Factors determining industrial competitiveness and the role of spillovers

Abstract

This article applied regressions and panel data analysis to determine how micro-economic spillovers enhance the competitiveness of firms and industries. What made this study unique was that it considered the interactions between various spillover factors working simultaneously and their effect on competitiveness and also investigated possible harmful effects of spillovers. Data from the Manufacturing Firm Survey of the World Bank was used, which covered the first decade of the third millennium, including world economic crises. The investigation on sales used cross-sectional regressions, following a survey conducted on sales and competitiveness. The general findings were that FDI and technological expenses offered little spillover advantages to firms, but that spillovers from research and development do enhance competitiveness. Managerial expertise and education of the workforce restrict spillovers and enhance competitiveness, while a larger and less educated workforce increases leakages of information and spillovers, suppressing competitiveness. The results further revealed that exports and spending on communication, machinery and equipment, a trained work force and innovation all enhanced sales, but the numbers of new firms and the number of privately owned businesses suppress competitiveness. Concerning the negative effects of spillovers, corruption, crime, theft and disorder increase spillovers and curb competitiveness. More spending on security decreases these negative spillovers, as does support from well-known suppliers. A larger workforce causes more negative spillovers, as do the number of new and temporary workers, more competitors and new suppliers. The findings of this study will be of special value to managers and project planners.