SYSTEMIC COMPETITIVENESS: MAKING A BETTER PLACE FOR BUSINESS The competitiveness of firms operating from a particular location is determined not only by firm own performance, but also by a multitude of other factors in the business environment from which it operates. The Systemic Competitiveness model (Source: Jorg Meyer–Stamer) scopes the variety of factors that can be influenced by LED to improve competitiveness. Identifying which of these factors to prioritise is crucial to maximise LED impact. Whilst the main focus of LED is mainly on making a better place for business, LED also needs to develop allocation where citizens are able to compete for local and external economic opportunity, and where environmental quality and sustainability is managed well. Micro Level: Competitiveness of Key Sectors and Clusters The key issue at the micro level is effective management of technical and organizational learning processes at the firm level, effective technology management being the necessary condition of continuous product and process innovation. Moreover, management of this sort must be geared to optimizing the inter-firm division of labour by encouraging close interaction between industrial firms, suppliers, service firms, and specialized R&D institutions and to intensifying producer user contacts. Meso Level: Competitiveness of the Location for Key Sectors The mesolevel is concerned with shaping the specific environment in which firms operate by means of selective interventions that catalyse/stimulate priority sectors. This is where the state and societal actors on the national, regional, and local level are creating locational advantages, often by pursuing opportunities that will not be realised by individual business entrepreneurs due to high barriers to entry, scale intensity or other market failures. Of particular significance are a competition- related configuration of material infrastructure (basic services, transportation, communications, and energy systems) and sectoral policies, above all education/ training policy, research policy, and technology policy; a specifically formulated trade policy and regulatory systems (e.g. environmental standards, technical safety standards) that contribute to the emergence of specific competitive advantages. An import protection policy for emerging industries with a lot of development potential – limited in time and tied to clear-cut performance criteria – can facilitate the process of building competitive advantages at firm level. The mesolevel also requires development of new patterns of organization and guidance to compliment the traditional top-down pattern of government control. The necessary resources for shaping locational advantages and guidance activities (money, know-how, ideas) are widely dispersed across both public and private actors. Government programs have often been relatively ineffective because the firms concerned were not involved in the policy formulation, and the programs were thus misguided (e.g. vocational training, R&D). Therefore, it is desirable that organizational patterns emerge that are characterized by mutual information, inclusion of special interests, and joint problem-solving mechanisms, and these form the basis of decision making processes. The shaping of structures at the meso level therefore requires a high degree of social-organizational ability and the willingness of the relevant groups of actors to engage in decision-making mechanisms based on strategic interaction and keyed to solving problems through cooperative effort. Macro Level: Economic, Political & Regulatory Framework conditions: The main concern at the macrolevel is to create the framework for effective competition to ensure that pressure is brought to bear on firms to increase their productivity, reducing the gap with the firms most innovative and competitive at the international level. The requirement for this is: a stable macroeconomic framework that ensures undistorted prices and favourable financing terms; a competition policy that prevents the emergence of monopoly situations; an exchange-rate and trade policy that does not obstruct exports, while at the same time avoiding adjustment processes that overtax the response potential of even adaptable firms and shunning ruinous import competition that can lead to high trade deficits. Meta Level: Development Orientation of Society Three elements are important at the meta level: first, a social consensus on the guiding principle of market and world-market orientation; second, a basic pattern of legal, political, economic, and overall social organization that permits the strengths of the relevant actors to be focused, sets in motion social communication and learning processes, and bolsters national innovative, competitive and growth advantages; and third, the willingness and ability to implement a medium- to long term strategy of competition-oriented techno-industrial development. Competitive strength calls for high levels of ability in organization, interaction, and strategy on the part of groups of national actors, who, in the end, will have to strive to realize a systems management encompassing all of society. Citizens Access Economic Opportunities (Good Place to Work) Citizens and especially the poor have less access to economic opportunities due to a number of limiting factors such as education levels, health, safety, access to basic services, ICT, transport and information. When poor people have access to tangible assets, such as land, housing, water, energy, sanitation, transport and credit, or intangible assets, such as education, health and personal security, they are enabled the means to participate in economic activity and therefore are better placed to benefit from economic growth. Where people are healthy, do not spend their entire day collecting fuel and water and have access to public transport on decent roads, they are more capable of seizing LED opportunities as and when they arise. These factors require attention to increase the ability of citizens to access economic opportunities. Whereas many of these factors fall in the domain of social development, relevant leaders and citizens need to understand the economic consequences of their decisions. Citizens need to be informed for example to understand the consequences of not taking maths and science at higher grade, whilst public sector leaders need to make wise choices when investing public funds. Environmental Quality and Sustainability To ensure that economic growth does not come about in a manner detrimental to the environment or to sustainable development, checks and balances are required. The whole community sooner or later pays the price for conscious or unconscious the exploitative behaviour, by individuals or sectors. It is important therefore to be aware of the current state of and trends in environmental quality and sustainable development, to determine if intervention is required. Care should be taken not to do the work of existing organisations such as nature conservation but rather to work jointly and focus on facilitating changes in the behaviour of relevant industry sectors. Conservation and environmental management stakeholders have a valid role to play to maintain balanced development. Maintaining this balance requires parties promoting economic growth, and parties countering economic growth based on grounds of conservation and sustainable development, to understand and support each other in pursuit of their objectives. This requires ability and the willingness to engage in constructive dialogue to solve problems through cooperative effort.

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