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Economic competitiveness

[ Summary ]

 

Chapter 3:
Implementing a strategy to boost economic competitiveness

 



3.2 A few elements of methodology

 

3.2.1 Choosing a general policy


Based on the differences and complementarities between corporate economic competitiveness and territorial economic competitiveness, how should a general policy be chosen? One might seek to:

  • better exploit an area’s existing or untapped resources;
  • increase business performance;
  • diversify products and services;
  • exploit more lucrative market segments.

These four policies correspond to four general and complementary objectives that should not be pursued in isolation. For example, it is difficult to extend a product range without first improving the use of local resources, or to tap into new market niches without first modifying business products and performance.

How, then, is it possible to clarify these objectives and the relationship between them before defining more specific objectives? Below we propose two types of analysis:

  • a prospective analysis of what can be achieved;
  • an analysis of shortcomings and ways to overcome them.


a) Prospective analysis: identifying opportunities

    Identifying niches or products that can generate value added and keep it in the area is a key aspect of any endogenous development strategy. The aim is to map out guidelines by seeking viable solutions. This might, for example, include switching from wholesaling to selling in niche markets, updating traditional expertise or exploiting untapped local sub-products.


      Example

      The mayors of the Cilento Park area (Campania, Italy) decided to give a strong indication of change to local farmers accustomed to bulk-selling the region’s two chief products, chestnuts and olive oil. Chestnut farmers were given the opportunity to visit processing factories (chestnut flour, marrons glacés), many for the first time. In the olive oil sector, systems were set up, with support from the World Wildlife Fund (WWF), for the production of organic olive oil. The oil sold under the WWF label yields double the returns producers were accustomed to earning before. The next step was to carry out a systematic search for non-exploited and/or neglected local resources.


      Example

      In the Alto Cavado region (Norte, Portugal), the embroidered linen trade was dying out. In fact the embroidery formed part of a tradition, itself on the point of extinction, where men and women would exchange embroideries as a pledge of love or to ask for another’s hand in marriage. The LEADER group succeeded in relaunching the trade by creating a craft centre and integrating the decorative patterns of these embroideries into ordinary household objects, like curtains, tablecloths, lampshades, etc.

    In many cases, opportunities such as this are not enough in themselves to make a trade viable, but they may serve as levers for developing a wider-ranging activity that becomes viable through economies of scale or the development of several market niches.


b) Identifying shortcomings and ways to overcome them

    The summary analysis of an area’s capital presented in section two of this publication helps us to identify four levels of shortcomings in economic competitiveness.

    Each level allows us to take stock of a key element for economic competitiveness (analysis of existing assets) and its utilisation (analysis of practices), highlighting shortcomings in developing an area’s resources. By analysing organisational systems we can examine whether an area is capable of overcoming such shortcomings and has the necessary means to do so, or whether further means are required.

    By analysing shared knowledge and values we can identify the area’s deepest-rooted limitations and what measures have been, or should be carried out to overcome them. The following table summarises this approach.

    This reveals four possible shortcomings in economic competitiveness, corresponding to the four levels of analysis in the preceding chapter:

    • the skills and level of utilisation of the workforce: unemployment;
    • financial resources - problems for project promoters to access such resources;
    • business firms - they lack sufficient capabilities to renew and innovate;
    • the area’s products and services - lack of access to more lucrative markets.

    Specific means must be found for overcoming each of these shortcomings, in terms of both organisation and measures.

 

Existing resources To what degree have they been developed? What are the shortcomings? Examples of possible measures to offset such shortcomings
In terms of structures In terms of values and expertise
The area’s existing working population and skills Levels of employment and utilisation of local vocational skills Unemployment and under-employment Training engineering to create new activities Social partner dialogue and inter-institutional consultation on training
Financial resources Financial investment at local level Lack of access for promoters of small projects and business start-ups Financial engineering (guarantee funds, loans on trust) for business start-ups and promoters of small projects Raising the awareness of banks and savers about territorial development
Enterprises Smooth operation Inability to innovate Business support systems Search for mechanisms to acquire knowledge, appropriate means for transferring it
Products and services (supply) Consolidation and expansion of the market segments already exploited Lack of access to more lucrative market segments (remoteness, lack of contacts, etc.) Collective marketing organisations Business information systems

 

 

3.2.2 Overall design of the approach: defining priorities under LEADER


Once a general policy has been defined and desirable measures have been identified for exploiting opportunities and making up for shortcomings, these measures can be organised into a global strategy. This involves dividing measures into three categories: those that can be achieved in the short term, the medium term and the longer term.

  • In the short term, measures will essentially involve informing, coordinating and mobilising support from the players, as well as demonstration projects;

  • In the medium term, more complex processes of negotiation may be implemented;

  • In the longer term, measures of a more structural nature may be envisaged.

The following table shows a few examples of possible types of measure and priority choices for an area.

LEADER has an “experimental” function that favours “soft” measures designed to meet short- and medium-term needs, whilst instigating measures that can be consolidated only in the long term. A LEADER- type approach is therefore intended:

  • To harness an area’s “untapped” potential, including: human resources (the unemployed, potential entrepreneurs); new sources of innovation (ideas and projects from local entrepreneurs); abandoned or neglected physical and heritage resources (landscapes, architecture, small-scale artefacts, wasteland); intangible resources which are dying out (skills, traditions, shared values and sense of identity); financial resources (savings and non-reinvested profits, remittances from former residents who have left the region, etc.).

  • To foster the creation of links between players in order to: reinforce links with markets; create an impact upstream and downstream of the sectors present in the area; to develop appropriate product ranges and thresholds; to organise product promotion and marketing; to increase the collective potential for innovation; and so forth.

  • To foster cooperation between the various approaches, functions and structures.

  • To stimulate debate and guide the first steps towards structuring key principles for supporting long-term development: financial engineering, training, quality control, product/design renewal, links with research and testing and transfer mechanisms, agreements with other regions, etc.

 

Objectifs Types of shortcoming Short term (information, awareness-raising, mobilising support) Medium term (negotiations) Long term (structural measures)
Skills and workforce To promote these more effectively Mismatch between job demand / supply Pilot training measures Management/labour dialogue and training engineering Training structures
Financial resources Idem Lack of access for project promoters Direct support Negotiation with banks Financial engineering structures
Other resources Idem Use of untapped or neglected resources Raising the awareness of owners and the community Consultation on taking over/ reutilising resources Systems for taking over resources
Enterprises To improve performance Poor innovation ability Training/raising the awareness of existing/ potential entrepreneurs Transfer of innovation involving research Innovation support structures
Products/services To enlarge the product range Lack of diversification of the offering Prospective studies of products Quality charters Quality control structure
Markets To tap into new segments Remoteness, lack of contacts, individual approach Market studies / raising awareness about collective solutions Customer negotiations/consultation to develop collective approaches Promotion/ marketing structures

 

 

3.2.3 Choosing a starting point and the need for a gradual approach


The development of a LEADER Action Plan is accompanied by a step-by- step process of learning and risk-taking by the local players involved. It is through this process that the Plan can gradually be refined as it develops. So any Action Plan should provide for a certain amount of flexibility in order to allow high-risk measures to be offset by low-risk measures.

Depending on the initial problems (producers’ lack of trust, various objections, lack of perceptible results, etc., one may, depending on the case, choose to start with either:

  • measures involving collective interests; or
  • less risky ad hoc measures with a demonstrative impact.


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