As we head into 2014, it’s time to admit that we’ve been living in a world of short-termism, one of the main contributors to the global financial and economic crisis. Short-termism in the pursuit of double-digit returns on share prices and property investments; high-frequency trading in stock exchanges; the fixation on quarterly results to meet shareholders’ expectations; or politicians who promote “quick-fix” and often populist policies to win elections. New Year’s resolutions should get companies reflecting about a more long-term and sustainable view towards business and capital investment as well as for employee training & skills, focusing on the retention of their talents as well as attracting new ones. And sustainable profitability entails sustaining competitive advantages through constant upgrading and innovation to remain cutting-edge and ahead of the pack.
Why can’t nations, in their efforts to get ahead in global competitiveness indices, strive to apply the same logic of sustainability to their competitiveness strategies? Unfortunately, the drive for competitiveness is often misunderstood as a win-lose battle between firms for market share or currency wars between nations and often encourages short-term decisions. But for any company or nation, narrowly looking at cost, price or export competiveness will not be enough to deeply impact sustainable profitability or economic development.
A new approach towards “sustainable competitiveness” should be the ultimate objective of a business or national development strategy. Policy-makers should thus recognize that improving national competitiveness and advancing social and environmental welfare are not mutually exclusive.
In terms of economic development, a long-term view implies laying the foundations for future competitiveness by investing in human capital, via education and training; investing in infrastructure and adopting new technologies; and developing a cultural mindset that encourages adaptability and resilience. Sustainable competitiveness is about building on national strengths and improving weaknesses to achieve greater prosperity and well-being for the population.
In other words, nations need to consider the economic, social and environmental factors in their long-term competitive strategies. It’s really about how nations are managing their resources and competencies…are they sufficiently investing for the long-term? In education, infrastructure and technology? Are they building efficient institutions? Are they cultivating an innovative mindset? Competitiveness is not an end in itself, but a means to an end. The long-term objective is to achieve greater prosperity for the population, in terms of increasing living standards and human development. If properly understood, sustainable competitiveness could be the remedy to the cancer of short-termism.