Here is an elegantly argued article about COMPETITIVENESS by Fuad Cassim and Andrew Charman (from the CAPE TIMES 9 JAN 2009) in the OPINION & ANALYSIS column. Bold is my own

THE world economy is faced with the gravest financial turmoil since the Great Depression of the 1930s. Commentators suggest SA may be less severely affected than her major trading partners, yet this optimism should be treated with caution. We may not face a financial crisis, but our economic woes run deep.

If we consider SA's competitiveness, our economy has been losing ground against our major trading partners for years. Policy makers need to take note of this trend because the state of our competitiveness offers a telling insight into the productivity of our firms and the performance of the government in creating an environment conducive to growth.

Doing all my work in South African industry (especially IT), I am consistently flabbergast at how inefficient these business are.

Sound macro-economic policy may not in itself result in improved prosperity. Prosperity can be achieved only through creating wealth. Those who think prosperity can be achieved through distributing wealth are wrong, simply because governments do not create wealth, industry does; so we need to take more seriously the micro-economic foundations of our economy. In doing so, we must recognize the state of our competitiveness, both globally and locally.

There is a growing awareness in policy debates that competitiveness matters, but it is often taken to refer to the integration of the global economy, driven by liberalised trade and knowledge sharing. In these terms, competitiveness presumably means that industry, too, will increasingly globalise, seeing more cost-effective inputs and easier access to emerging markets. The result, in this scenario, will be declining wages and more unsustainable exploitation of natural resources.

But this understanding of competitiveness does not explain why industry does not automatically relocate in search of cheap labour. Nor does it explain why the most competitive nations, such as Switzerland, Denmark and Sweden, are also prosperous and have relatively low disparities in wealth between rich and poor. The answer lies in the realisation that competitiveness is a direct reflection of productivity which, put simply, is the key to prosperity. In the long term, competitiveness is not achieved by reducing labour costs, but by investing in human capacity to pursue innovation. Policy makers must confront the evidence that competitive economies will grow faster and be more successful in reducing poverty. In countries where the business environment stifles enterprise competitiveness, enterprise growth is restrained and businesses struggle to raise productivity.

The World Economic Forum has sought to benchmark countries' performances against a common index. The comparative performance of each country is reported on annually in the forum's Global Competitiveness Index (GCI). In the most recent report (2007-08), the GCI compares the overall competitiveness of 131 countries, including SA, which currently ranks 44th. While SA is relatively well positioned in terms of its overall score, there are several reasons for concern.

The first is that SA is sliding down the table. A few years ago, SA was 36th. The second is that the scorecard shows a stark divide between the private sector and public institutions. Whereas our private sector, as measured in the subsidiary Business Competitiveness Index, is ranked 34th, many of the public institutions and services assessed in the GCI perform as poorly as slow-developing and even least-developing countries.

The government has argued that the inefficiency in public institutions and redistribution policies must be seen as the short term cost of addressing the legacy of poverty and racial inequality. These goals must be achieved as soon as possible, but they should be achieved through raising the competitiveness of our institutions. Current efforts to skill labour and redistribute wealth are unlikely to have a significant effect on the productivity of small and medium businesses.
The competitiveness of small and medium firms will rest on the sophistication of their business approach and the manner in which they use human resources and pursue innovation. These factors are shaped, in turn, by the presence of related and supporting industries. The government needs to nurture these competitive advantages through shaping the context for enterprise competition, by encouraging local competition and instituting rules to encourage investment. It can also have a direct effect on the business environment through investing in infrastructure, providing funding to promote innovation, enhancing the capacity of higher education institutions to conduct industry-linked research, promoting high-level skills development and, most of all, through raising the productivity of institutions that provide basic services, such as primary education, health and security.
SA can best achieve prosperity through raising its competitiveness. This means, above all, enhancing the micro-economic foundations of small and medium enterprises so that they can raise their productivity. High productivity will support high wages and therefore better lifestyles, while productive firms will be better placed to compete in local and global markets.

South African policy makers need to take seriously the current state of our competitiveness. The poor performance of our institutions must be acknowledged and significantly improved. The needs of small and medium business must be supported through appropriate policies. The necessary enterprise development strategy must think globally, aiming to enhance the competitiveness of our industry to engage in new markets and match our competitors.

Cassim is executive director of Uni-Africa Investment Holdings.
Charman is CEO of Sustainable Livelihood Consultants.

This ties into observations made by Mamphela Ramphele in an obituary to Helen Suzman in The Sunday Times (Published:Jan 11, 2009). If we replace her command of politics with a formula to a generic winning strategy (eg management of the CSIR / CHPC), I think her opinion is true here too.

Suzman stretched the bounds of possibility of using the system to better the lives of individuals by arming herself with knowledge of the parliamentary and legal systems. She knew more about the law and parliamentary procedures than many of her adversaries in parliament.

In addition, she had a very disciplined and hard-working research team, which ensured that her interventions were based on facts and solid analysis.

She undertook field visits to see for herself how those vulnerable to abuse of power really lived. Her questions were sharpened by her deep insights into the cases she was raising.

Mamphela went further

She refused to restrict her brief to representing the interests of her constituency of Houghton that elected her.

Which brings me onto another matter, I see Professor Nithya Chetty (can't Tuks take away the Associate?) has an article about UKZN in the Cape Times, basically summarising his point of view that Academic Freedom has been compromised at UKZN. While I suspect he is correct, I wonder if his lashing out at management and industry may have unintended consequences.