Globalization and competitiveness.

Globalization is a concept that pretends to describe the immediate reality as a planetary society, beyond frontiers, tariff barriers, ethnical differences, religions, political ideologies and socioeconomic or cultural conditions. It emerged like a consequence of the internationalization process, that it’s more and more accentuated in the economy, social conflicts and political and cultural events.

This process seemed the definite mechanism to finish the inequality in the world, but contrary it has been a process that it’s promoted rapid outsourcing (from develop to developing countries), free movements of capitals (with recurrent crises), tariff dismantling that generates a growth of world trade with an regulatory institution (WTO), …, and other effects.

So much scepticism? There’re several reasons for thinking that. The fear is based in the wide inequality that the globalization gives to the developing countries (inequality even inside the country, with isolated developed zones).
It’s so much clearly that the most develop countries in foreign trade are more able to invade the regional markets. Its big multinationals and investment groups take the reins of complete sectors, the greater part of them are keys of the national production.

The small countries’ companies only have an alternative: to review its strategies and policies to reach some level of competitiveness that it allows them to survive. But only few of these companies can aim to go overseas. The competitiveness is a challenge for these countries, but is a chance too for surpassing the vicious circle of poverty-low productivity-poverty. If the globalization is a process that facilitates commercial, political or cultural expansion, it could be pose the low competitiveness problem from two perspectives: production and markets.
The disadvantage in technological capacity, in machinery and process, it’s one of the biggest problems that producers admit. The same investment level doesn’t allow the desired development, and the expansion of the tertiary sector (services, distribution and finance) debilitates its reaction capacity. In most cases, labour force just doesn’t aim to primary or secondary sector, but aim to tertiary sector, which has an excessive activity. This situation generates uncontrolled imports, because they’re very harmful for these fragile economies.
Incipient disposition of institutional and infrastructure nets are an obstacle for the growth of strong and healthy companies. The formation of the country’s resources requires an effort of decades or even centuries, a mystic of development and consistent economic policy that survives to the ups and downs of several years. Contrary to the technical knowledge, the resources don’t have the rapidity in its dynamism that the competitive level demands.
The problem of the technological disadvantage took importance in the 80s in some countries of the region (Latin America). There was a discussion about the need to implant an industrial restructuring programme, as movement that continues to the industrialization purposes of the 60s. The obsolescence level worried to entrepreneurs. Actually, it isn’t a new problem. Some analysts think when they review the Latin American history, that the scientific and technological delay is a determinant of the dependency. To be efficient in a society requires new political, economics and social conditions that those societies can’t invent easily.

For example, in El Salvador in 1990, an industrial restructuring policy was implanted, creating an Investment Credit Fund that pretended cover technological, technical capabilities … and other needs. However, like other region countries, these institutions didn’t work.

What a pity! A big effort for nothing! But what’s the alternative? Only one: to be competitive or die. This affirmation can be too radical, but this world is so radical too. For example, Spain has an important challenge with its new partners in the European Union. Some multinationals o even national SMEs (Small and Medium Enterprises, PYMEs in Spain) have moved or are moving to Hungary, Poland, Czech Republic, Slovakia (Seat with its model Ibiza) and these movements are unstopping facts. It’s a reality for us and our only alternative is competing with them, but not in low labour costs.

And now, we launch a new question: Why can we be competitive? First of all, we should to enumerate our advantages (natural and human resources) and disadvantages (lacks and debilities), and forecast our possible or future opportunities and threatens. We can fail in the enumeration, but we could get more and actual information of us, about who are we and what can we do in this new international panorama that changes continuously. It’s a simply but deep self-analysis. In the case of Spain, we have to improve our technological level. It is necessary increase our R&D spending, both companies and public sector, because our dependency will be bigger, and we will not be able to control our destiny. The figures of that situation are pathetic: 0.96% of GDP is spending in scientific development, and worse, we spend in lotteries more than in R&D (1% of the GDP)!! Spain is in the third division in R&D, and for instance, Intel spends the same than all Spanish Economy. But what’s the position of the companies? No good too. Our enterprises are less active in this question, even multinationals (especially foreign companies). And how many should administration spend in R&D? How does it spend? Direct or indirectly (creating incentives instead of give an amount of money)?

If Spain doesn’t change its economic model, we’ll loss competitiveness. Nowadays, countries such as South Korea has surpassed Spanish Economy in GDP level (not yet in GDP per capita), with a technological model, and other countries can do better than us, overcoat new partners of the former Oriental Europe, for example Poland, which has the same size of Spain (demographic and geographically), can make up in the next ten o twelve years a strong economy.

In the other hand, it’s a pure shame that our best researchers have to work in other countries in Europe and in the United States. We’ve a valuable human capital that can’t be spent, in spite of our universities must change (improving the relation with the private sector, for instance) or other things that can be unpleasant. A responsible government should take the bull’s horns (coger el toro por los cuernos) and start to remedy this critical situation. If we want be one of the most advanced society of the world, we have to assume this challenge. I think firmly that the Spanish Society must claim these necessary changes, instead of concerning authentic nonsense like TV programmes or football league. The administration, entrepreneurs and the trade unions must come to an agreement in this case, assuming each one its responsibility.

Un saludo a tod@s