This presentation was delivered by Micael Enright at India's National Competitiveness Forum 2015, the flagship event of India Council on Competitiveness. Institute for Competitiveness (India) the Indian knot in the global network of the Institute for Strategy and Competitiveness at Harvard Business School has initiated the India Council on Competitiveness. The Council, created in collaboration with the U.S. Council on Competitiveness; is based in Gurgaon, India and is an association of distinguished members from industry, academia, think tanks, media and researchers. The mission of the India Council is to set an action agenda to drive Indian competitiveness, productivity and leadership in world markets to raise the standard of living for all Indians. For more information, visit www.compete.org.in

1. Competitiveness: New Approaches,
Make in India: Lessons from China
Professor Michael J. Enright
Enright, Scott & Associates
University of Hong Kong
Hong Kong Institute for Economics and Business Strategy
September 2015
2015-09 © Copyright Michael Enright, 2015 1
© Copyright Michael J. Enright , 2015
This presentation is incomplete without the spoken commentary.
Please do not duplicate, store, or transmit in any form without the permission of the author.

2. ESA and Competitiveness
• Professor Michael Enright helped design and then managed the
Competitive Advantage of Nations Project at Harvard Business
School in the 1980s
• ESA undertook the first competitiveness project in a
developing country based on modern competitiveness
methodology
• ESA has undertaken detailed competitiveness assessments all
around the world, usually in conjunction with local partners
• ESA has made major enhancements over the years to focus on
the practical aspects of improving competitiveness, advanced
use of these tools remains proprietary to ESA
2015-09 © Copyright Michael Enright, 2015 2

3. Our approach to competitiveness
1. Generate a proper overall competitiveness index
2. Use data and benchmarks creatively
3. Bring business into the frame
4. Organize the pieces into a useful framework
5. Develop strategies and policies appropriately
• The steps can be used individually or together
2015-09 © Copyright Michael Enright, 2015 3

4. A new competitiveness index
• Existing competitiveness indices like WEF, IMD
– Mix up “explanatory” and performance variables
– Use “explanatory” variables based on opinion
– Use inadequate samples (30+ responses in some nations)
– Are complex, inconsistent, shift over time, don’t cover enough places
– Do not measure what drives competitiveness – productivity
• The ESA Productivity Competitiveness Index (EPCI)TM
– GNI / Pop(15-64) with highest value scaled to 100
– One year snapshot and 3 year rolling average
– Coverage 172 countries 1990-2014
– Simple, performance only, measures productivity
2015-09 © Copyright Michael Enright, 2015 4
“ESA Productivity Competitiveness Index” and “EPCI”
are both trademarks of Enright, Scott & Associates, Ltd.

5. ESA Competitiveness Index, EPCI1TM, 2014
Country Rank Index Country Rank Index
Norway 1 100.00 Singapore 13 46.71
Switzerland 2 80.37 Austria 14 46.40
Luxembourg 3 65.90 Netherlands 15 46.01
Qatar 4 65.77 Germany 16 45.07
Australia 5 63.30 Belgium 17 44.58
Macao 6 62.48 Iceland 18 42.32
Denmark 7 60.69 France 19 42.21
Sweden 8 60.11 Ireland 20 41.45
Kuwait 9 55.11 Japan 21 41.24
United States 10 51.91 United Kingdom 22 38.30
Canada 11 47.89 Israel 23 36.87
Finland 12 47.09 New Zealand 24 36.03
2015-09 © Copyright Michael Enright, 2015 5
Source: Enright, Scott & Associates

6. Rank comparisons, 2014
Country
ESA
EPCI1
(of 135)
WEF
(of 135)
Country
ESA
EPCI1
(of 135)
WEF
(of 135)
Norway* 1 11 Germany* 15 5
Switzerland 2 1 France 18 22
Luxembourg* 3 18 United Kingdom* 21 9
Qatar* 4 15 Ireland 19 24
Australia* 5 21 Japan* 20 6
Denmark 6 13 New Zealand 23 16
Sweden 7 10 Hong Kong* 25 7
Kuwait* 8 39 Korea 29 25
United States 9 3 Kazakhstan 51 47
Canada 10 14 Brazil 54 53
Finland 11 4 Malaysia* 56 19
Singapore* 12 2 China* 70 27
Austria 13 20 India* 110 66
2015-09 © Copyright Michael Enright, 2015 6
Comparison just of the 135 economies in both databases.
Source: Enright, Scott & Associates

7. Comparison EPCI1 and WEF comparisons, 2014
0
20
40
60
80
100
0 20 40 60 80 100
NormalizedWEF
EPCI1
2015-09 © Copyright Michael Enright, 2015 7
WEF = EPCI1 line
Source: Enright, Scott & Associates
0
20
40
60
80
100
120
140
160
0 20 40 60 80 100120140160
WEF
EPCI1
WEF Rank “Too High”
WEF Rank “Too Low”
Index Values Rankings

8. Average deviation in rank from EPCI1 and WEF indices
EPCI1 vs WEF
Year Ave Deviation Out of
2014 17 135
2013 17 138
2012 16 134
2011 16 135
2010 16 136
2009 14 129
2008 14 129
2007 14 124
2006 13 117
2015-09 © Copyright Michael Enright, 2015 8
Source: Enright, Scott & Associates

9. Use data and benchmarks creatively
• We use the raw data from multiple sources, compare with relevant
benchmarks, map against real trade and investment performance,
and use this as input to policy and strategy
• We identify unique sets of comparators, competitors, customers, and
complementors for each country
• For each set of benchmarks:
– Where do we have advantages to exploit / disadvantages to overcome?
– What pattern of trade and investment should we see apparent
advantages / disadvantages? Is this seen in reality? If not, why not?
– What are the specific issues that prevent us from realizing our potential?
– What set of strategies and policies can deal with these issues?
2015-09 © Copyright Michael Enright, 2015 9

10. Australia versus traditional benchmarks in
“Knowledge Economy” variables
2015-09 © Copyright Michael Enright, 2015
Above 90th percentile Below 30th percentile
Adult Literacy Rate (10.00)
Gross Secondary Enrolment Rate (10.00)
Difficulty of Hiring (10.00)
Rigidity of Hours (10.00)
School Enrolment, Secondary, Female (10.00),
Soundness of Banks (9.77)
Days to Start a Business (9.76)
Gender Development Index (9.76)
ICT Expenditures as percentage of GDP (9.70)
Employment to Population Ratio (9.55)
Human Development Index (9.53)
Life Expectancy at Birth (9.32)
Reliance on Professional Management (9.32)
Firing Costs (9.02).
Manufacturing Trade as percentage of GDP (0.47),
Trade as percentage of GDP (0.70)
Export of Goods and Services as percentage of
GDP (0.70)
Value Chain Presence (0.91)
Daily Newspapers per 1000 people (1.79)
Share of Unemployment with Secondary Education
(1.89)
Employment in Industry (2.14)
Foreign Direct Investment Outflows as percentage
of GDP (2.33)
Science and Engineering Articles with Foreign Co-
authorship (2.33)
Interest Rate Spread (2.58)
Mobile Phones per 1000 people (2.89)
Labor Force with Secondary Education (2.97)
10
Source: Enright, Scott & Associates

11. 2015-09 © Copyright Michael Enright, 2015
Australia: Top competitors by sector
Rank
Agriculture,
Forestry, and
Fishing (A0)
Mining (B0)
Manufacturing
(C0)
Electricity, Gas,
Water, Waste
Services (D0) and
Construction (E0)
Service
Sectors (F0 to
S0)
1 United States China China United States United States
2 New Zealand United States United States China United Kingdom
3 China Canada Germany United Kingdom China
4 Canada Brazil United Kingdom Germany New Zealand
5 Argentina United Kingdom Japan New Zealand Hong Kong
6 United Kingdom South Africa Indonesia Japan Canada
7 Indonesia Indonesia India Canada Germany
8 Brazil India Hong Kong Hong Kong Singapore
9 Japan Chile Korea India Japan
10 Hong Kong Argentina New Zealand Singapore India
11
Source: Enright, Scott & Associates

12. Australia versus Asia-Pacific
2015-09 © Copyright Michael Enright, 2015
Above 90th percentile Below 30th percentile
Human Development Index (10.00)
Soundness of Banks (10.00)
Average Number of Citations per S&E
Articles (10.00)
Adult Literacy Rate (10.00)
Gross Secondary Enrolment Rate (10.00)
Difficulty of Hiring (10.00)
Rigidity of Hours (10.00)
Labor Force with Tertiary Education
(10.00)
Gender Development (10.00)
School Enrolment, Secondary, Female
(10.00)
Rule of Law (9.41)
Government Effectiveness (9.41)
Voice and Accountability (9.41)
Life Expectancy at Birth (9.41)
Employment to Population Ratio, Ages 15–
24 (9.41)
Days to Start a Business (9.38)
ICT Expenditure, % of GDP (9.17)
Science and Engineering Journal Articles
per million people (9.38)
Firing Costs (9.38)
Intellectual Property Protection (9.29)
Availability of Venture Capital (9.29)
Quality of Management Schools (9.29),
Professional and Technical Workers % of
Labor Force (9.29)
Reliance on Professional Management
(9.29)
Local Availability of Specialized Research
and Training Services (9.29)
Average Years of Schooling (9.23)
Employment in Services (9.23)
Seats in Parliament Held by Women (9.23)
School Enrolment, Tertiary, Female (9.23)
External Business Internet Use (9.23)
Royalty and License Fees Receipts (9.17)
Trade as percentage of GDP (0.63)
Exports of Goods and Services as
percentage of GDP (0.63)
Manufacturing Trade as percentage of
GDP (0.67)
Annual GDP Growth (1.76)
Labor Tax and Contributions (1.88)
Share of Unemployment with Secondary
Education (2.50)
Price Basket for Internet (2.94)
12
Source: Enright, Scott & Associates

13. The ESA sequenced approach
• Most competitiveness sources say
– Identify the “biggest gaps” to the world leaders
– Filling those gaps is the most important
• Unfortunately
– This only works for countries in the top 10 or 20
– The “recipes” for others can be misguided
• ESA uses a sequenced approach
– Use the ESA Index to identify economies performing 10%, 20%,
30%, etc. better / also identify customers, competitors,
– Use multiple sources of data, “how to match the benchmarks”
• This allows for a tailored, sequenced approach
2015-09 © Copyright Michael Enright, 2015 13

14. A sequenced approach to development
0%
20%
40%
60%
80%
100%
Status Quo Step 1 Step 2 Step 3 Step 4
ESA Index
P6
P5
P4
P3
P2
P1
2015-09 © Copyright Michael Enright, 2015 14
Change to
match P2
Change to
match P3
Change to
match P4
Change to
match P5
Source: Enright, Scott & Associates

15. Bringing business into the frame
• Much national competitiveness work ignores the business and
industrial makeup of the country in question
• Some “drivers of competitiveness” will be relevant in some
industries (and countries) and irrelevant in others
• We need to focus on the drivers that are important in the
specific industries in the economy and how the economy
performs in these drivers versus relevant competitors
• ESA Business Survey
– 20,000 responses to global survey on drivers important to
competitiveness in specific industries
– Nation-specific surveys: who are the relevant competitors, what
drivers are important, how does our country perform on the drivers
2015-09 © Copyright Michael Enright, 2015 15

16. 2015-09 © Copyright Michael Enright, 2015
Importance-Performance Competitiveness AnalysisTM
2
Good performance,
but not so
beneficial
1
Leverage, market,
exploit, further
develop
3
Poor performance,
but does not matter
much
4
Fix, mitigate,
overcome
Importance
Performance
Low
Low
High
High
16
“Importance-Performance Competitiveness Analysis” and
“IPCA” are both trademarks of Enright, Scott & Associates, Ltd.
Source: Enright, Scott & Associates

17. IPCATM Australian industries
11/10/2014 © Copyright Michael Enright, 2014
Importance
Performance
8
6
474849
76
69
3
15
462
18
71
75
50
17
68
19
58
46
70
40
61
42
74
5
45
24
73 39
72
714
23
55
29
22
35 59
56
54
13
34
16
575364 512563 3352 4112 4365 28
2767 26
30
36
66
37
38
32
60 31
21
9
11
44
10
20 1
2
1.00
4.00
7.00
1.00 4.00 7.00
17
Source: Enright, Scott & Associates
8
6
4748
49
76
69
3
15
4 62
18
71
75 50
17
68
19
58
46
70
40
61
42
74
5
45
24
73
39
72
7
14
23
5529
22
35
59
56
54
13
34
16
57
53
64
51
25
63
33
52
411243
6528
27
67
26
30
36
66 3738
32
60
31
21
9
11
44
10
20
1
2
1.00
4.00
7.00
1.00 4.00 7.00
Importance
Higher Education Automobiles

18. From the business survey
• One-page “competitiveness maps” for the major industries in
an economy that can be tracked over time
• Features that are important across multiple industries
become the focal points for policy and strategy
• Can map “importance” / “performance” in competitiveness
drivers to actual industry growth, trade data, etc.
• Can apply the approach to emerging industries in early
stages to forecast national potential
2015-09 © Copyright Michael Enright, 2015 18

19. Organize the pieces in a useful framework
Competitive
Industries/
Activities
Potential
Industries/
Activities
Supranational Cluster FirmNational Industry
2015-09 © Copyright Michael Enright, 2015
Source: Michael Enright
19
Competitiveness is not additive. No single level can make a nation,
region, or city competitive, any single level can make it uncompetitive.

20. Our approach to competitiveness
1. Generate a proper overall competitiveness index
2. Use data and benchmarks creatively
3. Bring business into the frame
4. Organize the pieces into a useful framework
5. Develop strategies and policies appropriately
2015-09 © Copyright Michael Enright, 2015 20

21. “Make in India”: Some Lessons from China
2015-09 © Copyright Michael Enright, 2015 21

22. Supply chains are global
2015-09 © Copyright Michael Enright, 2015 22
Source: http://comparecamp.com/
349 China 11 Vietnam 2 Brazil
139 Japan 7 Mexico 2 Costa Rica
60 USA 6 Indonesia 2 Austria
42 Taiwan 6 Israel 2 Netherlands
32 S. Korea 5 France 1 Canada
24 Philippines 5 Czech Rep 1 Portugal
21 Malaysia 3 Belgium 1 Spain
21 Thailand 3 Italy 1 Morocco
17 Singapore 3 Ireland 1 Puerto Rico
13 Germany 3 UK 1 Malta
1 Hungary
iPhone6, Suppliers per Country

23. China is part of an East Asian production system
Technology
Capital goods
Components
Subassemblies
Finished goods
ASEAN
China “Advanced
Economies”
NICS
2015-09 © Copyright Michael Enright, 2015 23
Source: ESA

24. South Asia does not have the trade networks
of SE and E Asia
2015-09 © Copyright Michael Enright, 2015 24
0
10
20
30
40
50
60
70
2000
2002
2004
2006
2008
2010
2012
E Asia Exports, %
SE Asia S Asia
E Asia C-W Asia
0
10
20
30
40
50
60
70
2000
2002
2004
2006
2008
2010
2012
SE Asia Exports, %
SE Asia S Asia
E Asia C-W Asia
Source: ADB
0
10
20
30
40
50
60
70
2000
2002
2004
2006
2008
2010
2012
S Asia Exports, %
SE Asia S Asia
E Asia C-W Asia

25. Export processing is key to China’s exports
0%
10%
20%
30%
40%
50%
60%
0
200
400
600
800
1000
1200
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
US$billion
Processing Trade Exports
% of Total Exports
2015-09 © Copyright Michael Enright, 2015 25
Export Processing Trade in China

26. Nearly 75% of China’s exports
come from 3% of its land mass
2015-09 © Copyright Michael Enright, 2015 26
This meant that world-class
infrastructure only had to be
provided initially for ~200 km
inland from three major port
areas for China to become a
manufacturing powerhouse.
It also meant that labor had to
be mobile to move to the places
that had the infrastructure and
access to markets.

27. FIEs are key to China’s trade
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
US$Trillions
FIE Exports
FIE Imports
2015-09 © Copyright Michael Enright, 2015 27
0%
10%
20%
30%
40%
50%
60%
70%
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
China's Exports by FIEs (%)
China's Imports by FIEs (%)

28. FIE’s are also key to China’s industrial output
0% 10% 20% 30% 40% 50% 60% 70% 80%
Manufacture of Computers, Communication and Other Electronic…
Manufacture of Automobiles
Production and Supply of Gas
Manufacture of Leather, Fur, Feather and Related Products and…
Manufacture of Articles for Culture, Education, Arts and Crafts, Sport…
Manufacture of Textile, Wearing Apparel and Accessories
Manufacture of Foods
Manufacture of Measuring Instruments and Machinery
Manufacture of Chemical Fibers
Repair Service of Metal Products, Machinery and Equipment
Manufacture of Electrical Machinery and Apparatus
Manufacture of Rubber and Plastic Products
Manufacture of Liquor, Beverages and Refined Tea
Manufacture of Paper and Paper Products
Manufacture of Furniture
Manufacture of General Purpose Machinery
Manufacture of Raw Chemical Materials and Chemical Products
Manufacture of Medicines
Other Manufacture
Printing and Reproduction of Recording Media
Manufacture of Special Purpose Machinery
TOTAL
2015-09 © Copyright Michael Enright, 2015 28
FIEs% of Revenue, Selected Industries, China 2013

29. Hong Kong retains a crucial role
2015-09 © Copyright Michael Enright, 2015 29
- 200 400 600 800
Hong Kong
Japan
United States
Singapore
Taiwan
Korea
Germany
UK
Netherland
France
Macao
Canada
Australia
Malaysia
Italy
Sources of FDI into China,
US$ billion, 1985-2013
0
50
100
150
200
250
300
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Hong Kong Re-exports from China,
US$ billion, 2003-2012

30. Questions for “Make in India”
2015-09 © Copyright Michael Enright, 2015 30
• What is the supply chain strategy for “Make in India”?
• What regional production chains and trade networks will India join
as part of “Make in India”?
• What is the export strategy for “Make in India”?
• What is the import strategy for “Make in India”?
• What is the infrastructure strategy for “Make in India”?
• What is the labor and labor mobility strategy for “Make in India”?
• What is the foreign investment strategy for “Make in India”?
• Where is India’s Hong Kong, or Hong Kong substitute?

31. For more information contact
© Copyright Michael J. Enright, 2015
This presentation is incomplete without the spoken commentary.
Please do not duplicate, store, or transmit in any form without the permission of the author.
Michael Enright
Enright, Scott & Associates
Phone: 852-3101-8650
Fax: 852-3101-9635
michaelenright@enrightscott.com
2015-09 © Copyright Michael Enright, 2015 31