Competitiveness a more valuable growth parameter

Global competitiveness is crucial to industrialisation and sustained productivity. Net photo.

When we speak of a country’s competitiveness, we are looking at its ability to sustainably produce goods and services for which there is a market at a price and quality that their market is willing to pay for.

Competitiveness may be local or regional and is now increasingly global as the Internet and global infrastructure allow for the almost seamless exchange of goods and services across continents.

Kenya has come a long way in terms of creating a conducive business environment that will nurture local industries and attract Foreign Direct Investment (FDI).

Perhaps a conspicuous signifier of this is our recent ranking in the Global Ease of Doing Business at position 61, which is 12 places up from the previous year and 31 places from 2016.

However, Ease of Doing Business is a ‘necessary but not sufficient’ condition to improve growth and prosperity. This reminds me of a conversation on an East African country where you are able to register a business in hours ‘I can set up in hours, but then what do I sell? How do I make money?’ – this is a competitiveness question.

Global competitiveness is therefore crucial to industrialization and sustained productivity that will ensure a country’s capacity to provide productive jobs, decent wages and consequently a dependable social support system for its population. Competitiveness may be due to natural factors e.g. climatic conditions, physical location or geographic conditions.

In some cases, competitiveness is built on the sheer will and determination of a nation without any such benefits, Japan and Singapore being examples of such power-houses that emerged despite, and some may argue because of, not having any physical or geographic advantage.

I would argue that the most potent form of global competitiveness is where natural factors are combined with will and determination to create powerhouses that are unbeatable. A classic example in our country is the floriculture industry where we have combined our location, weather and altitude with investment, both local and international, to create a world-beating industry, especially in cut roses.

Theoretically, in a liberalized economy, competitiveness is found and nurtured by the free market. Economic actors find and discover what the markets want and then compete to provide goods and services at a quality and price that is competitive.

However, the State is today a major player in affecting competitiveness positively or negatively.

In a positive sense, the State can build infrastructure that eases movement of goods and people, educate the populace, provide healthcare, etc that affect the macroeconomic factors.

So as we look at the Manufacturing Pillar of the Big 4 Agenda and our ambitions to grow manufacturing beyond 15 percent of GDP, our key question must be as simple as it is foundational – what can we make in Kenya today at a quality and price that is globally competitive.

The writer is Vice Chairman of Kenya Association of Manufacturers.

The views expressed in this article are of the author.