Urgent imperative for SME's to contribute to the national growth and development agenda

8/10/2019 Urgent imperative for SME's to contribute to the national growth and development agenda

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The Urgent Imperative for SMEsto contribute to

Silburn Clarke, FRICS

Chairman, Jamaica Business Development Corporation

ByGrowing the GDP

&

Improving the Current Account Deficit

The National Growth and Development Agenda


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a. Macroeconomic Challenges and the SMEs Role in Export and Economic Stability

b. Nature of Global Knowledge Economy

c. The InnovationProductivityCompetitivenessConnexions

e. A Sustainable Competitive Advantage Model

f. Findings on Motivation from US High-Tech firms

f. Case Study: Born Globals / International New Ventures

g. Case study: Jamaicas first Global Enterprise

h. Take Home Messages

PRESENTATION OUTLINE


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The world is betting that Jamaicawill fail !!

Jamaica is in a high-risk programme, a last-

ditch effort to avoid a massive adjustment,

even a collapse.

Financial Times, May 2013


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The Urgent National Export Imperative

Radical Reversal of Persistent Unsustainable Trade & Services Deficits


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Current Account Deficit is Staggering

Avg 5yr CA deficit : US$1.8bln


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Output must grow by 6% minimum to

maintain economic stability

Planned Primary Surplus for 2012/2013 5.2% of GDP

New Taxes 1.3%

NHT Contributions 0.8%

Planned Primary Surplus (post-implementation) 7.3%

Interest Cost on Debt -8.2%

NDX Interest Savings 1.3%

Cost of Principal Repayment -6.5%

Net Primary Surplus -6.1%

Minimum GDP Growth Required 6.1%

Source: Caribbean Association of Actuaries


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Economic Stability Model

In stableeconomies;

Debt Primary Surplus

approximates to ________

GDP Long Term Interest Rate

The higher the tendency to a level of equality is the more stable the economy is.

but in unstable economies ;

Debt Primary Surplus

is not equal to __________

GDP Long Term Interest Rate



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The higher the level of disequilibrium is thehigher the tendency to instability

In Jamaicas case: Our Debt to GDP ratio isseverely out of alignment with our ratio ofPrimary Surplus to LT Interest Rates

The numbers: 140% to 67%


Economic Stability Model


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Innovation drives Productivity

JPC: 2001-2010 period


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Contribution of Industrial Sectors to Overall Performance

GDP Performance 2002-2011


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Henrekson, Stockholm School of Economics

Growth Drivers and Firm Types

Replicative Firms

Efficiency Factors

Innovating

Firms

Small

Businesses


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SMEs are VITAL to Countrys Survival

Imagine 1000 SMEs exporting US$1million in goods and services:Thats US$1.0billion contributing to our Current Account

Now imagine 2000SMEs exporting US$1million in goods andservices:

SMEs combined would add US$2.0billion and so

CLOSE OUR CURRENT ACCOUNT DEFICIT

GROW OUR GDP

STABILISE OUR ECONOMY


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The models of the last 2 eras (agricultural and industrial ) rested on Land,Labour (low-cost) and Capital (LLC) as key factors of economic production

In the current period Knowledge is the main resource

The Global Knowledge Economy

Umemoto 2006


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Global economy has been in transition since the 1980s to what is variously termed a

New Economy, Digital Economy or a Knowledge Economy

THE NEW KNOWLEDGE ECONOMY


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Global Shift to the Knowledge Economy

(variance in GDP explained by KEI in model)


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RESOURCE-BASED ECONOMIES EFFICIENCY-BASED ECONOMIES INNOVATION ECONOMIES

Transition

I to II

Jamaica

Guyana

Transition

II to III

Trinidad

Barbados

Stage II

Dom Rep

Panama

Costa Rica

Stage III

???

Stage I

Honduras

Nicaragua

Countries compete based on their factor

endowments: primarily unskilled labour

and natural resources.

Compete on the basis of price and sell

basic products or commodities, with

their low productivity reflected in lowwages.

Countries begin to develop more efficient

production processes and increase product

quality.

Competitiveness is increasingly driven by higher

education and training.

Wages have risen and they cannot increase

prices

Companies must compete by producing new

and different goods using the most

sophisticated production processes and

through innovation.

Wages will have risen by so much that they

are only able to sustain those higher wagesand the associated standard of living by

higher value production

The Shift to Knowledge and Innovation


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Thoughts on Innovation

Pronounced uniform regional group inflexion

i i i


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Mission: To create new Innovation

Outcomes for Firms


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What is Innovation

Innovation....

Creation of added-value from new or Improved products, processes,methodologies, services, business models, or markets

Schumpeter 1934


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The Innovation-Productivity-Competitiveness-

Export Link

Innovative Capacity

Competitiveness Improvement

Competitive Global Marketspaces

Begins with

knowledgeable

engaged motivated

human resources

Increased

Productivity

Export Entry


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NATIONAL INNOVATION BEGINS WITH INDIVIDUAL INNOVATION

Clarke 2012


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Going Global

Typically the most productive local firms are the

earliest to go global:

a. The firm has the confidencethat they can play onthe global stage

a. Having maxed out markets domestically, theyneed the global marketspace in order to

maintain their growth trajectory


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GROWING SUSTAINABLE COMPETITIVE ADVANTAGE

Is the resource or

capability VALUABLE?

Is it homogeneously

distributed across

all firms ?

Ie RARE

Is resource or capability

IMPERFECTLY mobile ?

Competitive

disadvantage

Competitive

parity

Sustained

Competitive

Advantage

Temporary

Competitive

Advantage

YES

NO

YES

NO

YES

NO

Mata, Feurst, Barney (1995)

Acquired /Imported

Innovations

Indigenous

Innovations

Is the ORGANISATIONAL

model embedded

?

YES

V.R.I.O MODEL


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Study of IWB of Employees in

US High-Tech Services Firms

Organisational

Context

Individual

Motivation

Employee

Innovative

Behaviour

in

Workplace

Intrinsic

Motivation

Integrated

Motivation

Identified

Motivation

Organisational Context =0.327 =0.267 =0.195

Model explains (Rsq) 24% 21% 14%

Employee Innovative Work Behaviour

Autonomous Motivation Explains 36.1%


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Four 17 year olds straight out of school

(Campion) decided on recording career

Travelling, performing and harvesting

revenues globally within 3 years of start-up

Classic INV firm

SCA based on their unique content and

singing style (VRIO)

Recently completed a multi-year deal forThe Voice / Guiding Light to be on Japan

Air Line (JAL) playlist for inter-continental

and domestic flights

Born Globals / International New Ventures (INV)

T. O. K.

Case Study #1


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Jamaicas first global enterprise ?


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At its peak in the 1920 the UNIA had over

Divisions : 1,900

Countries : 40 globally

including : United States, Cuba, Panama, CostaRica, Ecuador, Venezuela, Ghana, Sierra Leone,

Liberia, India, Australia, Nigeria, Namibia, Canada,

Nigeria and South Africa.

The first Jamaican Global Enterprise

The UNIA

If you have not confidence in self, you are twice defeated in the race of life.With confidence, you have won even before you have started.

Case Study
http://en.wikipedia.org/wiki/Panamahttp://en.wikipedia.org/wiki/Costa_Ricahttp://en.wikipedia.org/wiki/Costa_Ricahttp://en.wikipedia.org/wiki/Ecuadorhttp://en.wikipedia.org/wiki/Venezuelahttp://en.wikipedia.org/wiki/Ghanahttp://en.wikipedia.org/wiki/Sierra_Leonehttp://en.wikipedia.org/wiki/Liberiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Australiahttp://en.wikipedia.org/wiki/Nigeriahttp://en.wikipedia.org/wiki/Namibiahttp://en.wikipedia.org/wiki/South_Africahttp://en.wikipedia.org/wiki/South_Africahttp://en.wikipedia.org/wiki/Namibiahttp://en.wikipedia.org/wiki/Nigeriahttp://en.wikipedia.org/wiki/Australiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Liberiahttp://en.wikipedia.org/wiki/Sierra_Leonehttp://en.wikipedia.org/wiki/Ghanahttp://en.wikipedia.org/wiki/Venezuelahttp://en.wikipedia.org/wiki/Ecuadorhttp://en.wikipedia.org/wiki/Costa_Ricahttp://en.wikipedia.org/wiki/Costa_Ricahttp://en.wikipedia.org/wiki/Panama


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eCLIPSE

Enhancing Competitiveness throughLeadership, Innovation, Productivity, Self-Determinism and Entrepreneurship.

Complements business planning, accounting,budgeting training with,

Global mindset orientation, innovation,creative problem-solving


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GoJ / IMF mandate for JBDC and SMEs and as part of the GrowthAgenda

MSME and Entrepreneurship Policy tabled in May and passed this

week in Parliament

Legislative Agenda: Secured Interests Personal Property , Insolvency ,

Copyright, Trademark, Companies Act, Superform

$63million of Capital Support from MIIC in 2013/2014 for Creative

Industries and Business Incubation and Acceleration

$2billion in loan support to micro-enterprise sector ($700million)

and SME sector ($1.3billion)

HISTORIC SME POLICY SUPPORT FRAMEWORK


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Need to structure economic payoffs to favour innovators and the

innovating firms in order to drive sustainability, resilience, flexibility,

competitiveness, export growth and prosperity

SMEs are vital to increasing exports and stabilising the economy

Jamaica cannot assert any globally distinctive VRIO resources or

capabilities from factors derived from and structurally bounded to

the old agro-industrial era

Your mental models, global mindset, confidence, persistence,

motivation are critical factors for taking your firm global

With confidence you are a winner before you get started (Garvey)

MESSAGES TO TAKE HOME


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THANK YOU !

Silburn Clarke, FRICS

[email protected]

Urgent imperative for SME's to contribute to the national growth and development agenda

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