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The Challenges of competition in a globalised economy

The Challenges of competition in a globalised economy. What is the knowledge economy? What is required for a country to be able to fully participate in the knowledge economy? The World Economic Forum Global Competitiveness Report Special Focus on Turkey. What is the knowledge economy?.

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The Challenges of competition in a globalised economy

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  1. The Challenges of competition in a globalised economy What is the knowledge economy? What is required for a country to be able to fully participate in the knowledge economy? The World Economic Forum Global Competitiveness Report Special Focus on Turkey

  2. What is the knowledge economy? • The knowledge economy is the use of knowledge technologies (such as knowledge engineering and knowledge management ) to produce economic benefits. • Today's global economy is described as one in transition to a "knowledge economy", as an extension of an "information society". • The transition requires that the rules and practices that determined success in the industrial economy need rewriting in an interconnected, globalized economy where knowledge resources such as know-how and expertise are as critical as other economic resources.

  3. TEPEK TEPEK is the acronym for the title of this EU funded programme – Turkey’s participation in the European knowledge economy

  4. What is required for a country to be able to fully participate in the knowledge economy? • The World Bank has identified Four Pillars of The Knowledge Economy - four critical requisites for a country to be able to fully participate in the knowledge economy.These are: • Education & Training:An educated and skilled population is needed to create, share and useknowledge. • Information Infrastructure:A dynamic information infrastructure-ranging from radio to the internet-is required to facilitate the effective communication, dissemination andprocessing of information

  5. Four Pillars of The Knowledge Economy contd. • Economic Incentive & Institutional Regime:A regulatory and economic environment that enables the free flow ofknowledge, supports investment in Information and Communications Technology (ICT), and encourages entrepreneurship is central to theknowledge economy • Innovation Systems: A network of research centres, universities, think tanks, private enterprises and community groups is necessary to tap into the growingstock of global knowledge, assimilate and adapt it to local needs, andcreate new knowledge

  6. TEPEK • This TEPEK project is intended to help strengthen these pillars in Turkey. TEPEK combines training with various dissemination activities including: • Action Learning • Building local consortia • Website • Dissemination of project results • Seminars for the core team members

  7. The World Economic Forum Global Competitiveness Report • The WEF Global Competitiveness Report series has evolved over the last three decades into the world's most comprehensive assessment of countries' competitiveness • Produced in collaboration with leading academics and research institutes, the Report provides users with a comprehensive assessment of their strengths and weaknesses related to national competitiveness using the Global Competitiveness Index as the main methodology • In order to assess national competitiveness, WEF uses the Global Competitiveness Index (GCI), which measures the set of institutions, policies and factors that set the sustainable current and medium-term levels of economic prosperity

  8. WEF • The goal of the WEF’s work on competitiveness is to contribute to a better understanding of the key ingredients of economic growth and prosperity. • By highlighting the strengths and weaknesses of an economy, policy-makers, business leaders and other stakeholders are offered an important tool for the formulation of improved economic policies and institutionalreforms

  9. WEF • In addition to statistical data the index also features data from the Executive Opinion Survey carried out by the World Economic Forum. The 2008 Survey captures the perceptions of over 12,000 business leaders from the featured 134 economies. Turkey is ranked 63 in this year’s survey.

  10. 2008-09 Top10

  11. Countries rated under 12 categories or ‘pillars’: Basic Requirements: • 1st pillar: Institutions • Public institutions: Property rights, Ethics and Corruption, Undue influence, Government inefficiency, Security • Private institutions: Corporate ethics, Accountability • 2nd pillar: Infrastructure - General and specific infrastructure • 3rd pillar: Macroeconomic stability • 4th pillar: Health and primary education

  12. Efficiency Enhancers • 5th pillar: Higher education and training • Quantity of education • Quality of education • On-the-job training • 6th pillar: Goods market efficiency • Competition: Domestic competition and Foreign competition • Quality of demand conditions • 7th pillar: Labour market efficiency • Flexibility • Efficient use of talent

  13. Efficiency Enhancers 2 • 8th pillar: Financial market sophistication • Efficiency • Trustworthiness and confidence • 9th pillar: Technological readiness • 10th pillar: Market size • Domestic market size • Foreign market size

  14. Innovation and Sophistication Factors • 11th pillar: Business sophistication • Networks and supporting industries • Sophistication of firms’ operations and strategy • 12th pillar: Innovation

  15. How these relate to economy types • The first four are key for factor driven economies • The next six pillars are key for efficiency driven economies • The final two pillars are key for innovation driveneconomies

  16. Special Focus on Turkey • Turkey ranked 59 in the 2006-2007 report, and was the focus of a special country report • Based on its GDP per capita level, Turkey was in the efficiency-driven stage: • Efficiency enhancers critical for the country’s competitiveness (50%) • Basic requirements remain very important (40%) • Innovation and sophistication factors less important (10%).

  17. The Business Sophistication Pillar • Turkey showed a competitive advantage in this pillar • Progressinbusiness sophistication compared with its own performance in the other GCI pillars • With a rank of 39 and a score of 4.58, business sophistication was by far the pillar in which Turkey did best and outperformed both the accession 10 average (4.46) and Bulgaria (3.59) and Romania (3.89).

  18. Other highlights • High scores for for its cluster related infrastructure, including: • Local supplier quantity (29th) and quality (39th) • Control of international distribution (29th) • Extent of goods production higher up on the value chain (37th)

  19. Importance of Innovation • In current knowledge-based and interconnected economic systems, innovation becomes the only sustainable driver of productivity growth for firms and countries alike • Developing national dynamic competitive advantages allows countries to ensure increasing levels of prosperity and living standards for their citizens • Capacity to generate endogenous innovation leads to sustained productivity increases and enduring competitiveness • Turkey already performed better with regard to innovation than all accession and candidate countries with the exception of Croatia

  20. The main innovation enablers • Government • Business sector • Research institutions Turkey scored well in: • Extent of research cooperation betweenthe private sector and universities (46th) • Availability of scientists and engineers (44th) • Companies’ capacity for innovation (47th)

  21. Areas for Improvement • Report notes that government-related variables, such as public procurement of high technology goods and intellectual property protection, remain areas of concern, with rankings of 62nd and 71st respectively • Turkey ranks 70th for number of US utility patents granted per million inhabitants • Domestic innovation potential has not yet been fully tapped with regard to development of new processes and products

  22. Conclusions • Turkey does quite well in some of the more complex competitiveness dimensions such asbusiness sophistication and technological adoption • Continues to lag behind in some of the more basic requirements for competitiveness – stabilityof the macroeconomic environment, the quality of public institutions and the educational system. • Country’s competitive strengths are primarily in areas normally reserved for countries at higher stages of development • Highlights the need to address some of the more basic issues • Critical for enabling improvements in productivity and growth at the present time

  23. Links • http://gcr.weforum.org/gcr/ • http://www.weforum.org/pdf/Global_Competitiveness_Reports/Turkey.pdf Thank You! Barbara Baker, Magpie Links Ltd

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