ADB calls for strong partnership between state, firms
ADB calls for strong partnership between state, firms
Deutche Press Agenteur, Manila
A strong partnership between governments and private firms is vital in boosting a nation's competitiveness amid a highly globalized and technological market, the Asian Development Bank (ADB) said Monday.
The Manila-based ADB noted that competitiveness has become one of the most important issues in the debate over how countries can enhance their economic performance amid globalisation, technological advances and growing competition.
"Development requires a partnership between market and state with an appropriate division of responsibilities," the ADB said in its Annual Development Outlook (ADO) 2003 report.
"The objective of this partnership is to create a competitive or well-functioning market economy, whose ultimate objectives are to raise living standards and by implication, reduce the gap with countries at the income and technological frontier," it added.
The report said governments must understand that "it is firms that compete in an increasingly global market, both at home and abroad, and that the national policy environment can either constrain or improve their efforts".
Governments must therefore focus on providing a legal framework that facilitates the entry and exit of corporations, implements sound policies and corrects market failures to support the strategies of firms to stay in business and generate new markets.
"A government's efforts should be directed at convincing investors that the country is implementing sound economic policies," the ADO said.
But some government interventions aimed at correcting market imperfections are more problematic than helpful, such as export processing zones or industrial parks which often have minimal benefit to domestic activities, the report noted.
"These types of direct interventions often mask failures in achieving the essential functions of government required to sustain firm-level competitiveness," it said.
Competitiveness is best achieved when firms are encouraged to continually enhance their entrepreneurial and technological capabilities through education, innovation and improved physical infrastructure. -- dpa