Managing Competitive Advantage

Successful national export strategies are based on identifying a country's competitive advantage and understanding how to make the most of it.

Developing and transition economies, almost by definition, face severe resource constraints when organizing trade development and export promotion. Existing trade support programmes are likely to lack funding, and financing isn't available to launch new ones. Key institutions in the national trade support network are, in many instances, technically weak but resources, financial and otherwise, to improve capacities remain limited. Staff lack specialized training but there are few opportunities to upgrade their competency.

The scarcity of financial, programme-related, institutional and personnel resources calls for priority-setting within the national trade support network. But what types of support should be emphasized? For which target audience? Delivered in which fashion? By which organization? With which resources?

ITC is convinced that the best way to ensure effective resource allocation within the national trade support network is through a national export strategy. Indeed, ITC maintains that a strategy which realistically assesses the national capacity to export, the level of demand in the international marketplace and the resources needed to consolidate the fit between the two is critical to sustained improvement in national export performance.

Yet few developing and transition economies have invested in a national export strategy. Of those countries that have, it has been difficult to assess results.

Successful export strategies

In response to the shortage of documented models and networking on what works, ITC's Executive Forum on National Export Strategies provides a debating forum on national export strategy 'best practices'. Each year some 25 'national strategy teams' from developing and transition economies are invited to review ideas on export strategy design and management, exchange opinions and develop plans for strengthening the strategy development process within their own countries. To ensure that the national strategy process takes place within the framework of a public-private sector partnership - which ITC believes to be the key to effective strategy development - each national team participating in the Executive Forum dialogue includes a senior government official and a leading representative of the business sector.

New perspectives for a national approach

The 2002 Executive Forum focused on 'Managing Competitive Advantage'. ITC attempted to gather the ideas generated in previous debates into a single best practice model which would highlight the value of a national export strategy to the ultimate objective of achieving international competi-tiveness.

Participants appraised national export strategy and related management approaches from the perspectives of creating value, capturing value, adding value, projecting value and confirming value. It was not an easy task and led ITC, and the participating national strategy teams, into new, and largely uncharted, waters.

Participants explored competitiveness strategies through five sub-themes emphasizing value:

• Creating value: moving from comparative to competitive advantage reviewed the implications for the public-private sector partnership of maintaining a dynamic strategy which increasingly emphasizes specialization and technology - and innovation-based competitiveness.
  
  
• Capturing value: a value chain approach to national export strategy development looked at this new concept as a tool for developing sector-specific export strategies that both increase competitiveness and 'value-retention' from exports while maximizing the contribution of improved export performance to overall economic development. Debate focused on the importance to sectoral strategy of identifying and meeting 'critical success factors', of positioning national supply capability within the context of the international value chain, and of focusing the national trade support network on those linkages within the national value chain that dictate the sector's efficiency.
  
  
• Adding value: building value-addition alliances debated ITC's suggestion that for many developing countries, the route to increased export capacity and value addition lies in building alliances among local firms rather than actively promoting foreign direct investment. The potential contribution to competitiveness of industrial clusters, backward-forward linkages between local producers and agricultural production partnerships were reviewed, together with recommended approaches to facilitating such in-country alliances through a national export strategy.
  
  
• Projecting value: is there a case for national branding considered the relevance of image to national competitiveness. Participants were asked to identify the features that distinguish their country (and export) capacity from those of competing nations and to assess the suitability of investing in a national branding programme. A best practice road map for national branding was developed during the course of the debate.
  
  
• Confirming value: export strategy performance measurement concentrated on the importance to strategy-makers of monitoring and evaluating strategy, particularly with respect to its impact on competitiveness. Participants reviewed the performance monitoring approaches of the Hong Kong Trade Development Council, the Malta External Trade Corporation (METCO) and Finland's Finpro. Debate concentrated on the importance of adding a degree of 'science' to the art of performance assessment and how to replicate a systematic approach to measurement in developing countries.
  
  

  Brian Barclay (barclay@intracen.org) is Coordinator of ITC's Executive Forum process.

  
  
  Related articles:

  • International Perspectives
  • Partners' Views on the Executive Forum
  • ITC's First Executive Forum on National Export Strategies
  • Trade Maps: Knowledge as Power and the Fast Fish
  • Building Capacity to Compete in Business