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Global Competitiveness Report 2004-05:Sweden’s Business Competitiveness
Christian H.M. Ketels, PhDInstitute for Strategy and Competitiveness
Harvard Business School
GCR Launch - SwedenChamber of Commerce, Stockholm
13 October 2004
This presentation draws on ideas from Professor Porter’s books and articles, in particular, “Building the Microeconomic Foundations of Prosperity,”in The Global Competitiveness Report 2004-05 (World Economic Forum, 2004); “Clusters and the New Competitive Agenda for Companies and Governments,” in On Competition (Harvard Business School Press, 1998); Clusters of Innovation Initiative (www.compete.org), a joint effort of the Council on Competitiveness, Monitor Group, and ongoing research. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the author
Additional information may be found at the website of the Institute for Strategy and Competitiveness, www.isc.hbs.edu
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2 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Global Competitiveness Report
• Annual publication of the World Economic Forum since 1979; in recent years academic guidance from– Professor Michael E. Porter, Harvard Business School– Professor Jeffrey Sachs (until 2002)/Professor Xavier Sala-i-Martin
(since 2003), Columbia University • Covers 104 economies; based on statistical data and global Executive
Opinion Survey of 8,729 respondents (84 per country)
Content• Core chapters present the Growth Competitiveness Index and the
Business Competitiveness Index• Nine other chapters by leading researchers on key competitiveness
issues• Extensive data sheets on all economies covered
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3 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Focus of this presentation
Ranking Competitiveness
Business CompetitivenessBusiness Competitiveness
The set of institutions, market structures, and economic policies supportive of high current levels of
prosperity
Michael E. Porter
The set of institutions, market structures, and economic policies supportive of high current levels of
prosperity
Michael E. Porter
Growth CompetitivenessGrowth Competitiveness
The set of institutions and economic policies supportive of high rates of economic growth in the medium
term (coming five years)
Xavier Sala-i-Martin
The set of institutions and economic policies supportive of high rates of economic growth in the medium
term (coming five years)
Xavier Sala-i-Martin
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4 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Competitiveness and Prosperity
ProductivityProductivity
Innovative CapacityInnovative CapacityInnovative Capacity
ProsperityProsperityProsperity • The Business Competitiveness Index measures the level of prosperity(GDP per capita) that an economy can sustain
• Sustainable prosperity is set by the underlying competitiveness of the economy, which is determined by the level of productivity and – over time – innovation achievable by companies
• Countries can overperform or underperform true competitiveness for substantial periods of time
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5 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Microeconomic Foundations of CompetitivenessMicroeconomic Foundations of Competitiveness
The Quality of the Microeconomic
BusinessEnvironment
The Quality of the The Quality of the MicroeconomicMicroeconomic
BusinessBusinessEnvironmentEnvironment
The Sophisticationof Company
Operations andStrategy
The SophisticationThe Sophisticationof Companyof Company
Operations andOperations andStrategyStrategy
Determinants of Productivity and Productivity Growth
Macroeconomic, Political, Legal, and Social Context for Competitiveness
Macroeconomic, Political, Legal, and Social Macroeconomic, Political, Legal, and Social Context for CompetitivenessContext for Competitiveness
• Nations or regions compete in offering the most productive environment for business
• A sound macroeconomic, political, legal, and social context creates the potential for competitiveness, but is not sufficient
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6 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Company Operations and StrategyCompany Operations and Strategy National Business EnvironmentNational Business Environment
• Nature of Firm’s Competitive Advantages
• Extent of Innovation• Sophistication of Production• Sophistication of Marketing• Sophistication of Organizational
Structures and Incentives• Extent of Internationalization
• Nature of Firm’s Competitive Advantages
• Extent of Innovation• Sophistication of Production• Sophistication of Marketing• Sophistication of Organizational
Structures and Incentives• Extent of Internationalization
• Factor Conditions– Physical Infrastructure– Administrative Infrastructure– Human Resources– Technology Infrastructure– Capital Markets
• Context for Firm Strategy and Rivalry– Incentives – Policies affecting competition
• Demand Conditions• Related and Supporting Industries
• Factor Conditions– Physical Infrastructure– Administrative Infrastructure– Human Resources– Technology Infrastructure– Capital Markets
• Context for Firm Strategy and Rivalry– Incentives – Policies affecting competition
• Demand Conditions• Related and Supporting Industries
The Business Competitiveness Index, 2004Measured Elements
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7 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Business Competitiveness Index 2004Relationship with GDP Per Capita
United States
Switzerland
UK
Denmark
Singapore
New Zealand
Taiwan
Norway
IcelandIreland
GreeceIsrael
Italy
S Korea
Hungary
India
Netherlands
Spain
Czech RepPortugal
Business Competitiveness Index
2003 GDP per Capita
(Purchasing Power Adjusted)
BrazilMalaysia
China
Russia
VietnamJordan
Uruguay
ArgentinaSouth Africa
Source:Global Competitiveness Report 2004
Estonia
Indonesia
Sweden
Malta
Kenya
Austria
Paraguay
Croatia
Slovak Rep.
Tunisia
PolandLithuania
Bulgaria
Canada
France FinlandBelgium
Cyprus Slovenia
Chile
GhanaEthiopia
Bolivia
Malawi
TurkeyMexico
JamaicaBosnia
y = 1549.9x2 + 8603.4x + 11188
R2 = 0.8064
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8 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Japan
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
0% 1% 2% 3% 4% 5% 6%
Prosperity
Norway
Netherlands
United States
Compound annual growth rate of real GDP per capita, 1998-2003
GDP per capita (PPP
adjusted) in US-$,
2003
Source: EIU (2004)
IrelandCanada
South Korea
Hungary
Greece
SlovakiaPoland
Czech Republic
MexicoTurkey
Portugal
Spain New ZealandSwitzerland
DenmarkIceland
SwedenFinland
UKGermany
Italy
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9 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Sweden’s Economic Performance
• Swedish prosperity continues to be high but lags leading OECD peers
Key drivers of Swedish prosperity
• Key strength is Sweden’s high labor productivity, among the best in the world although the gap to the United States has widened in recent years
• Labor input is also high – Sweden reports a high share of employees in the population that is still compensating for low and falling work hours
• Key weakness is the high level of local prices in Sweden, among the highest in the world, that are reducing the benefits Swedes derive from high productivity
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10 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Sweden’s Economic PerformanceOther Indicators
• Sweden has a strong position in international patenting
• FDI stocks and inflows are substantial
• Sweden’s world export market share has stayed roughly stable over the last decade
• Sweden continues to be home to a relatively high number of multinational companies
• Patenting is reflecting high R&D spending
• FDI inflows are at the level predicted given the structure of the Swedish economy
• Sweden has lost ground on world markets in some key clusters
• Increasing concerns and reports about relocations, not only by large companies
Strong Or not so strong?
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11 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
The Microeconomic Foundations of Economic PerformanceUsing the Business Competitiveness Index
• Overall level of sustainable prosperity that can be supported given a country’s current competitiveness
• Strengths and weaknesses of a country’s business environment relative to its overall level of competitiveness
• Developments in the overall competitiveness and the strengths and weaknesses of individual countries
• Overall patterns in the competitive environment for locations in the world economy
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12 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Business Competitiveness Index Rankings123456789
10111213141516171819202122232425
123456789
10111213141516171819202122232425
Top 25Top 25 Country
+1-1+2-1+20-3+50-2+8-2-2+1-3+1-10-5+2-1-1+3-1+2
United StatesFinland
GermanySweden
SwitzerlandUnited Kingdom
DenmarkJapan
NetherlandsSingapore
Hong Kong SARFrance
AustraliaBelgiumCanadaAustriaTaiwan
New ZealandIcelandNorwayIsrael
IrelandMalaysia
KoreaSouth Africa
Change
Business Competitiveness Index 2004
Note: Constant sampleof countries
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13 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
High IncomeMiddle IncomeLow Income
Business Competitiveness Report 2004BCI Rank Versus Value
BCI Score
High
LowBCI Rank93 1
India
Norway
IrelandIsrael
JapanNetherlands
S KoreaSpain
MalaysiaSouth Africa
Estonia
IndonesiaGreece
Italy
Malta
Portugal
Cyprus
Slovenia Chile
Source:Global Competitiveness Report 2004
Singapore
USGermany
Sweden
MexicoRomania
China
Paraguay
Bosnia
RussiaKenya
Sri Lanka Ghana
Pakistan
TanzaniaVenezuela
Denmark
Argentina
Brazil
VietnamSerbia
Switzerland
UK
DenmarkSwedenGermany
Finland US
JapanNetherlands
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14 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Business Competitiveness Report 2004The Prediction Gap: High Income Countries
-$10,000
-$5,000
$0
$5,000
$10,000
$15,000
Italy
Norway
Irelan
dMalt
aCyp
rusGree
ceIce
land
Spain
Sloven
iaCan
ada
Austria
Portug
al
United
States
Austra
liaBelg
ium
Hong K
ong S
ARFran
ceKore
aNeth
erlan
dsDen
markTaiw
anSwitz
erlan
dJa
pan
Israe
lSing
apore
New Zea
land
United
Kingdo
mSwed
enGerm
any
Finlan
d
Current prosperity above sustainable level
Current prosperity below sustainable level
17% of GDP
Source:Global Competitiveness Report 2004
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15 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Business Competitiveness Report 2004Explaining the Prediction Gap
Actual GDP per Capita
Predicted GDP per Capita
Factors Influencing the Prediction Gap
• Location– Prosperity of neighbors – Population with access to ocean
• Governance– Government Accountability – Government Effectiveness
• Natural resources (NR)– NR export revenues
Other• Transitory impact of macroeconomic or
political climate• Structural factors with no simple relationship to
prosperity, e.g. taxation, imbalance of competitiveness profile
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16 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Business Competitiveness Report 2004Explaining the Prediction Gap: Examples
Note: Effect of each factor normalized by the average of all countries Source: Global Competitiveness Report 2004
OverperformerWhy is prosperity so high
UnderperformerWhy is prosperity so low
MixWhat are the countervailing forces
Norway Italy
China India
Sweden Germany
Location Governance Natural resources Other factors
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17 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Sweden
Hong K
ong S
ARSing
apore
Icelan
dEsto
nia
Slovak
Rep
ublic
Taiwan
Irelan
dMala
ysia
Switzerl
and
United
States
United
Kingdo
mNeth
erlan
ds
New Zea
land
Portug
alAus
triaNorw
ayLa
tvia
Canad
aJa
pan
Lithu
ania
Sloven
iaAus
tralia
Denmark
Finlan
dGerm
any
France Ita
lyPola
ndGeo
rgia
Ukraine
Brazil
Belgium
Incentive EffectComplexity
Positive
Negative
Source: Global Competitiveness Report 2004
Business Competitiveness Report 2004Explaining the Prediction Gap: Taxation
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18 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Global Competitiveness Report 2004Business Environment and Company Sophistication
The national business environmenthas advanced beyond company
sophistication
The national business environmenthas advanced beyond company
sophistication
EstoniaTunisiaNorwayCyprus
PortugalAustraliaMalaysiaJordan
BotswanaHungary
New ZealandAlgeria
Hong Kong SARChile
Singapore
EstoniaTunisiaNorwayCyprus
PortugalAustraliaMalaysiaJordan
BotswanaHungary
New ZealandAlgeria
Hong Kong SARChile
Singapore
Company sophistication is more advanced than the
national business environment
Company sophistication is more advanced than the
national business environment
PhilippinesJapan
GermanyKoreaItaly
GuatemalaVenezuelaSwitzerlandCosta Rica
FranceBrazil
PolandHondurasArgentinaSweden
PhilippinesJapan
GermanyKoreaItaly
GuatemalaVenezuelaSwitzerlandCosta Rica
FranceBrazil
PolandHondurasArgentinaSweden
Note: Sorted by strength of imbalance Source: Global Competitiveness Report 2004
Sweden
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19 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Microeconomic Foundations of CompetitivenessMicroeconomic Foundations of Competitiveness
The Quality of the Microeconomic
BusinessEnvironment
The Quality of the Microeconomic
BusinessEnvironment
The Sophisticationof Company
Operations andStrategy
The Sophisticationof Company
Operations andStrategy
Sweden’s Competitiveness ProfileStrengths and Weaknesses
Macroeconomic, Political, Legal, and Social Context for Competitiveness
Macroeconomic, Political, Legal, and Social Context for Competitiveness
• Relative strengths in areas of innovation, investment, and organizational structures
• Relative weaknesses in marketing and the presence along the value chain
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20 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Company Operations and StrategySweden’s Relative Position 2004
Willingness to delegate authority 1
Capacity for innovation 2
Production process sophistication 3
Extent of staff training 3
Company spending on research and 4 development
Extent of branding 4
Competitive Disadvantages Relative to GDP per Capita
Competitive Advantages Relative to GDP per Capita
Country Ranking, Arrows indicate a change of 5 or more
ranks since 1998
Country Ranking, Arrows indicate a change of 5 or more
ranks since 1998
Extent of regional sales 16
Extent of marketing 12
Value chain presence 10
Extent of incentive compensation 10
Nature of competitive advantage 9
Reliance on professional management 9
Breadth of international markets 8
Degree of customer orientation 6
Control of international distribution 6
Note: Rank by countries; overall Sweden ranks 4 (5 on Company Operations and Strategy, 19 on GDP pc 2003)Source: Global Competitiveness Report 2004
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21 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Microeconomic Foundations of CompetitivenessMicroeconomic Foundations of Competitiveness
The Quality of the Microeconomic
BusinessEnvironment
The Quality of the Microeconomic
BusinessEnvironment
The Sophisticationof Company
Operations andStrategy
The Sophisticationof Company
Operations andStrategy
Macroeconomic, Political, Legal, and Social Context for Competitiveness
Macroeconomic, Political, Legal, and Social Context for Competitiveness
• Relative strengths in technology and innovation, level playing field for competition, administrative infrastructure, physical infrastructure, and basic financial market conditions
• Relative weaknesses in competition, human resources, advanced demand conditions, and basic cluster conditions
Sweden’s Competitiveness ProfileStrengths and Weaknesses
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22 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Factor (Input) ConditionsSweden’s Relative Position
Factor(Input)
Conditions
Factor(Input)
Conditions
Quality of scientific research institutions 2
Internet users per 10,000 people (2003) 3
University/industry research collaboration 3
Efficiency of legal framework 3
Ease of access to loans 4
Patents per million population (2003) 6
Availability of scientists and engineers 6
Competitive Disadvantages Relative to GDP per Capita
Competitive Advantages Relative to GDP per Capita
Extent of bureaucratic red tape 23
Quality of math and science education 21
Local equity market access 18
Air transport infrastructure quality 17
Quality of public schools 15
Quality of electricity supply 14
Venture capital availability 13
Quality of management schools 12
Reliability of police services 11
Cell phones per 100 people (2003) 11
Overall infrastructure quality 10
Telephone/fax infrastructure quality 9
Administrative burden for startups 9
Country Ranking, Arrows indicate a change of 5 or more
ranks since 1998
Country Ranking, Arrows indicate a change of 5 or more
ranks since 1998
Note: Rank by countries; overall Sweden ranks 4 (6 on National Business Environment, 19 on GDP pc 2003)Source: Global Competitiveness Report 2004
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23 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Context for Firm Strategy and RivalrySweden’s Relative Position
Intellectual property protection 1
Tariff liberalization 2
Hidden trade barrier liberalization 4
Cooperation in labor-employer relations 5
Favoritism in decisions of government 5officials
Business costs of corruption 6
Effectiveness of bankruptcy law 6
Competitive Disadvantages Relative to GDP per Capita
Competitive Advantages Relative to GDP per Capita
Intensity of local competition 39
Extent of locally based competitors 33
Decentralization of corporate activity 24
Centralization of economic policy-making 22
Prevalence of mergers and acquisitions 20
Effectiveness of anti-trust policy 19
Efficacy of corporate boards 17
Foreign ownership restrictions 13
Regulation of securities exchanges 10
Protection of minority shareholders’ 9interests
Context for Firm Strategy and Rivalry
Context for Firm Strategy and Rivalry
Country Ranking, Arrows indicate a change of 5 or more
ranks since 1998
Country Ranking, Arrows indicate a change of 5 or more
ranks since 1998
Note: Rank by countries; overall Sweden ranks 4 (6 on National Business Environment, 19 on GDP pc 2003)Source: Global Competitiveness Report 2004
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24 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Demand ConditionsSweden’s Relative Position
Stringency of environmental regulations 6
Competitive Disadvantages Relative to GDP per Capita
Competitive Advantages Relative to GDP per Capita
Government procurement of advanced 19 technology products
Buyer sophistication 13
Laws relating to ICT 12
Presence of demanding regulatory 11standards
Demand ConditionsDemand
Conditions
Country Ranking, Arrows indicate a change of 5 or more
ranks since 1998
Country Ranking, Arrows indicate a change of 5 or more
ranks since 1998
Note: Rank by countries; overall Sweden ranks 4 (6 on National Business Environment, 19 on GDP pc 2003)Source: Global Competitiveness Report 2004
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25 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Related and Supporting IndustriesSweden’s Relative Position
Competitive Disadvantages Relative to GDP per Capita
Competitive Advantages Relative to GDP per Capita
Related and Supporting Industries
Related and Supporting Industries
Extent of collaboration among clusters 6
Local supplier quality 6
Country Ranking, Arrows indicate a change of 5 or more
ranks since 1998
Local availability of components and parts 21
Local supplier quantity 20
Local availability of process machinery 14
State of cluster development 9
Local availability of specialized research 8and training services
Country Ranking, Arrows indicate a change of 5 or more
ranks since 1998
Note: Rank by countries; overall Sweden ranks 4 (6 on National Business Environment, 19 on GDP pc 2003)Source: Global Competitiveness Report 2004
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26 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Business Competitiveness IndexSweden’s Position over Time
BCI Rank Company Operation &Strategy Rank
National BusinessEnvironment Rank
1998199920002001200220032004
Rank
1
Note: Constant sample of countries Source: Global Competitiveness Report 2004
5
15
10
• Sweden’s overall BCI index value has dropped slightly (32 advancing/39 falling indicators), balanced across all elements of competitiveness
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27 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Swedish Competitiveness 2004 Key Observations
Level of competitiveness• High and should support higher prosperity• Prosperity held back by taxes and imbalance between company
sophistication and business environment quality
Strengths and weaknesses• Strengths in areas related to technology and innovation, level playing
field for competition, administrative infrastructure, physical infrastructure, and basic financial market conditions
• Weaknesses in areas related to competition, human resources, advanced demand conditions, and basic cluster conditions
Trend• Slightly positive development in the last few years• But 2004 seems to have been a lost year for competitiveness upgrading
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28 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Appendix
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29 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Japan
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
0% 1% 2% 3% 4% 5% 6%
Prosperity
Norway
Netherlands
United States
Compound annual growth rate of real GDP per capita, 1998-2003
GDP per capita (PPP
adjusted) in US-$,
2003
Source: EIU (2004)
IrelandCanada
South Korea
Hungary
Greece
SlovakiaPoland
Czech Republic
MexicoTurkey
Portugal
Spain New ZealandSwitzerland
DenmarkIceland
SwedenFinland
UKGermany
Italy
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30 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Decomposing Prosperity
IncomeIncomeIncome
Labor Productivity
Labor Productivity
Labor Utilization
Labor Utilization
Domestic Purchasing
Power
Domestic Purchasing
Power
• Consumption taxes• Level of local market
competition• Efficiency of local industries
ProsperityProsperityProsperity
• Skills• Capital stock• TFP
• Working hours• Unemployment• Participation rate• Population age profile
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31 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Productivity
Compound annual growth rate (CAGR) of real GDP per employee, 1997-2002
GDP per employee
(PPP adjusted) in US-$,
2003
Source: EIU (2004), Groningen Growth and Development Centre and The Conference Board (2004)
Spain
NetherlandsItaly
Switzerland
Portugal
Mexico
Turkey
Czech Rep.Hungary
South Korea
Greece
Slovakia
IrelandUnited StatesAustria
NorwayFranceBelgium
CanadaFinland
GermanyJapan Iceland
DenmarkUK
New Zealand
Sweden
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
-1% 0% 1% 2% 3% 4%
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32 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Swedish Labor Productivity Growth Versus the U.S.
$-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 200368
69
70
71
72
73
74
75
76
77
US $Relative
Real GDP per Employee(1990 prices)
Source: Groningen Growth and Development Centre and The Conference Board (2004)
Relative Real GDP per Employee
(US=100)
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33 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
-2.0% -1.5% -1.0% -0.5% 0.0% 0.5%
Norway
DenmarkGermany
PolandLatvia
Finland
Lithuania
Sweden
Annual Hours Worked per Employee, 2003
Growth of Annual Hours Worked per Employee, CAGR, 2000-2003
Labor UtilizationSelected Countries
Source: Groningen Growth and Development Centre and The Conference Board (2004), authors’ calculations
Estonia
US
UKIrelandPortugal
Czech Republic
Slovak RepublicSlovenia
Hungary
Austria
France
JapanCanada
Spain
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34 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Lithu
ania
Slovak
Rep
ublic
Czech
Rep
ublic
Latvi
aHun
gary
Estonia
Russia
Poland
Slov
enia
Spain UK
United
Stat
esAus
triaFinl
and
German
y Norw
ayDen
markSwed
en
Purchasing PowerParity Factor, 2003
Domestic Purchasing Power of IncomeSelected European Countries
Source: Groningen Growth and Development Centre and The Conference Board (2004), authors’ calculations
Higher local prices relative to the United States
Lower local prices relative to the United States
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35 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
0
50
100
150
200
250
300
350
400
0% 2% 4% 6% 8% 10%
Source: US Patent and Trademark Office (www.uspto.gov). Author’s analysis.
Annual U.S. patents per 1 million population, 2003
Compound annual growth rate of US-registered patents, 1998 - 2003
Innovation
= 10,000 patents granted in 2003
Japan
United States
Switzerland Sweden
Germany
Canada Denmark
New Zealand
France
ItalyAustralia
AustriaUKSouth Korea
NetherlandsNorway
Spain
Finland
HungaryIreland
(17.5%, 42)
Singapore(28.9%, 102)
Taiwan(11.3%, 234)
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36 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
R&D Spending Effectiveness
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
Japa
n USSwitz
erlan
dGerm
any
Canad
aFinl
and
S Korea
New Zea
land
Denmark
Netherl
ands
Sweden
Austria UK
Belgium
Irelan
dIta
lyFran
ceAus
tralia
Norway
Hunga
ryIce
land
Spain
Czech
Rep
.
Slovak
Rep
.Port
ugal
Poland
US Patents in 2003 per 1 Mio. R&D Spending in 2001
(or latest available)
Source: OECD, USPTO, author’s calculation
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37 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
0%
10%
20%
30%
40%
50%
60%
70%
80%
0% 10% 20% 30% 40% 50% 60%
Comparative Inward Foreign InvestmentOECD Countries
FDI Stocks as % of GDP, Average 2000-2002
FDI Inflows as % of Gross Fixed Capital Formation, Average 2000-2002
Source: UNCTAD (2004)
Ireland (84%, 130%)
Netherlands
Italy
Czech Republic
DenmarkSweden
SlovakiaUK
New Zealand
Switzerland
CanadaFinland
PortugalSpain
Germany
Australia
Greece United States
Norway MexicoPoland France
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38 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Comparative Inward Foreign InvestmentInward FDI Performance versus Potential
-80
-60
-40
-20
0
20
40
Czech
Rep
ublic
Slovak
iaEsto
nia UKSpa
inDen
markLa
tvia
Sweden
Lithu
ania
Poland
Hunga
ryGerm
any
Finlan
dAus
triaNorw
ayRus
siaRank Difference:
FDI Performance – FDI Potential, 2001
Source: UNCTAD (2004), author’s analysis.
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39 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Sweden’s Export PerformanceWorld Export Market Shares
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
GoodsServicesTotal
Source: WTO (2004), Institute for Strategy and Competitiveness (2004)
World export share in %
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40 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Change in Swedish World Export Market Share, 1992 - 2002: -0.2%
Source: UNCTAD Trade Data. Author’s analysis.
Swedish Cluster PortfolioGoods Exports, 1992-2002
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
-2.5% -2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0%Compound annual growth rate of Swedish world export market share, 1992 – 2002
Swedish World Export Market Share, 2002: 1.46%
Forest Products
Communications Equipment
Furniture
Pharmaceuticals
Automotive
AerospaceEngines
EntertainmentProducts
PrefabricatedEnclosures
Fish & Fishing Products
ProductionTechnology
Metal Manufacturing
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41 Copyright 2004 © Professor Michael E. PorterGCR Press Conference 2004 10-13-03.ppt
Multinational Companies’ Home Base
Business Week 1000Business Week 1000
• United States 423• United Kingdom 73• Canada 37• Germany 35• Sweden 15• Spain 10• Finland 5• Norway 5• Denmark 4• Ireland 4• Austria 3• Portugal 3• Poland 2• Hungary 1
• United States 423• United Kingdom 73• Canada 37• Germany 35• Sweden 15• Spain 10• Finland 5• Norway 5• Denmark 4• Ireland 4• Austria 3• Portugal 3• Poland 2• Hungary 1
Note: Business Week ranks by Market Value Source: Business Week (2004), author’s analysis.