Because global competition is tough, a high quality product may still lose its competitive edge if the support environment (regulatory framework, business infrastructure) is inadequate. The creation or upgrading of that support environment is essentially a joint venture between the public and private sectors, with government playing a key role in creating an environment conducive to trade.
Since 2004, UNIDO has been building up a competitiveness analysis programme which helps countries to identify those sectors and products in which they have the greatest competitive potential and in which they could be competitive in the medium to long term. The methodology used is the fruit of an earlier research programme, carried out under the guidance of the late Sanjaya Lall of Oxford University in the UK,which formulated a series of economic indicators and indices measuring industrial and export performance.These proved to be very user friendly with great appeal to the private sector as they are easily understandable and offer an opportunity to benchmark the performance of products and sub-sectors against that of neighbouring countries or star performers who national enterprises may wish to emulate.
Competitiveness analysis is not only an essential tool in policy formulation which ensures that scarce development resources are allocated efficiently, benefiting industries that are (potentially) the strongest exporters; it also ensures that technical assistance resources are used where their impact is greatest. Moreover, this is not a “one-off” or yearly exercise. Maintaining competitiveness in export markets means that continuous monitoring and assessment of global and regional trends in trade and industry is needed and that the results of this analysis should also feed into decisions on industrial policy and strategies.
UNIDO’s strategy has three phases: raising awareness on industrial and trade competitiveness; training public and private sector counterparts on industrial diagnosis and trade competitiveness analysis; and setting up an inter-institutional (or institutional) unit staffed by young professionals from key Ministries and private sector institutions.