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As of 1 July 2002, this project is no longer run or housed at CID |
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Andean Competitiveness Project
Project Activities
The ACP was conceived as a four-year project, with a mid-term evaluation in the second year. Activities and subprojects were planned for the first two years.
The ACP worked in three broad areas for the period 2000-2001:
I. Microeconomic underpinnings of competitiveness
II. Economic policies
III. Environment and sustainable development
However, there was also an understanding that some cross-cutting topics, like
geographic considerations, governance and implementation, and improvement of
the educational/training system, should be addressed in all areas of work,
as appropriate. The project maintained a flexible approach so as
to incorporate new subjects or specific projects as the need arose.
One common theme of the project was the need for innovation and change, moving the Andean economies away from their dependence on natural resources toward more knowledge-based production structures.
I. Microeconomic underpinnings of competitiveness
This area of work consists mostly of interventions geared to generate and
follow processes to foster competitive advantage at the firm or group of
firm levels. Michael Porter heads this part of the team, which also involves
the active participation of the Latin American Center for Competitiveness
and Sustainable Development (CLACDS), a research institution affiliated with
the Instituto Centroamericano de Administración de Empresas (INCAE). There
are three subprojects in this area:
1. Information technology clusters: The project is working in Venezuela to explore the possibility of developing a cluster of innovative and competitive firms in this industry.
2. Agrotechnology clusters: Given the importance of agriculture in the Andean region, the impact of low-productivity agriculture on the environment, and the possibility of significantly enhancing the competitiveness of agricultural endeavors, the project is building on previous work and working toward creating agrotechnology clusters. It is also examining barriers to competitiveness that arise from public policies and striving to build consensus for changing such policies. This work is being carried out in Bolivia, Ecuador, and Peru.
3. Institutions for competitiveness: A country agenda on competitiveness should be based on a joint effort between government and civil society, especially the business sector. Although particularly focused on Colombia, the project is examining the experience of formal and informal institutions to promote competitiveness in several countries and is striving to draw lessons for the entire Andean region.
II. Economic policies
This area groups five subprojects carried out by CID researchers under the leadership of Jeffrey Sachs. All of these include studies to give support to policy initiatives to be undertaken by each government. Mixed teams composed of researchers from CID (and other parts of Harvard) and the local universities performed this work.
1. Information Technology Readiness: The project evaluated all five countries' readiness to take advantage of new information technologies to help identify policy initiatives that would enhance competitiveness through advancement in this area. The CID team is led by Colin Maclay and is using the guide prepared at CID (Readiness for the Networked World. A Guide for Developing Countries). Country-specific assessments and policy recommendations by mixed teams from CID and the local universities have been completed. Preliminary results of this project were used to define the country and characteristics of the cluster work on IT being now carried out in Venezuela by the CLACDS group.
2. Competitiveness Indicators: Building upon the experience of the Global Competitiveness Report, a set of specific indicators has been analyzed, critiqued, and validated for each country in order to assess progress in the different areas of competitiveness. This work has led to a greater understanding of the specific barriers to competitiveness that need to be dismantled in order to promote economic growth. The project leader is Andrew Warner.
3. Andean attractiveness to FDI: Starting from very recent work done at CID on the determinants of investment location decisions by multinational corporations, the ACP has evaluated the institutions, policies, and regulations in place in the five Andean Countries. Initial work was carried out by Howard Shatz of CID; Joaquín Vial now directs this subproject. This work has required the local universities to play an active role in surveying local subsidiaries of multinational companies. This project also includes a study being carried out by Felipe Larraín on policy instruments for export promotion and diversification, as well as for attracting specific types of foreign direct investment, with specific reference to experiences like Costa Rica's with INTEL and Ireland's export processing zone.
4. Competitiveness enhancement strategies: The costs and benefits of competitiveness-enhancing strategies were analyzed on the basis of international experience by Jeffrey Sachs. The main purpose of this study is to determine conditions for a successful transition from resource-based economies to knowledge-based economies.
5. Vulnerability to external shocks: This subproject studied policy instruments to reduce vulnerability to price shocks in the main commodity exports and will make proposals to this effect. General research has been carried out jointly by local universities and a CID team led by Joaquín Vial and Osmel Manzano of CAF during the first year of the project. Country-specific recommendations were proposed in 2001.
III. Environment and sustainable development
One of the main concerns about competitiveness is the interaction between economic development and the environment. Resource-intensive strategies and pressure coming from a fast-growing (and poor) population have made economic growth detrimental to the environment. A new, comprehensive strategy for the future must deal with the environmental challenges these countries face. The ACP addressed this issue with a team directed by Theodore Panayotou. Initial work focuses on the following two projects, led by Robert Faris:
1. Natural resources use: Identification of conditions for the optimal use of a given natural resource in a complex economy, in which the resource can be extracted or used in an environmentally friendly manner. In a second stage, country-specific data will be collected and the model developed will be applied to each country. Policy implications dealing with royalties, natural resource taxation, and government revenues will be derived. Analytic as well empirical preliminary results should be available by August 2001. The initial work was carried out with respect to Bolivia and Venezuela. The work in this project has been done in close coordination with the project on vulnerability to external shocks.
2. Environmental policies and the cost of doing business: The local universities are collaborating in a review of the Andean countries' environmental policies and institutions. The work includes cost implications for business and the formulation of policy recommendations for each country. Initial work applies to Colombia, Ecuador, and Peru. Preliminary results were available by August 2001.
There are also other projects that may have been taken up in a second phase,
particularly some concerning the development of "green markets" to help
shift the focus from current production practices to the new opportunities
that a more sophisticated insertion into the world economy can generate.
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© 2007 by the President and Fellows of Harvard College.
Last revised 10/31/2007