science and…
7
6
5
4
Percentage of adults (16-24
year olds) who score level 2 or
3 in problem solving in…
3
Researchers per 1,000 in total
employment, (Business)
2
1
PCT patent applications per
million population
Expenditure on R&D as a
percentage of GDP (BERD)
Percentage of firms engaged
in innovative activity
(services)
Percentage of firms engaged
in innovative activity (total)
Researchers per 1,000 in total
employment, (Higher
Education)
Expenditure on R&D as a
percentage of GDP (HERD)
NI
Innovation, Research and Development (ROI)
Percentage of firms engaged
in innovative activity
(industry)
Researchers per 1,000 in total
employment, (Gov't)
10
PhD graduates per 1,000 of
population (aged 15-64)
9
8
Expenditure on R&D as a
percentage of GDP (GOVerd)
Persons with tertiary
education (ISCED) and/or
employed in science and…
7
6
5
4
Percentage of adults (16-24
year olds) who score level 2 or
3 in problem solving in…
3
Researchers per 1,000 in total
employment, (Business)
2
1
PCT patent applications per
million population
Expenditure on R&D as a
percentage of GDP (BERD)
Percentage of firms engaged
in innovative activity
(services)
Percentage of firms engaged
in innovative activity (total)
Researchers per 1,000 in total
employment, (Higher
Education)
Expenditure on R&D as a
percentage of GDP (HERD)
RoI
Innovation, Research and Development (NI/ROI)
Percentage of firms engaged
in innovative activity
(industry)
Researchers per 1,000 in total
employment, (Gov't)
10
PhD graduates per 1,000 of
population (aged 15-64)
9
8
Expenditure on R&D as a
percentage of GDP (GOVerd)
Persons with tertiary
education (ISCED) and/or
employed in science and…
7
6
5
4
Percentage of adults (16-24
year olds) who score level 2 or
3 in problem solving in…
3
Researchers per 1,000 in total
employment, (Business)
2
1
PCT patent applications per
million population
Expenditure on R&D as a
percentage of GDP (BERD)
Percentage of firms engaged
in innovative activity
(services)
Percentage of firms engaged
in innovative activity (total)
Researchers per 1,000 in total
employment, (Higher
Education)
Expenditure on R&D as a
percentage of GDP (HERD)
RoI
NI
What does the Comparison Suggest?
• Both NI and ROI could improve their effective
competiveness levels by actions such as:
• NI: Improving private sector investment,
research infrastructure, innovation system;
Reducing traffic congestion, energy import
dependency
• ROI: Improving broadband access, research
infrastructure (HERD/GOVERD); Reducing barriers
to entrepreneurship, legal regulations
5. Where to next? (1)
• Current Context
– New governments north and south
– Economic recovery
• Buoyancy of FDI investment
• Hesitant recovery of SMEs
– Urban-rural divide
– Infrastructural needs – must be addressed
effectively
– Fiscal pressures
• Uncertainty in relation to BREXIT
5. Where to next? (2)
• Competitiveness Scorecard and Report
– Who are they for? What is their role?
– Potential for more joined up thinking in government
– Important in context of increased devolution
• Explore possible new concepts
– Broader metrics; more refined metrics
– New geography – cities?
• Identify specific country/regional competitors?
• Framework approach not perfect but can assist:
Using a Competitiveness Framework
can help to get
Everyone: politicians, public servants, business, media, etc
Competitiveness Framework can help
to focus on weakness and risk
Remember: the chain is as strong as
the weakest link ...
A
B
C
D
No point in policy/expenditure focussing
on links A, B, D while ignoring C ...
Competitiveness framework can help to
join up thinking and avoid this ...
Sir George Quigley
worked to promote a strong island
economy. An honest and structured
focus on competitiveness can assist
this process.