National WealthBuilding Strategies:

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Presentation 18

• National Wealth-Building Strategies
• From Strategic Vision to Strategic Implementation

By Prof. Dr. Zafar U. Ahmed President and
CEO Academy for Global Business Advancement
Inc., Texas AM University at Commerce, Commerce,
Texas, USA
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Thought Starter
Nations need a framework that will help them
clarify what they can realistically hope to
accomplish
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• National Wealth-Building Strategies
• From Strategic Vision to Strategic Implementation

• Nations develop their wealth-building strategies
  to
• fulfill these goals
• Designing effective strategies requires defining
  the
• Nations strategic thrust
• Strategic posture
• Strategic implementation.

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• Nations Strategic Thrust

• To formulate a strategic thrust for the nation,
  its policymakers need to assess the nations
  current competitive, internal, and external
  environments
• Needs to set or review the nations objectives
  and goals subject to these environments.
• Steps in analyzing nations current situation
• Analyzing the global competitive structure
• Analyzing the impact of the major global forces
  and trends
• Analyzing the nations capabilities.

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• Nations Strategic Thrust

• 1. Analyzing the global competitive structure
• A nations wealth critically depends on its
  competitive position in the global marketplace.
• Each nation will face certain close competitors,
  namely, other nations pursuing the same target
  markets with the same or similar strategies.

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• Nations Strategic Thrust

• 2. Global Forces and Trends
• Nations are now competing more for the means to
  create national wealth than for political control
  over other nations.
• Six fundamental forces are
• The increase of global interdependence
• The widespread protectionism and growth of
  regional economic bloc
• The transnationalization of MNCs
• Rapid technological advances
• The increasing and conflicting politics of
  nationalism
• The growth of environmental concerns

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• A Nations Strategic Thrust

• 3. The Nations Capabilities
• The degree to which each nation captures
  opportunities or copes with threats depends upon
  its capabilities.
• Such capabilities may include
• The nations culture
• Attitudes and values
• Its social cohesion

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• Nations Strategic Thrust

• 3. The Nations Capabilities
• Its factor endowments
• Its industrial organizations, and its
  governmental leadership.
• An assessment helps the policy makers identify
  both major strengths and weaknesses
• Assessing the nations environment aids
  policymakers in setting objectives and goals

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• Nations Strategic Thrust

• 4. Goal Formulation
• The nations objectives are set to meet
  aspirations
• Raising the level of GNP per capita
• Improving the international competitiveness
• Achieving a high level of employment
• Stable price levels
• Good health, good education, and good environment

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• Nations Strategic Thrust

• 4. Goal Formulation
• Objectives and goals should be prioritized
• For less developed countries, perhaps economic
  objectives and goals should come first
• In the more developed economies, policymakers try
  to balance of economic, social, and political
  objectives
• Objectives/Goals should be realistic and stated
  quantitatively

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• Nations Strategic Thrust

• 4. Goal Formulation
• Matching the nations strengths/Weaknesses,
  Opportunity/Threats and Competitive/Cooperative
  patterns with its goals serves as the foundation
  for formulating the nations strategic thrust.
• Strategic Thrust
• Sustaining Revitalizing
• Building Turnaround

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• Nations Strategic Posture

• The nations strategic thrust must be translated
  into pragmatic and concrete guidelines for
  identifying specific public policies to improve
  competitiveness
• Micro competitiveness is the ability of domestic
  firms to sell their products in the global market
  place, based on their relative price and quality
  attractiveness.
• Nations international competitiveness refers to
  its ability to achieve high factor incomes in the
  global economy.

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• Nations Strategic Posture

• Types of Public Policy
• Government Primary Policies
• Investment
• Industry Building Strategy
• Trade
• Government Support Policies

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• Nations Strategic Posture

• Types of Public Policy
• Government Primary Policies
• Investment
• Most government compete today to attract foreign
  firms to invest in their economy because they
  bring several benefits
• The global growth in foreign direct investment
  has increased the interlinkage and
  interdependence among nations

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• Nations Strategic Posture

• Types of Public Policy
• Government Primary Policies
• Industry-Building Strategies
• A nations economic strength depends on the
  choices and health of its industrial clusters,
  industries, and firms
• Related industries generate synergistic effects
  for an industrial cluster (snowball,
  substitution, spillover)

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• Nations Strategic Posture

• Types of Public Policy
• Government Primary Policies
• Industry-Building Strategies
• The first step in developing the nations
  industry portfolio is to analyze its industrial
  development determinants
• The second step is to formulate the nations
  industrial vision

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• Nations Strategic Posture

• Types of Public Policy
• Government Primary Policies
• Trade
• Government export promotion and assistance play
  an increasingly important role in todays growing
  international competition
• Direct program concentrates on the demand side
• Indirect program concentrates on the supply side

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• Nations Strategic Posture

• Types of Public Policy
• Government Primary Policies
• Trade
• To ensure that the nations export promotion
  strategies are effective, two linkages need to be
  taken into consideration
• . Link between export promotion and import
  penetration.
• . Link between export diversification and
  specialization.

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• Nations Strategic Posture

• Types of Public Policy
• Government Support Policies
• Policies are needed to enable the governments
  primary policies to work efficiently that
  includes
• Macroeconomic policies
• The nations infrastructural development
• Development of the institutional framework

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• Nations Strategic Implementations

• State functions
• The State as a Wealth Initiator
• The State as a Protector and Upholder
• The State as a Regulator
• The State as an Arbitrator and Distributor
• The State as an Organizer

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• Nations Strategic Implementations

• State functions
• The State as a Wealth Initiator
• Providing infrastructure
• Using various policy instruments to enhance
  private investment
• Creating the platform for building industry
  clusters
• Acting as a joint venture
• Providing other forms of hybrid public private
  development
• The State as Protector and Upholder
• This entails state expenditure for defense and
  also the states support of various interest
  groups.
• It also involves the maintenance of legal and
  institutional framework

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• Nations Strategic Implementations

• State functions
• The State as Regulator
• Establishing standards and regulations over a
  wide range of social and economic activities.
• Product Standards
• Competitive Behavior
• Pollution control
• The State as an Arbitrator and Distributor
• Adjudicate or settle disputes, to guarantee
  income, to provide minimum wages etc.

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• Nations Strategic Implementations

• State functions
• The State as Organizer
• The state may influence the organization of
  social interests and groups deliberately
  sponsoring interest groups or recognizing some
  interest groups but not others

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• Nations Strategic Implementations

• State functions
• The State as Organizer
• Four elements for implementing the nations
  wealth building strategies
• Assessing the states strengths and weaknesses
• Recognizing dilemmas and trade offs among policy
  options
• Building a healthy business-government
  relationship and
• Enhancing government-government cooperation with
  friendly foreign countries
• African Growth and Opportunity Act, as a Case in
  Point

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• Nations Strategic Implementations

• State functions
• The State as Organizer
• Assessing the states strengths and weaknesses
• The relative performance of public versus private
  economic activities should be judged in the
  context of individual countries and specific
  situation
• Countries differ in the configuration of their
  interest groups, the voting system, the
  bureaucratic structure, the role of the court and
  public opinion

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• Nations Strategic Implementations

• State functions
• The State as Organizer
• Recognizing Dilemmas and Trade-offs
• Programs be developed systematically to eliminate
  public policy disadvantages, as well as
  managerial inadequacies
• The choices of policies and administrative
  actions are partly influenced by the nations
  culture, attitudes and values

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• Nations Strategic Implementations

• State functions
• The State as an Organizer
• Building a Healthy Business government
  Relationship
• Economic development requires cooperation
• In market economy, wealth generated will be
  distributed in higher wages, dividends,
  reinvestment, tax revenue etc
• The type of quality of leadership within the
  business and government sectors can also affect
  the character of business government relations

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• Nations Strategic Implementations

• State functions
• The State as an Organizer
• Enhancing Government-Government Cooperation
• In a global system of free trade, if any state
  break the rules of free trade, the benefits of
  free trade exchange slip away from all parties
  involved
• Reciprocity is one of the important principles
  that help international cooperation to emerge
• US Free Trade Agreement With Many Nations, as a
  Case in Point

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• Assessing the States Strengths and Weaknesses

• The relative performance of public versus private
  economic activities should, therefore, be judged
  in the context of individual countries and
  specific situations
• Rwanda, as a Case in Point

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• Recognizing Dilemmas and Trade-offs
• Among Policy Options

• If a nation desires to improve its
  competitiveness, it is vital that programs be
  developed systematically to eliminate public
  policy disadvantages, as well as managerial
  inadequacies
• The Major Issues facing policymakers include
• Growth orientation vs. income distribution
  orientation
• Sectoral balance vs. sectoral imbalance
• Shock therapy vs. gradualism
• High unemployment vs. high inflation
• State ownership vs. private ownership
• Large private companies vs. small entrepreneurs
• Interventionism vs. free markets
• Inward investment facilitation vs. bootstrapping

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• In Conclusion

• Economic development requires cooperation between
  business and government
• The type and quality of leadership within the
  business and government sectors can also affect
  the character of business-government relations
• Business-government relations are influenced,
  too, by the relative power of two sectors