Development Options for Suriname in light of globalisation trends and negotiations at WTO and FTAA

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Development Options for Suriname in light of
globalisation trends and negotiations at WTO and
FTAA

• Dr. Raymond Saner
• University of Basle, Switzerland
• Centre for Socio-Eco-Nomic Development
• Geneva, www.csend.org

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Objective of PresentationPart I

• To provide an overview of the field of national
  competitiveness globalisation
• To examine the linkage between quality of human
  resources and business competitiveness and to
  explore relevance for Suriname

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Objective of PresentationPart II

• To provide an overview of the current
  developments in trade negotiations
• To raise issues pertaining to linkages between
  economic development and trade strategies for
  Suriname

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Sources of Information Utilized re Suriname

• UNCTAD, WTO, IMF, OECD, CSEND
• Rosalea Hamilton, UNDP Project SUR,
  2003Implications for SURs Economy of the WTO,
  FTAA, CSME and ACP/EU Trade Agreements
• Vanus James, UNDP Report, 2001, Poverty
  Eradication Plan of Suriname

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Changing Landscape
21st Is Driven by 2 Complementary Revolutions --

• Globalisation of world economy
• Proliferation of information and communication
  technology

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Globalisation Means.

• Worldwide standardisation of customer needs
• Worldwide product awareness
• Worldwide standardisation of product technology
• Worldwide market presence of key competitors
• Worldwide marketing of standardised products

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Examples

• Watches and parts
• Textile machinery
• Mining machinery
• Oilfield machinery
• Consumer electronics
• Semi-conductors

• Sew machinery
• Electro-medical apparatus
• Synthetic insecticides and fungicides
• Civil aircrafts and parts
• Typesetting machinery

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Changing the Rules of the Game
Comparative Advantages
Competitive Advantages
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Stages of National Competitiveness
Source adopted from M. Porter, 1990
Advance
Decline
?
Factor-Driven
Investment- Driven
Innovation- Drive
Wealth-Driven
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Success Factors of National Competitiveness
(Source Michael Porter, 1990)
Firm strategy, structure rivalry
Chance
Demand conditions
Factor Conditions
Related supporting industries
Government
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Factors with the most decisive influence on
comparative advantages of a region with a future
(Ch. Koellreuter, BAK, 1997)
(1)
Ranking
Factors
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Factors with the most decisive influence on
comparative advantages of a region with a future
(BAK survey, 1997)
(2)
Factors
Ranking
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Knowledge Based Capital
Knowledge is the only meaningful resource
today. The traditional factors of
production land (e.g. natural resources),
labour and capitalhave not disappeared, but
they have become secondary. They can be
obtained, and obtained easily, provided there
is knowledge. Peter F.
Drucker
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Result?
Eroding the cost advantage that has been long
enjoyed by newly industrialised and developing
countries!
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Result?
Countries compete on Competitive Advantage, NOT
anymore on Comparative Advantage! Same is
true for the companies!
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What is Knowledge Society?
Knowledge in this new meaning is
knowledge as a utility, knowledge as the
means to obtain social and economic
results. (Peter F. Drucker)
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Implications?

• Even greater demand on high quality human
  resources
• Accepted need and practices for life long
  learning and continuing education
• Increased cross-border mobility for talents
  (greater brain drain)
• Greater commitment for development of human
  capital by the countries and by the world class
  corporations
• Pursuit of intellectual capital formation
• Defending of intellectual property rights

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Lester C. Thurow, MIT Bus Schoolon Quality of
Education
In todays economic world, countries without
educated work forces simply cannot set sails
economically what ever their desires. If
countries cannot organise good education
systems, there is no such thing as catching up
economically. (March, 2001)
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Building on Lester C. Thurow in regard to
Quality of Management Development
If companies cannot organise good management
development and training systems, there is no
such thing as sustainable economic performance.
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Strengthening Enterprises Competitive Advantage

• A priori is through
• availability of high quality human resources to
  recruit from (government responsibility)
• investment in human resource development and
  training to sustain competitive
  advantages(enterprise responsibility)

The urgent need to reassess the existing training
and development programmes and to ensure the
quality of new ones
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Application to Suriname 2a

• The analysis suggests that the fundamental
  missing element of the development strategy is
  that of the expansion of output and export
  potential and demand through investment in the
  capacity to innovate and make exports
  autonomously more attractive. It is
  characteristic of Suriname and other Carribean
  economies that innovation is done mainly through
  imported ideas, machinery and equipment (p.76)

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Application to Suriname 2b

• The survey results suggest that need for more
  training and research to address the knowledge
  deficiency of the trading environment and to
  strengthen the human capacity to deal with trade
  matters.
• The survey suggests that there is need for
  Suriname to improve negotiating capacity by
  improving skills sets and improving the
  consultative mechanism (p.83)
• (Source Rosalea Hamilton, UNDP, 2003)

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Application to Suriname 2c

• Preparation through schooling must now focus on
  the ability to learn, diagnose, and to make
  innovative solutions with the information
  acquired.
• Thus, education must now foster an independence
  of spirit and analytical ability. Such
  preparation is achieved only through lifelong
  learning oriented heavily towards problem-soling
  and practical application.(p.7)
• (Source Vanus James, UNDP, 2001)

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Conclusion 1 Part I

• Competition of the 21st century is a race of
  knowledge creation and application
• Knowledge society requires knowledge workers
  which in turn demands quality education and
  training at ALL levels
• Companies are embedded in the countries/regions
  that they operate in. Available human resources
  are constrained by the quality of existing
  education and training services

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Conclusion 2 Part I

• Developing Countries who base their development
  strategy on commodities and cheap labour cannot
  count on sustainable economic and social
  development.
• Globalisation means interdependence across
  borders. No country can stay aloof of this trend
  without seriously endangering its future
• FDI flows to countries that can guarantee stable
  economic and social development, the rule of law
  and can offer a skilled and motivated work force.
  

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Trade Development options for Suriname Part
II

• Dr. Raymond Saner
• University of Basle, Switzerland
• Centre for Socio-Eco-Nomic Development
• Geneva, www.csend.org

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Effects of trade liberalisation since 1995
(Source Rosala Hamilton, 2003)

• The empirical evidence suggests rather strongly
  that trade liberalisation as championed by the
  trade agreements, coupled with exchange rate
  liberalization as recommended by the IMF, has not
  proven to be strong medicine to solve the
  development problems of Suriname.
• The available evidence is that the downward
  adjustment of the tariff has generated very
  little positive growth stimulus for trade and
  even more importantly for GDP growth. (p.8)

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Effects of trade liberalisation since 1995
(Source Rosala Hamilton, 2003)

• The existing trade agreements and those being
  negotiated all focus primarily on substantial
  tariff reduction and promise to yield growth in
  export demand and growth in output. The bulk of
  Surinames revenue from trade come from customs
  duties, total statistical and licensing fees, and
  consent rights.
• These are also the tariffs that have been subject
  to the most reduction since 1990, leading to a
  fall in Government revenue and a reduction in
  Governments ability to sustain budgetary support
  for unprofitable state enterprises and to
  manipulate the economy through the budget. (p.8)

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Tariff Regimes

• In compliance with CARICOM, SUR is supposed to
  bring tariffs fully in line with the Common
  External Tariff (CET) resulting in an estimated
  revenue loss of SRG 11.5 billion. (R. Hamilton,
  2003)
• WTO rules consist of applying MFN to all WTO
  members, observing NT/MA non discrimination and
  adhering to Bound Tariff Commitments.
• Regional Trade Agreements (RTAs) like CARICOM
  cannot discriminate against non RTA members, e.g.
  by raising tariffs against other WTO members.
• Consequence SUR tariffs can only go further
  down, hence revenue loss appears certain and need
  for competitiveness of the economy is a must.

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Boston Consulting Grid
-MARKETS STRENGHT
Revenues / Profits -
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SWOT - Suriname

• Weaknesses
• No sectoral strategy
• Political fragmentation
• ?
• __________________
• Threats
• Substitutions of products ?
• MNC Bargaining Power
• ?

• Strenghts
• Minerals
• Forests
• Dutch Identity
• __________________
• Opportunities
• Tourism ?
• Agro products ?
• ?

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FDI for Suriname, yes IF

• foreign investors practice good Business
  Diplomacy (e.g. Shell in Nigeria build roads,
  schools, hospitals, training local employees, use
  local suppliers etc.
• foreign MNCs do not engage in disloyal transfer
  pricing
• foreign investor makes effort to employee and
  train local staff, use local suppliers and limits
  environmental damages (contribution to reduction
  of unemployment, poverty and enterprise creation)

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Global Regional Trade Agreements(select
group of key RTAs)
WTO
INDIA
NAFTA
FTAA
EU
CARICOM
CHINA
SUR
MERCOSUR
ASEAN
CAN
EFTA
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Trade Strategies for SUR?

• CARICOM cost/benefit analysis? Joining forces
  with regional competitors (tourism, minerals,
  agro) aiming at same markets (USA, EU) ?
• FTAA options after Cancun failure light
  (Brasil), flexible (USA), a la carte (FTA or
  sauve qui peut) ?
• MERCOSUR Association Agreement like Bolivia?
• China, India, South Africa viable export markets
  for SUR products and services?

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Things to do. For Suriname..

• Ensure effective interministerial coordination
  mechanism
• Ensure effective government to business
  consultation mechanisms
• Ensure that political parties and civil societies
  understand cost/benefit of doing nothing versus
  doing what (recompetitiveness?
• Establish sectoral strategies first, then decide
  on trade regime and trade negotiation strategies
• Ensure adequate training of economic and trade
  diplomats and civil servants

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Things to do...

• Ensure adequate data collection and public access
  to pertinent trade and economic information
• Ensure effective representation of SUR interests
  at WTO, FTAA, CARICOM, MERCOSUR, and EU as well
  as constructive cooperation with UNCTAD, UNDP,
  IDB, WB, IMF, WHO, ILO and UN.
• Study examples of other countries with similar
  multi-ethnic composition like Singapore,
  Switzerland, Mauritius, and Bolivia to learn from
  their successes and failures.

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Thank You for your attention !!