The Competitive Advantage of Singapore: Transition to the ... Files/caonsingapore08-02-01… · The Competitive Advantage of Singapore: Transition to the Innovation Stage Professor

The Competitive Advantage of Singapore:Transition to the Innovation Stage

Professor Michael E. PorterHarvard Business School

New Economy Conference @ SingaporeAugust 2, 2001

This presentation draws on ideas from Professor Porter’s articles and books, in particular, The Competitive Advantage of Nations (The Free Press,1990), “The Microeconomic Foundations of Economic Development,” in The Global Competitiveness Report 1998, (World Economic Forum,1998), “Clusters and the New Competitive Agenda for Companies and Governments” in On Competition (Harvard Business School Press, 1998)and ongoing statistical study of clusters, Competing for Prosperity: The Microeconomic Foundations of Development, forthcoming, and “What isStrategy?” (Harvard Business Review, Nov/Dec 1996). No part of this publication may be reproduced, stored in a retrieval system, or transmittedin any form or by any means - electronic, mechanical, photocopying, recording, or otherwise - without the permission of Michael E. Porter.

2CAON Singapore 2001 - 08-02-01 CK Copyright © 2001 Professor Michael E. Porter

Singapore 2001

• Singapore has achieved an extraordinary level of prosperity

• The current economic downturn is largely driven by the ITinvestment

• However, there are structural changes in the competitiveenvironment that require that Singapore revisit its economicstrategy


Singapore’s Economic Performance

15,000

17,000

19,000

21,000

23,000

25,000

27,000

29,000

31,000

33,000

35,000

0% 1% 2% 3% 4% 5% 6% 7%

Canada

Germany

Israel

South Korea

New Zealand

SINGAPORESweden

Taiwan

US

AustraliaJapan

UK

Finland

Ireland*

Compound annual growth rate of GDP per capita, 1990-2000

Weighted averageOECD

WeightedaverageOECD

GDP percapita(PPP

adjusted)in US-$,

2000

Note: Irish GNP per capita is about 20% lower than the reported GDP per capita figure due to large dividend outflows to foreign investors. We useGNP per capita for Ireland because it is more representative. For other countries GDP and GNP are very similar.

Source: WEO


Sources of Rising Prosperity• A nation’s standard of living (wealth) is determined by the productivity with which

it uses its human, capital, and natural resources. The appropriate definition ofcompetitiveness is productivity.

– Productivity depends both on the value of products and services (e.g.uniqueness, quality) as well as the efficiency with which they are produced.

– It is not what industries a nation competes in that matters for prosperity, buthow firms compete in those industries

– Productivity in a nation is a reflection of what both domestic and foreign firmschoose to do in that location. The combination of domestic and foreignfirms in a particular field creates the most fertile environment for prosperity

– The productivity of “local” industries is of fundamental importance tocompetitiveness, not just that of traded industries

– Devaluation does not make a country more “competitive”, rather it reveals alack of fundamental competitiveness

• Nations compete in offering the most productive environment for business

• The public and private sectors play different but interrelated roles in creating aproductive economy


Innovation and Prosperity

Competitiveness(Productivity)

Innovative Capacity

Prosperity

• In advanced economies, innovation is needed tosupport high levels of prosperity


Microeconomic Foundations of DevelopmentMicroeconomic Foundations of Development

Quality of the Microeconomic

BusinessEnvironment

Quality of the Microeconomic

BusinessEnvironment

Sophisticationof Company

Operations andStrategy

Sophisticationof Company

Operations andStrategy

Determinants of Productivity and Productivity Growth

Macroeconomic, Political, and Legal Context for DevelopmentMacroeconomic, Political, and Legal Context for Development

• Sound macroeconomic policies and a stable political / legal context arenecessary to ensure a prosperous economy, but not sufficient

• Competitiveness ultimately depends on improving the microeconomicfoundations of competition


Context forFirm

Strategyand Rivalry

Context forFirm

Strategyand Rivalry

Related andSupportingIndustries


Factor(Input)

Conditions

Factor(Input)

Conditions

• Sophisticated anddemanding local customer(s)

• Unusual local demand inspecialized segments that canbe served globally

• Customer needs thatanticipate those elsewhere

• A local context thatencourages efficiency,investment, andsustained upgrading

• Open and vigorouscompetition among locallybased rivals

DemandConditionsDemand

Conditions

• High quality, specializedinputs available to firms:

- human resources- capital resources- physical infrastructure- administrative infrastructure- information infrastructure- scientific and technological

infrastructure- natural resources

Productivity and the Microeconomic Business Environment

• Presence of capable, locally-based suppliers and firms inrelated fields

• Presence of clusters insteadof isolated industries


California Wine Cluster

Educational, Research, & Trade Organizations (e.g. Wine Institute,

UC Davis, Culinary Institutes)

Educational, Research, & Trade Organizations (e.g. Wine Institute,

UC Davis, Culinary Institutes)

Growers/VineyardsGrowers/Vineyards

Sources: California Wine Institute, Internet search, California State Legislature. Based on research by MBA 1997 students R.Alexander, R. Arney, N. Black, E. Frost, and A. Shivananda.

Wineries/ProcessingFacilities

Wineries/ProcessingFacilities

GrapestockGrapestock

Fertilizer, Pesticides,Herbicides

Fertilizer, Pesticides,Herbicides

Grape HarvestingEquipment

Grape HarvestingEquipment

Irrigation TechnologyIrrigation Technology

Winemaking EquipmentWinemaking Equipment

BarrelsBarrels

LabelsLabels

BottlesBottles

Caps and CorksCaps and Corks

Public Relations andAdvertising

Public Relations andAdvertising

Specialized Publications(e.g., Wine Spectator, Trade

Journal)

Specialized Publications(e.g., Wine Spectator, Trade

Journal)

Food ClusterFood Cluster

Tourism ClusterTourism ClusterCaliforniaAgricultural Cluster

CaliforniaAgricultural Cluster

State Government Agencies(e.g., Select Committee on Wine

Production and Economy)


Finland

United States

GermanyNetherlands

SwitzerlandDenmark

SwedenUnited Kingdom

AustraliaCanada

BelgiumAustria

Japan

FranceHong Kong

Iceland

Israel

New Zealand

Norway

Taiwan

Ireland

Spain

Italy

South Africa

ChileKorea

Portugal

Turkey

Malaysia

Brazil

Hungary

Greece

Czech Republic

Jordan

Slovakia

India

Mauritius

EgyptThailand

PolandMexico

Costa Rica

China

Argentina

PhilippinesIndonesia

Colombia

Peru

ZimbabweEl Salvador

Russia

Vietnam

Venezuela

BulgariaUkraine

Ecuador

Bolivia

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Global Competitiveness Report 2000The Relationship Between Microeconomic Competitiveness

and GDP Per Capita

Microeconomic Competitiveness Index

Source: Porter, Michael E. “The Current Competitiveness Index: Measuring the Microeconomic Foundations of Prosperity.” The GlobalCompetitiveness Report 2000, New York: Oxford University Press, 2000

1999 GDP perCapita*

* Adjusted for Purchasing Power Parity

SINGAPORE


Stages Of Competitive Development

Factor-DrivenEconomy

Factor-DrivenEconomy

Investment-Driven Economy

Investment-Driven Economy

Innovation-Driven Economy

Innovation-Driven Economy

Source: Porter, Michael E.,The Competitive Advantage of Nations,Macmillan Press, 1990

InputCost

Efficiency UniqueValue


Geographic Levels and Competitiveness

Broad Economic AreasBroad Economic Areas

Groups of NeighboringNations


States, ProvincesStates, Provinces

Cities, MetropolitanAreas


NationsNations

World EconomyWorld Economy

e.g. APEC, ASEAN


Singapore’s Current Position

• Singapore has taken the Investment-Driven strategy ofeconomic development to an extraordinary level of prosperity

• But the limits of the Investment-Driven strategy are becomingapparent

– Singaporean wages are already higher than other locationscompeting for investment-driven activities

– Labor force participation is near its upper limit– Capital/labor ratios are at or near U.S. levels– China is fundamentally altering patterns of FDI and the competitive

landscape– Progress in growing and globalizing indigenous companies is slow

• Regional cooperation initiatives have yet to yield major benefits


I. Address some enduring and emerging weaknesses

II. Make the transition to an Innovation-Driven economy with aunique role in the region

III. Transform company strategies

IV.Reorient and broaden the approach to regional cooperation

Singapore’s Economic Agenda in 2001


I. Address some enduring and emerging weaknesses– Improve the efficiency of domestic industries


15CAON Singapore 2001 - 08-02-01 CK Copyright © 2001 Professor Michael E. PorterSource: WEO

12345678910111213141516171819202122232425

LuxembourgJapanUnited StatesNorwaySwitzerlandDenmarkIcelandSINGAPORESwedenUnited KingdomFinlandHong KongNetherlandsAustriaGermanyBelgiumCanadaFranceIrelandAustraliaItalyIsraelSpainTaiwanNew Zealand

Rank GDP per capita (currentexchange rate) Index rank

GDP per capita (PPP)Index rank

LuxembourgUnited StatesNorwayIcelandSwitzerlandCanadaDenmarkBelgiumAustriaJapanIrelandAustraliaNetherlandsGermanyFinlandHong KongFranceSwedenItalyUnited KingdomSINGAPORENew ZealandIsraelSpainKorea

Competition and Local PricesRelative Prices for Local Goods and Services, 2000


I. Address some enduring and emerging weaknesses – Improve the efficiency of domestic industries– Strengthen domestic competition and antitrust policy



Competition and Competition PolicySingapore’s Relative Position

Context forFirm Strategyand Rivalry

Context forFirm Strategyand Rivalry

Note: Rank by countries; overall Singapore ranks 9 (5 on Quality of Business Environment)Source: Global Competitiveness Report 2000

Absence of Distortive 1Government Subsidies

Tariff Liberalization 1

Hidden Trade Barrier Liberalization 6

Absence of Legal Barriers to Entry 8

Extent of Locally Based Competitors 40

Intensity of Local Competition 27

Effectiveness of Anti-trust Policy 14

Competitive DisadvantagesRelative to GDP per Capita

Competitive AdvantagesRelative to GDP per Capita

Country Ranking Country Ranking


0%

5%

10%

15%

20%

25%

30%

Singapore Hong Kong OECD US

Competitive Pressure in SingaporeComparative Price-Cost Margins in Manufacturing

Price - AverageCost Margin,

Average, 1990 - 98

Source: IMF


I. Address some enduring and emerging weaknesses – Improve the efficiency of domestic industries– Strengthen domestic competition and anti-trust policy– Improve the capabilities of the education system



Comparative Educational Spending,Selected Countries

Source: UN

2%

3%

4%

5%

6%

7%

8%

9%

0% 2% 4% 6% 8% 10% 12% 14%

Public expenditure oneducation, Share of

GDP 1996

Growth of public education spending,CAGR 1990 - 1996

Malaysia

PhilippinesS Korea

Thailand

Singapore

Australia

New Zealand

Ireland

Finland

Sweden

UK

Canada

US


I. Address some enduring and emerging weaknesses – Improve the efficiency of domestic industries– Strengthen domestic competition and anti-trust policy– Improve the capabilities of the education system– Create an explicit strategy to mobilize older and

underemployed citizens



I. Address some enduring and emerging weaknesses – Improve the efficiency of domestic industries– Strengthen domestic competition and anti-trust policy– Improve the capabilities of the education system– Create an explicit strategy to mobilize older and underemployed

citizens– Reduce government involvement in the economy



Government-Ownership In Singaporean CompaniesComparison with other Asian Countries

Share of top 20 companieswith state share > 20%*

> 10% > 20% > 30%

Singapore

Hong Kong

Japan

Korea

Malaysia

Taiwan

Philippines

45%

5%

5%

15%

NA

NA

NA

23.6%

3.7%

1.1%

5.1%

17.8%

3.0%

3.6%

23.5%

1,4%

0.8%

1.6%

13.4%

2.8%

2.1%

11.3%

0.9%

0.4%

1.2%

8.2%

2.8%

2.1%

Share of companies withstate share**

Source: *La Porta et al (1998), **Claessens et al. (1999) cover 3’000 publicly traded companies in Asia


Evolving the Role of Government

• A strong and effective government role proved beneficial in theinvestment phase when efficiency and reliability were the principalcompetitive advantages

• Substantial government involvement will have diminishing returns- Government ownership is still high despite recent partial

privatizations. Government ownership places constraints oncompany strategy, and limits competition in the affected sectors

- Outward investments by government-linked companies are viewedwith suspicion in many countries, and are likely to be politicized

- Government “guidance” in the form of financial incentives andapproval requirements draws management to focus more on thegovernment than on the market

• A more open, pluralistic and heterogeneous society and economy areneeded to spur innovation and attract mobile knowledge workers

• Government’s role must shift to improving the business environmentand less involvement in the competitive process


I. Address some enduring and emerging weaknesses – Improve the efficiency of domestic industries– Strengthen domestic competition and anti-trust policy– Improve the capabilities of the education system– Mount an explicit strategy to mobilize older and underemployed


II. Make the transition to an Innovation-Driven economy– Signs of Progress



0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

0% 5% 10% 15% 20% 25%

Change in R&D InvestmentsCompound Annual Growth Rate in R&D Expenditures, 1985-1998

Source: US Competitiveness 2001: Strengths, Vulnerabilities, and Innovation Priorities Report; Global Competitiveness Report 2000

USA

Germany

UK

Sweden

Canada

SINGAPOREAustralia

Japan

Ireland

Italy New Zealand

South Korea

FranceIsrael

R&D Spending as Shareof GDP, 1998

R&D Expenditures, CAGR, 1985 - 1998

27CAON Singapore 2001 - 08-02-01 CK Copyright © 2001 Professor Michael E. PorterSource: US Patent and Trademark Office (www.uspto.gov). Author’s analysis.

Annual U.S. patentsper 1 million

population, 2000

Compound annual growth rate of US-registered patents, 1990 - 2000

International Patenting Output

0

50

100

150

200

250

300

350

400

450

0% 5% 10% 15% 20% 25% 30% 35% 40%

Australia

Canada

Germany

Japan

South Korea

New Zealand

SINGAPORE

Sweden

Taiwan

UK

Israel

= 10,000patentsgranted in2000

USA




II. Make the transition to an Innovation-Driven economy– Signs of Progress– Challenges

• Upgrade Singapore’s scientific, technological and knowledgecreation capacity



Science and Technology InfrastructureSingapore’s Relative Position

Licensing of Foreign Technology 4 University / Industry Research 19Collaboration

Quality of Business Schools 18

Quality of Science Research 15Institutions

Intellectual Property Protection 12

Company Spending on R&D 12






• Top 10 Singaporean-based inventors in terms of U.S. patents, 1999– CHARTERED SEMICONDUCTOR MANUFACTURING PTE LTD (37 patents)– TEXAS INSTRUMENTS, INCORPORATED (10)– HEWLETT-PACKARD COMPANY (9)– TRITECH MICROELECTRONICS INTERNATIONAL PTE LTD. (8)– NATIONAL UNIVERSITY OF SINGAPORE (7)– TRITECH MICROELECTRONICS, LTD.– SEAGATE TECHNOLOGY, INCORPORATED– BERG TECHNOLOGY, INC.– BLACK & DECKER INC.– MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.

• The electronics cluster accounts for more than 2/3 of all U.S. patents filedby Singaporean entities in 1999

Composition of Singaporean Patenting in the USTop Patenting Industries and Companies, 1999

Source: US Patent and Trademark Office (www.uspto.gov). Author’s analysis.





• Upgrade Singapore’s scientific, technological and knowledge creationcapacity

• Create advanced demand conditions



Demand ConditionsSingapore’s Relative Position

DemandConditionsDemand

Conditions


Extent of Regulatory Distortion of 1Competition

Openness of Public Sector 4Contracts

Demanding Regulatory 15Standards

Buyer Sophistication 12

Demanding Regulatory Standards 10





Finnish Wireless Cluster

! Finland is home to Nokia, the world’s most competitivehandset company

! There are approximately 3,000 Finnish firms in telecomand IT related products and services



Factor(Input)

Conditions

Factor(Input)

ConditionsDemand

ConditionsDemand

Conditions

! A history of competition intelecommunications servicesthroughout the 20th century

! Early to deregulate in telecomrelated industries

! More than 100 localoperators

! Active local rivalry in wirelesscommunications

Context forFirm

Strategyand Rivalry

Context forFirm

Strategyand Rivalry

! World’s most sophisticatedconsumers

! 70 percent penetration ofmobile phones (20 percent ofhouseholds have abandonedwireline phones)

! First country to allocatelicenses for 3rd generationwireless networks (3competitive groups)

! Heavy usage of shortmessage services

! Finland is a test market forWAP applications

! Substantial public investmentin telecommunications-relatedR&D, with a focus on wirelesstechnology

! Significant local venturecapital for mobile applications

! Finland is becoming aninternational center for WAPdevelopment (e.g., HewlettPackard, Siemens)

Source: “The Economic Impact of Third-Growth Wireless Technology,” U.S. Councilof Economic Advisors, October 2000Sou


I. Address some enduring and emerging weaknesses – Improve the efficiency of domestic industries– Strengthen domestic competition and anti-trust policy– Improve the capabilities of the education system– Mount an explicit strategy to mobilize older and underemployed citizens– Reduce government involvement in the economy


• Upgrade Singapore’s scientific, technological and knowledge creation capacity• Upgrade the science, technology infrastructure• Create advanced demand conditions• Encourage private sector-led cluster development• Widen the base of clusters in the economy around Singapore’s unique

advantages in the region



Related and Supporting IndustriesSingapore’s Relative Position




Cluster Presence 4 Domestic Supplier Quality 22

Domestic Supplier Quantity 19





Public / Private Cooperation in Cluster UpgradingMinnesota’s Medical Device Cluster

Context forFirm

Strategyand Rivalry

Context forFirm

Strategyand Rivalry



Factor(Input)

Conditions

Factor(Input)

ConditionsDemand

ConditionsDemand

Conditions

• Joint development of vocational-technical college curricula with themedical device industry

• Minnesota Project Outreach exposesbusinesses to resources available atuniversity and state governmentagencies

• Active medical technology licensingthrough University of Minnesota

• State-formed Greater Minnesota Corp.to finance applied research, invest innew products, and assist in technologytransfer

• State sanctionedreimbursement policiesto enable easier adoptionand reimbursement forinnovative products

• Aggressive trade associations(Medical Alley Association, HighTech Council)

• Effective global marketing of thecluster and of Minnesota as the“The Great State of Health”

• Full-time “Health Care IndustrySpecialist” in the department ofTrade and Economic Development


KnowledgeCreation

KnowledgeCreation

HealthcareHealthcare FinancialServices

FinancialServices

InformationTechnologyInformationTechnology

ApparelTextiles and

Footwear

ApparelTextiles and

Footwear

MarineMarineTourism andLeisure

Tourism andLeisure

PolymersPolymers

MetalworkingMetalworking

Specialty Paper

Specialty Paper

EnvironmentalProducts and

Services

EnvironmentalProducts and

Services

Massachusetts ClustersWidening the Cluster Base


Microeconomic Business EnvironmentSingapore’s Relative Position

Government Infrastructure 1Investment

Port Infrastructure Quality 1

Road Infrastructure Quality 1

Air Transport Infrastructure Quality 1

Overall Infrastructure Quality 1

Quality of Public Schools 4

Telephone / Fax Infrastructure Quality 6



Country Ranking


I. Address some enduring and emerging weaknesses

II. Make the transition from an Investment-Driven to a trueInnovation-Driven economy




1234567891011121314151617181920

1234567891011121314151617181920

Global Competitiveness Report 2000Singapore’s Ranking

FinlandUnited StatesGermanyNetherlandsSwitzerlandDenmarkSwedenUnited KingdomSingaporeAustraliaCanadaBelgiumAustriaJapanFranceHong KongIcelandIsraelNew ZealandNorway

GermanyUnited StatesFinlandJapanSwitzerlandSwedenNetherlandsDenmarkFranceBelgiumUnited KingdomAustriaIsraelIcelandSingaporeCanadaItalyTaiwanIrelandAustralia

FinlandUnited StatesNetherlandsDenmarkSingaporeGermanyAustraliaCanadaUnited KingdomSwitzerlandSwedenAustriaBelgiumHong KongFranceIcelandNew ZealandNorwayJapanIsrael

Rank Current CompetitivenessIndex

Company Strategy &Operations Index

National BusinessEnvironment IndexNational BusinessEnvironment Index

Source: Global Competitiveness Report 2000

SINGAPORE

SINGAPORE

SINGAPORE


Licensing of Foreign Technology 4

Note: Rank by countries; overall Singapore ranks 9 (15 on Company Operations and Strategy)Source: Global Competitiveness Report 2000

Product Designs 25

Control of International Distribution 25

Capacity for Innovation 25

Extent of Branding 21

Extent of Regional Sales 21

Marketing Expertise 17

Nature of Competitive Advantage 16

Value Chain Presence 16

Production Processes 13

Senior Management Recruitment 13

Breadth of International Markets 13

Company Spending on R&D 12



Company Operations and StrategySingapore’s Relative Position



Determinants of Relative PerformanceTypes of Competitive Advantage

Differentiation(Non-Price Value)

Lower Cost

CompetitiveAdvantage

CompetitiveAdvantage


Sources of Competitive Advantage

• Creating a unique andsustainable competitiveposition

• Assimilating, attaining, andextending best practice

Do the same thing better Compete in a different way

StrategicPositioning

OperationalEffectiveness


I. Address some chronic weaknesses

II. Make the transition from an Investment-Driven to a trueInnovation-Driven economy


IV.Reorient and broaden the approach to regionalcooperation



Geographic Levels and Competitiveness

Broad Economic AreasBroad Economic Areas



States, ProvincesStates, Provinces



NationsNations

World EconomyWorld Economy

e.g. APEC, ASEAN


The Mutual Dependence ofNations and Their Regional Neighbors

• A nation’s economic growth and prosperity can be greatly enhanced by healthy neighboring economies

- A collectively larger overall market increases specialization,widens export industries, and attracts foreign investments

- Individual nations can focus on their unique strengths

• A nation will inevitably suffer if it is isolated or an island amidcountries that are not prospering

- e.g. Israel

• A nation’s productivity can be greatly enhanced by regionalcoordination versus unilateral action


Finland

United States

GermanyNetherlands

SwitzerlandDenmark

SwedenUnited Kingdom

AustraliaCanada

BelgiumAustria

Japan

FranceHong Kong

Iceland

New Zealand

Norway

Taiwan

Ireland

Spain

Italy

South Africa

ChileKorea

Portugal

Turkey

Malaysia

Brazil

Hungary

Greece

Czech Republic

Jordan

Slovakia

India

Mauritius

EgyptThailand

PolandMexico

Costa Rica

China

Argentina

PhilippinesIndonesia

Colombia

Peru

ZimbabweEl Salvador

Russia

Vietnam

Venezuela

BulgariaUkraine

Ecuador

Bolivia

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Global Competitiveness Report 2000The Relationship Between Microeconomic Competitiveness

and GDP Per Capita

Microeconomic Competitiveness Index

Source: Porter, Michael E. “The Current Competitiveness Index: Measuring the Microeconomic Foundations of Prosperity.” The GlobalCompetitiveness Report 2000, New York: Oxford University Press, 2000

1999 GDP perCapita*

* Adjusted for Purchasing Power Parity

Singapore

ISRAEL


Regional Strategy and Geographic Scope

Broad EconomicAreas

Broad EconomicAreas

Groups of ProximateNeighboring Nations

Groups of ProximateNeighboring Nations

• Communication and mutualunderstanding

• Gains from increased tradeand investment

• Communication and mutualunderstanding

• Greater gains from increasedtrade and investment- Widen the range of traded

industries- More efficient specialization

by industry and stage in thevalue chain

• Investments in the businessenvironment of each nation

Benefitsof

regionalcooperation

Geographic proximity


Regional Strategy and CompetitivenessTraditional View• Free trade zone

– Gains from trade and investment

New View• A regional strategy to enhance competitiveness in each neighboring

country- Deep gains from trade and investment

- Policy coordination to capture mutual benefits to productivity amongcountries via specialization and capturing externalities across borders

- A powerful lever for speeding up the process of economic reform at thenational level

- A tool for promoting interest and investment in the region by theinternational community

and


• Coordinatemacroecono-mic policies

• Eliminate tradeandinvestmentbarriers withinthe region

• Simplify andstandardizecross-borderregulations andpaperwork

• Guaranteeminimum basicinvestorprotections

• Set minimumenvironmentalstandards

• Set minimumsafetystandards

• Establishreciprocalconsumerprotection laws

• Agree on foreigninvestmentpromotionguidelines to limitforms ofinvestmentpromotion that donot enhanceproductivity

• Coordinatecompetitionpolicy

• Improve regionaltransportationinfrastructure

• Create an efficientenergy network

• Upgrade/link regionalcommunications

• Upgrade/link financial markets

• Upgrade highereducation throughfacilitatingspecialization andstudent exchanges

• Expand cross-borderbusiness and financialinformation accessand sharing

• Coordinate activities toensure personal andphysical safety

• Enhancespecialization andupgrading inclusters thatcross nationalborders, e.g.

– Tourism

– Agribusiness

– Textiles andApparel

– InformationTechnology

• Share bestpractices ingovernmentoperations

• Improve regionalinstitutions

– Regionaldevelopmentbanks

– Disputeresolutionmechanisms

– Policycoordinationbodies

• Develop aregionalmarketingstrategy

Factor (Input)

Conditions

Factor (Input)

ConditionsRegional

GovernanceRegional

GovernanceContext for

Strategy and Rivalry

Context for Strategy

and Rivalry

Related and Supporting Industries

Related and Supporting Industries

Demand ConditionsDemand

Conditions

Regional Economic CoordinationIllustrative Policy Levers


• APEC and ASEAN cover a vast geographic area andencompass countries with widely different political systems andstages of development

– APEC and ASEAN’s role can be useful in trade expansion andestablishing general rules and guidelines

– Cooperation with individual countries within the Asia area can boosttrade and strengthen the competitiveness of specific clusters

• Deeper cooperation with immediate neighbors like Indonesiaand Malaysia can produce significant productivity benefits

– Meaningful cluster integration– Coordination of government economic and infrastructure policies

• At the same time, market integration within ASEAN, and withIndia, offer compelling strategic advantages to Singapore

The Role of Regional Coordination

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The Competitive Advantage of Singapore: Transition to the ... Files/caonsingapore08-02-01… · The Competitive Advantage of Singapore: Transition to the Innovation Stage Professor