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DEVELOPMENT AND COMPETITIVENESS
Susana [email protected]
James R. Wilson
Competitive Territories in the Global EconomySession 3, Tuesday 24th September 2013
• Last week we analysed the concept of globalisation:– The economy has been ‘globalising’ for hundreds of years– ‘Globalisation’ as a term has many interpretations: economic, political,
social, cultural, geographical, technological– It is also contested: ‘hyper-globalists’ versus ‘globalisation sceptics’– ‘Globalisation’ refers to changes in relationships as new technologies
combine with the dominant capitalist context in reducing the significance of territory
– This process has implications for businesses and for societies
• This week we will build from this context to focus on the implications for societies/territories:– What does it mean for a territory to ‘develop’?– Or to be ‘competitive’ within a global economy?
RECAP
• During the last decades economic development policies around the world have placed strong emphasis on ‘free markets’– The Washington Consensus: IMF, World Bank (macroeconomic
stabilization, economic opening with respect to both trade and investment, expansion of market forces within the domestic economy)
• We live in an era of widespread acceptance that government should play a limited role in the economy– It should ensure macroeconomic stability, property rights, and might play a
role in providing education, health ... – BUT the actual organisation of most economic activity is best left to firms:
here the best policy is no policy
• This is an era which has seen the rise of transnational firms, which now play a dominant role in economies
ECONOMIC DEVELOPMENT: CONTEXT
• In 1972 Stephen Hymer made the following predictions for the world economic system in the year 2000 ...
A “regime of North Atlantic Multinational Corporations”, that would “tend to centralize high-level decision-making occupations in a few key cities in the advanced countries, surrounded by a number of regional sub-capitals, and confine the rest of the world to lower levels of activity and income”
“the tendency of the system to produce poverty as well as wealth, underdevelopment as well as development”
SO WHO CONTROLS ECONOMIC DEVELOPMENT?
• Level III: Spread throughout the world according to where appropriate (low cost) manpower, raw materials and end markets are located
• Level II: More geographically concentrated in regional sub-capitals, where skilled workers, superior communication systems etc. are located
• Level I: Concentrated in a handful of key cities– London, New York, Paris, Bonn, Tokyo– Moscow and Beijing
Income, status, authority, and consumption patterns would radiate out from major centres, and the existing pattern of inequality and dependency would be perpetuated, implying that the basic relationship between different countries would be one of superior and subordinate, head office and branch plant. Hymer (1972)
THE INTERNATIONAL DIVISION OF LABOUR
What does ‘economic development’ mean to you?
BUT LETS TAKE A STEP BACK ...
• ‘Development’ is extremely widely used, in different contexts– Development is a ‘plastic word’
• It is often used to categorise places, and to make judgements:– ‘Developed’, ‘Developing’, ‘Less Developed’ ...– But these categories depend on a particular view of what ‘economic
progress’ actually means– Thus labels are open to different interpretations, and always carry with
them the views of those that use them
When thinking about the economic development of a particular place (city, region, country) ... perhaps the aims and objectives of people living in that place should define the concept of economic development ...?
DEVELOPMENT?
CONCEPTUALISATIONS OF ECONOMIC DEVELOPMENT
YES
NO
Developing Developing
NotDeveloping
Not Developing
DEVELOPEDLESS DEVELOPED
Progress TowardsCommunity Defined
Objectives?
SOCIO-ECONOMIC DEVELOPMENT
• If we accept that economic development must reflect the aims and objectives of people, then it becomes extremely difficult to separate out ‘economic’ processes from ‘social’ processes– ‘Economic processes’ influence social process and vice versa– They both need to be linked to democratic processes
• However convenient it is to do so, analysis and policy should not try to treat these processes separately – See Layard (2006) on the difference between a policy-maker’s ideal
world and the real-world
• Thus we switch from a focus on economic growth to a focus on socio-economic development
There are clear links between the analyses of economic development and globalisation ... But what are the implications for the popular concept of competitiveness ... ?
COMPONENTS OF HUMAN DEVELOPMENT INDEX
HUMAN DEVELOPMENT TRENDS
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
Human Development Index: Trends 1980 - present
Very high human development High human development
Medium human development Low human development
• Spain• Sweden• Netherlands• US• France• China• Germany• Qatar
• Thailand• Belgium• Italy• Slovenia• D.R Congo• Brazil• India• Costa Rica
BUT LET’S COMPARE THEM...
How would you rank these countries in terms of development?
• Building on our analysis of globalisation, we have started to explore what it means for territories or societies ‘to develop’ or ‘to be competitive’ in a globalised economy– Widespread acceptance of a Washington Consensus framework for
economic development: limited role for government• The role of transnational firms in controlling economic development• Stephen Hymer’s vision and the international division of labour
– But what does ‘development’ really mean?• Many different potential meanings: a plastic word• Should the aims and objectives of the people living in a particular place define
what development means for that place?• Perhaps it is more accurate to think of socioeconomic development?
– Finally, we started a discussion about the meaning of the word ‘competitiveness’
• Next time we will continue analysis of territorial competitiveness– What does it mean, and can we measure it?
SUMMARY
