SECTORAL COMPETITIVENESS
&
INDUSTRIAL CLUSTERING
MALTA 2013
COMPETITIVENESS
Two fundamental questions :
What is it?
Why does it matter so
much?
COMPETITIVENESS
1. Enterprise : Pepsi Cola v Coca
Cola
2. Sector (Tourism): Malta v Cyprus
3. National : Malta v ??
COMPETITIVENESS
International Trade Theory:
• A win-win proposition
• 2 presumptions: Free trade &
specialisation
Competitiveness:
• Int. Business = Winners & losers
“It is not what industries a nation
competes in that matters for
prosperity, but how firms compete
in those industries”
M.Porter
Profits =
PRICE x QUANTITY - COSTS
Competitiveness:
Cost v Differentiation
Cost = economies of scale,
superior technology, abundant raw
materials, low labour costs
Differentiation = entrepreneurship,
innovation and strategic marketing
(branding)
• Enterprises from stand-alone
units to part of value-chains,
networks, clusters.
• Clusters are important because
of externalities; providing a
unique way of organising
economic activity
clusters create
•critical mass of unique knowledge
and capability
•in a specific business field
•that comes from a mutually reenforcing effect combining firms &
supporting institutions
•Clusters promote specialisation in
the ‘same’ field in the ‘same’ place.
• Norway = 10% of all the
world’s seaborne
transportation.
• It is able to compete despite
its high wages.
• Why is Norway able to be so
productive and innovative?
• It has more than just shipping
companies.
• A variety of related industries,
suppliers & specialized
institutions. (eg. insurance
underwriters, shipping lawyers,
ship finance)
• Norwegian universities have
substantial maritime R&D
capabilities.
• Clusters are much more than
networks.
• Clusters are specialized asset
bases that get built over years
and even decades.
• Clusters contain a wide range of
institutions and capabilities that
require investment (public
/private)
Appropriate Roles of Government in
Cluster Development
• A successful cluster policy builds
on sound overall economic policies
• Government should support the
development of all clusters, not
choose among them
• Government policy should
reinforce established and
emerging clusters rather than
attempt to create entirely new
ones
• Government’s role in cluster
initiatives is as facilitator and
participant.
• The most successful cluster
initiatives are a public-private
partnership
THANK YOU