By André Schneider (André Schneider Global Advisory) and Mathis Wackernagel (Global Footprint Network)

Introduction

Today’s world is becoming increasingly interconnected and globalization is permeating all aspects of our lives. A successful company has to stay ahead of present or potential competition; superior performance is hence the ultimate desired goal. Against this backdrop, the theory of competitive advantage (Porter, 1985) suggests that states and businesses should pursue policies that create high-quality goods to sell at high prices in the market through emphasizing productivity growth as the focus of national strategies.  This use of the concept of competitiveness is based on the assumption that the well-being of a country, measured by its GDP, can be improved through creating the most beneficial national and global regulatory frameworks to enhance GDP development. As increasing salaries could trigger an increase in tax income, competitive advantage also offers the opportunity for a country to develop its social structures.

Competitive advantage, applied to countries, has led to three major developments:

In many countries, multi-stakeholder groups were created to increase the analysis, exchange, and decision processes around the actions to improve competitive positioning. This common approach was believed to guarantee good solutions that would allow a country to improve its competitive advantage and, at the same time, to continue to create a business-friendly environment.

The world on the edge or the need for a Plan B

It is important to recognize, however, that the wish for a country to develop a competitive advantage could lead to a race to disaster. On one hand, we have seen the emergence of countries over the past decades that have tried to maintain the benefits generated by their past competitive advantage without maintaining their competitive positioning, which has led to increasing levels of debt, and reduced the ability of these countries to maintain their independent capability to deal with national issues. On the other hand, the ecological result of this race to competitive advantage is starting to endanger the earth and the survival of the human species. We are beginning to see the implementation of the competitive advantage strategy cause overuse of our natural resources (‘overshooting’) such as biocapacity, fossil energy, water, and minerals. These natural resources are either non-renewable or only renewable to a limited degree (Lester Brown World on the Edge 2011, http://www.footprintnetwork.org, and http://www.waterfootprint.org).

The fundamental reasons for this race to disaster are as follows:

• The absolute necessity of the ecological, water, and fossil energy resources for the survival of human beings and their high importance for many of the production processes (especially water).
• The fact that such resources, given their limited availability, show no linear trend in availability nor in pricing will cause shocks to the global economic system.
• The fact that the systems developed to analyse and improve competitive advantage do not cater for the need for sufficient access to such resources and their potentially non-linear behaviour when they become scarce. This is especially in view of the fact that the global market will only be able to smooth over these effects at the very beginning through global exchanges, while the same global market will also be fully exposed to the potential system shocks generated by the highly reduced availability of these non-renewable resources.

Realizing the urgency of this race to disaster, we need to ask ourselves the following important question:

How can we create a framework for governments to help them understand the importance of the control of overuse of resources as a crucial element in their continued competitive positioning, and even in their survival as a nation, and build strategies to implement this understanding?

This question calls for a new look at the model of competitive advantage, based on a systemic view and prioritization of non-renewable or only partially renewable resources. Besides the main components of such resources, which are crucial to the creation of sustainable well-being (e.g. biocapacity, water, fossil energies, minerals), the following elements should be included in the next generation of competitiveness models:

• The fact that without such resources a state will be unable to offer any sustainable basis for survival, and that when these resources become scarce their prizing will increase in a non-linear fashion and hence use more and more of the wealth of a country. Such an evolution can easily reduce if not annihilate the competitive positioning of a country. Hence, it is important to make it a strategic target to reduce the overuse of these resources.
• The importance of wealth and debt for a country when dealing with the overuse of these resources, particularly during the transition phase from overuse to a balanced situation.
• The need to revisit our definition of well-being, and stop measuring success solely according to monetary output, including concepts like quality of life related to health and good life expectancy, access to education, individual wealth creation, and the capacity to reduce inequalities (indicator: Human Development Index: HDI). In conclusion, it becomes more and more clear that such a measure will better represent the aspirations of the populations.
• Finally, to understand that these global resource problems have a direct impact on countries and hence have to be addressed, in parallel to the global level, on a national level to assure the competitive advantage of each country.

Such a model needs to explain the impact of the nexus of resources and sovereign debt on the competitive advantage of any country and also help to develop strategies, which address these challenges within the national context. It must also include opportunities of the global governance systems and of the global market.  See below for an example of such a model.