Fabian Demicoli

Competitiveness: The Common Language

Measuring The Maltese Economies Performance against our competitors is very important. The world Economic Forum Global Competitiveness Index provides the instrument to enable us to make this comparison. There are other forms of comparisons as all global and regional economic fora provide some form or other of comparative statistics. But the World Economic Forum Index has wide acceptance. The important thing is that our economic managers, especially those at higher government level, but also in the line Ministries, read these figures. More important is that they schedule their programmes and strategies so that we can move up in the Index as this is what investors see and on which their estimates and their evaluations are made when businessmen and their advisors come to assess the competitiveness of our country.

 

Unfortunately, we in Malta tend to compare our own performance against our own performance in a previous period. This is not good enough as very often we may find that though on paper against our own performance a year before we appear to be moving forward, we might in practice be moving backwards when compared with our competitors. I know many businesses who make this great error. They buy more, they sell more, they believe they are bigger, but once they compare, they find that their market share is smaller as they have grown less than the whole market has grown. Worst still, they find that they have fallen back in comparison with their competitors.

 

Competition and competitiveness is a though game. Most people in business know that it is the toughest game of all. They can never rest. Even when successful the threat is always there. Your success means that others out there now want to target you and they want to beat you. So you can never rest. The successful business is the one that is sure that everyone in his team is conscious all the time of this fact. Even the one with the most comfortable product or service and who is dominant, will sooner or later learn this.

 

Only state bureaucrats running monopolies believe that all they have to do is add-up the costs of their service, add a profit mark-up and impose the price on costumers by Legal Notice. The Electricity Tariffs issue is all about this. No private owned company in a competitive market would have acted the way Enemalta did. Last time we had something like this from the private sector was the old Telecell. They came here to give us the first mobile phones, they obtained a fantastic monopoly, then they made us pay whatever they wanted. Luckily one sector that liberalized fast and now offers competitive rate is precisely the mobile telephony.

 

But competitiveness is something we have to work for all the time. Government must have this as it's basic philosophy. Public sector administration must look at the Competitiveness index and make sure that we move up in the eyes of the world even if its one notch at a time. But we must move up. People who fail must not be sustained and rewarded.

 

It is not acceptable that the Competitive Index of the World Economic Forum pushes Malta down to 52nd from 131 economies and that when the list of the most problematic factors for doing business in Malta is published, we continue to find on the list of most problematic issues areas that are within the capabilities of the public service to resolve. Top most on the list of issues that are hampering Malta's global competitiveness as listed by world economic forum is the inefficient Government bureaucracy. Access to Finance is a high second. Tax rates, restrictive labour regulations, inadequate educated workforce, tax regulations, inflation, are other prime issues. The public service must wake up. These are not issues for which we do not have the financial resources or for which there is no political commitment. These are issues that we must resolve. We must stop the talking and we must act on a clear measurable scheme. It's time someone starts using the hard stick. We must break through on these issues. Small steps forward are not enough.

 

In the private sector, the people who really create the wealth never sit pretty. They are always striving to become more competitive. The arm-chair critic thinks that they are simply striving to become richer. It is however an urge in business people that is necessitated by a higher motive: that of being successful. People don't go in business to be failures. They go in business because their entrepreneurial zeal wants them to be successful. To be successful they must compete.  To compete they watch themselves, the systems they use, the product or services they provide, the quality and training of the people they employ, sales techniques, marketing technique, and all that it takes to make a successful business. Above all they watch the competition. They don't want to fall back. They want to move forward.

 

In 2006-2007 Malta scored 1st on the World Forum Competitiveness Index in a league of 122 economies. In 2007-2008 Malta scored 56th out of 131 economies. In 2008-2009 Malta scored 52nd out of 131 economies. We moved forward. This really means that as the others pulled back, we moved forward even though since August 2008 the best economies started grinding to negative growth. But 52nd is not a comfortable place to be. We must all work harder.

 

It is of great interest that our economy is classified by World Economic Forum as an economy that is Innovative-driven. Economies are placed in three stages of competitiveness development. The first stage economies are Factor-Driven. The topmost stage reached by economies after competitiveness scores in a combination of pillars of competitiveness are taken into consideration. These pillars include market size, business sophistication, innovation, efficiency of institutions, the infrastructure, the standards of health and primary education, the levels and penetration of higher education and training, the financial market sophistication, the labour market efficiency, the technological readiness, the goods market efficiency and  last but not least, macroeconomic stability.

 

It's a tall order. But using a measurable approach used by others helps us to move on, area by area. It helps policy makers to know what to aim for and how to measure performance. The second stage of development puts together the economies that are considered to be Efficiency-Driven. The third stage of development puts together countries that like MMalta are considered to be Innovation-Driven. The countries that are moving from one stage of development to the other are placed in transitory stages. Each economy is assessed according to the same set of competitiveness pillars. Within each pillar there are a number of criteria on which scores are made so that each country can be assessed by the same measuring rod.

 

Today it's essential we manage our economy in a measured way. This is my gospel. We need to have more people up there who know that performance, efficiency, competitiveness, is the only language that matters.

 

When the winds blow, as they are doing now from all angles of the globe and economies are being squeezed down, it is the fittest that survive. Not only during the bad times, but always, the fittest move forward as they are lean and fit. During hard times the competitive invest more and win more not less as markets pull towards the fittest. It is not just a question of being resilient. Many confused resilient with competitive. Many in Aquila in Abruzzo Central Italy were resilient, but only those that were earthquake proof survived.

 

We will survive and grow more if we become more competitive. This is the gospel we need to preach. Here, in all our work, in the public administration, in the national parliament, in the European Parliament the language our representative need to speak in one: competitiveness.

 

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