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What got you here won’t get you there
What competitive advantage of nations really means
MAHMUD HOSSAIN OPU
Sandeep Ananthanarayanan
January 24, 2023 12:00 PM
It's been some time that I wrote an article in this newspaper claiming that Bangladesh could pack a punch harder than its bigger neighbours in many areas, and that it's time other countries started learning from it. That led to quite some bouquets from readers this side of the sub-continent, and a few brickbats as well … most from my friends.
“Bangladesh? A case study to learn from?”; “seat-of-the-pants analysis my friend …”; “it's a temporary trend …”; “they haven't improved, we've gone down …”;
“what got them here, can't get them there …”
I was foxed.
You see, while I have aggressively led some of the largest business groups in this nation, the one thing I have come to learn over years of experience is that charting a prudent business growth demands competitor benchmarking. If you want to assess true progress and map an efficient growth path, you try to learn deeply from the successes and failures of your competitors, both from those ahead of you and those behind you. And the one thing that good business leaders don't do, is be dismissive of such lessons from industry players.
But that was exactly what seemed to be happening when it came to comparing nations -- exemplified by some of the responses to my earlier report.
“It's only garments … do they even have one car manufacturer?”
When, in March 1990, HBS professor Michael Porter wrote the unassuming-yet-well-researched HBR article Competitive Advantage of Nations, one of the key paragraphs he wrote was that “there are striking differences in the patterns of competitiveness in every country; no nation can or will be competitive in every or even most industries. Ultimately, nations succeed in particular industries because their home environment is the most forward-looking, dynamic, and challenging.”
In other words, if only a few industries are succeeding in improving a nation's economic outlook, then why should we not support these more? Why divide resources into other industries that have less potential to succeed in the country, just because the Joneses do so, when one can make the most out of that one-trick-pony?
This would resound well with intrepid gamers, such as me -- you might be a master warrior in Shadow Fight with tens of possible attack moves, but you would possibly use only a handful to beat the pants of the opposing ninja ... no?
Look at where that pony has got us.
Bangladesh has been rated amongst the fastest top-10 growing economies globally since the past few years. In 2019, Bangladesh was ranked globally as the sixth fastest growing economy by the IMF. In 2020, NASDAQ placed Bangladesh at the global 3rd position. In 2021, the UN World Economic report ranked Bangladesh as South Asia's top-most economy. With close to a 170-million population, a fast-growing near-30 million middle and affluent class, the nation's per capita income, in a historic achievement, has beaten its bigger neighbor India.
And all this, not at the cost of equitable growth. Bangladesh has committed itself to achieving year 2030 targets on 17 UN Sustainable Development Goals, including those dedicated to human rights and gender equality. For example, the year 2030 SDG target on reducing poverty incidence below the national poverty line has already been achieved. SDGs related to maternal mortality, neonatal mortality, under-five mortality all have shown a steady decline in line with 2030 targets.
Compared with neighbouring India, Pakistan, and Nepal, Bangladesh has the lowest infant/child mortality rate (51 per 1,000 live births), the highest vaccination level (86.2% of children between one and two years), and the most extensive family planning services (52% of married women under 50 use modern methods of contraception). And of course, the lowest maternal mortality rate (194 per 100,000 live births) across South Asia.
In terms of child education, once again Bangladesh has left its neighbors behind. Bangladesh's 97.74% net primary school enrollment rate (compared to the US's 95%, Australia's 96%, OECD's 97%, EU's 97%) and 98.52% completion rate are well on path to achieve the 2030 SDG target of 100%. Notable progress has also been witnessed on SDGs related to increasing female workforce participation to close to 50% and on significantly decreasing child girl marriage.
These above-mentioned sustainable gains have had multiplier effects on the interest of foreign direct investors in Bangladesh, and that is the way to go.
While I could easily rest my case here, I leave you with another classic note from Porter's above-mentioned paper: “National prosperity is created, not inherited. It does not grow out of a country's natural endowments … its interest rates … or its currency's value … A nation's competitiveness depends on the capacity of its industry to innovate and upgrade!”
“But do they even care about the environment, those sweatshops?” would say the naysayer.
My friends, while Bangladesh now has the world's largest number of green garment buildings with LEED certification, across the border, GM, Harley, Ford, Lohia, Man Trucks, all of them closed automobile manufacturing operations in the span of the last five years due to a massively loss-making automobile industry.
Well, didn't someone say, what got you there, won't get you here.
Dr Sandeep Ananthanarayanan, alumnus of IIM Calcutta and University of Buckingham, is the Group Strategy Director of Best Holdings, teaches Strategic Management at North South University and takes M&A sessions at IBA. He is also the QMSC Board member at Bureau of Indian Standards, Government of India
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