How to get out of the non-competitiveness pit?

Ukraine is at the bottom of the global rating of countries’ competitiveness again. The situation is worse in Venezuela, Greece, and Croatia only. This distressing for Ukraine news is the result of the IMD World Competitiveness Yearbook project – the annual rating of competitive strength level of different countries carried out by the International Institute for Management Development (IMD), a leading business school located in Lausanne, Switzerland.

MIM-Kyiv has been its exclusive Ukrainian partner for six years now. Various approaches of bringing the results of their research to Ukrainian community and the government in particular have been used. But as the rating shows, the attempts were futile, the conclusions have not been drawn.

So this year MIM decided to take the lead and use its own platform to discuss the rating results. The roundtable which was initiated by the Ukrainian business school is going to be held in a form of discussions aimed at production of a new vision of Ukraine’s competitiveness factors in the globalized world.

On the eve of the event The Day met with Iryna TYKHOMYROVA, president of MIM-Kyiv. During this exclusive interview we discussed why none of the cabinet of ministers’ members was invited to the roundtable, and what, according to MIM experts, is required to pull Ukraine out of the non-competitiveness pit.

“We live in the era of knowledge economy. One thing today is to export some kind of raw material, and absolutely different one is to export value added goods. It is impossible to develop the competitive strength without the involvement of intellectual capital in the modern world.

“Ukraine has a high potential in this area. The level of our education, scientific thought, and the nation’s intellect in general is what we have not to simply be proud of, but actively use and profit from. And that is what we cannot yet learn to do. This makes the topic of global competitiveness in the conditions of the capital intellectualization very urgent for us.”

The announcement and analysis of the results of the IMD World Competitiveness Yearbook, a project by the leading Swiss business school IMD-Lausanne, is on the agenda of the roundtable. MIM-Kyiv has been its exclusive partner for six years. Last year Ukraine was the third from the bottom of the rating, the year before that it was the last but one. And what is this year’s result?

“Ukraine improved its position slightly. We are not so close to the end anymore, we are the fourth from the bottom. In the previous years Croatia and Venezuela were behind us, now Greece joined them. But we should not be reassured by this result. This ‘growth’ does not imply the situation in Ukraine got better, it just got worse somewhere else (in this case, in Greece).

“In any case, being the 56th out of 59 is worse than we can do. We can achieve higher results. And Poland, which demonstrates growth each year, is a good example for us.

“If we look at the results of the rating and the leading positions in particular, we will see that the top four spots are occupied by Hong Kong, the US, Switzerland, and Singapore, respectively. And let us look at the rating of the world’s leading business schools: the US, Singapore, Hong Kong, and Switzerland are among the best ones there, too. So, you can be absolutely sure that the economic activity the country demonstrates directly depends on the development of science and business studies in particular.”

Experts use 323 criteria while creating the rating: effectiveness of government, business management, infrastructure development, etc. What areas does Ukraine show good results in? And which criteria drag us to the “bottom”?

“This rating is quite specific. The ‘life of business’ has direct influence on it. The rating itself consists of two parts. The first one is the official statistics, the analysis of the country’s macroeconomic performance. The second one is surveys for business representatives created according to certain methods used by IMD. Their survey is made of a number of questions, identical for every country. Our task as a partner is to spread it and collect the results. We do not process them. IMD experts work with them, aggregate and evaluate them.

“Besides the announcement of the results and their comparison to the last year’s ones, our roundtable gives an opportunity to reveal and analyze those factors of our competitive advantage that would have further impact on Ukraine’s position in the global competitiveness rating, if properly developed. And these are finance, banking sector, energetics (energy issues have direct impact on our competitive capacity, and at the present this is our weak spot), and areas we are good at: agricultural sector, IT branch, and everything related to human resources and education. We need to launch the process of domestic capital intellectualization.”

Mark Holzberg, one of your lecturers, said in his interview to The Day once, “There are no lagging countries, there are countries that are poorly governed.” Then what would be the meaning of Ukraine being an outsider of the competitiveness for six years in a row?

“We wanted to keep politics out of our roundtable event, that is why we did not invite MPs or ministers. It is obvious that political climate in a country influences business greatly, but since politicians use any public platform in their own interest with the elections so close, we decided to refrain from inviting representatives of any political force. We do not need program appeals and political speeches, we count on constructive analysis. We want to form a joint position of the business representatives and experts on the issues that impede the development of business in the country.

“And the quote that bad countries do not exist, but ineffective government does, can be applied to any sphere of life. Because likewise, there are no bad enterprises, there are enterprises with incompetent and unprofessional management.

“The success of a country is measured by the success of its citizens, households, enterprises. We will not be able to move forward unless we realize that the competitive strength of a country directly correlates to the intellectual capital it possesses. And by the way, today Ukraine is at risk of losing it. We can see the tendency of increased risk of our intellectuals’ emigration. Ukraine educates highly professional specialists for countries that are our competitors.”

But still, it would be good if our “reformers” (the cabinet of ministers) could see the results of the rating and listen to opinions that will be discussed at the roundtable. It would help them evaluate their work, see the mistakes, and get acquainted with the decisions offered by business and science... Did you invite any of the ministers, or maybe the prime minister, to participate in the event?

“We have been participating in this rating for six years. And during this time period we have practiced different methods of its results publication. Last year we held a press conference at the Ukrainian Independent Information Agency UNIAN. By the way, mass media showed very little interest in it. In 2009, when hryvnia collapsed, the National Bank of Ukraine reacted to the rating by saying that it does not agree to IMD’s attitude towards the bank’s actions.

“This year we decided to carry out an independent analysis of the rating’s result and provide the experts with a platform for its discussion. I hope that thanks to The Day newspaper, which became our information partner, these discussions will be given publicity, and as a result, will be more effective.

“It was surprisingly easy to involve the participants: everyone we invited agreed to come. We did not receive a single refusal.”

So, judging from the absence of names of politicians on the list of participants, you did not invite them?

“No. We set ourselves a different task – to become an expert project for business and give it an opportunity to shape a joint vision of prospects of competitive economy development. And then deliver this joint vision to the society and the government.”

MIM was always notable for its exceptional world outlook. At The Day we call it “the competitive success philosophy.” You can transform practically any hardship into a positive experience that serves as a source of energy for further development. Considering our position in the IMD rating, we are in a desperate need of such practice today. Can you advise how this competitive success philosophy can be brought up to a nationwide scale?

“In order to be successful you have to love what you do, love your own country, and of course, work.

“Life constantly makes us move forward and come up with something special. Development is driven by the competitive environment. It is remarkable that MIM sets the tone not only in the development of domestic business education, but the international one as well. It often happens that we start practicing something before everyone else does. And in three or five years we hear our foreign colleagues speak of the innovations in education as of some great discoveries, while we have been actively using them for some time.”

Education in a business school has its special features. All the teachers here are business advisers of a sort. Because your school is attended by entrepreneurs, people from business. That is why students do not come to teachers for theory, they come with practical questions about the matters they face every day. Which questions are the most popular today? What troubles your students the most?

“Today business is mostly worried by one question: how to survive. Business feels a need in stability, in a civilized business environment that would provide a stable development. Today financial problems are the most acute ones, and the fiscal policy is one of the main factors to create them. Tax legislation can encourage business development, but it can cause additional obstructions as well. Finding one’s own way, a development strategy, a competitive position, and realizing them – these tasks are incredibly hard, and this is what we talk about at MIM-Kyiv. And I hope this is going to be the topic of our discussions at the roundtable.”