Research Review by a group of Sudanese experts, this research provides Data to Investors and push the Economic Activities.
Contribution by Babiker Idris, Abdul-Jabbar Mohammed, Mohamed Ahmed
The livestock sector of Sudan provides livelihood for about 17% of the population. Sudanese livestock products meet the domestic demand for meat in addition to a substantial excess for export amounting to about 22% of total country exports. It contributes about 19% of GDP. Sheep marketing in Sudan is characterised by traditional operations and is informally organised, although, recently there are great efforts by the formal livestock authorities to organise some secondary and terminal livestock markets. These markets are deficient in basic infrastructures and systematic marketing research. The system as a whole is faced by various complex obstacles and constraints, which decrease the contribution of livestock in general, and sheep in particular, to the national economy, and suppress the optimum exploitation of this resource. These obstacles are represented in the lack of transportation networks that connect the production and consumption centres to break the seasonality of supply that creates shortages and high prices at the consumption centres. This paper employs the policy analysis matrix (PAM) technique to examine the Sudanese live sheep and mutton competitiveness in the international market. The results indicated that the market price was greater than the border price implying a positive incentive as an implicit subsidy to the live sheep exporter. The mutton exporters were found subsidised as well. The international value added (IVA) indicted a positive foreign exchange earnings or savings. Exported live sheep and mutton coefficient of competitiveness (CIC) implied that sheep and mutton exports are profitable and internationally competitive.
Price differences are the immediate bases of international trade. Prices differ because countries producing goods have different comparative cost structures and because different goods require different mix of factors, the supply of which differs among countries. The principle of comparative advantage implies that a country will tend to produce and export those goods and services in which it has the greatest comparative advantage, and import those goods or services in which it has the least comparative advantage.
The term “competitiveness” is often used to refer to an advantage of firms or industries vis-à-vis their competitors in domestic or international markets. Others have extended the meaning to entire economies. In this context, competitiveness is equivalent to strong performance of economies relative to other countries, where strong performance can mean economic growth, success in exports and improved welfare (Cockburn et al., 1998).
Siggel (2003) stated that microeconomic concepts and indicators of competitiveness have a more solid theoretical base because they focus on the essential characteristics of producers in competition for market share and profits or the ability to export internationally. This ability is measured by the size or increase of market share. An economy may be considered competitive if it harbours a large number of internationally competitive enterprises and industries. In other words, it must perform strongly in export markets.
According to Cockburn et al. (1998), the definition which best corresponds to competitiveness as used by policy makers, businessmen and the general public, reads as: competitiveness is the capacity to sell one’s products profitably. To be competitive, a firm must undercut the prices or offer products of better quality (or with better service) than its competitors.
Wignaraja (2000) defined competitiveness as the degree to which a country, under open market conditions, can produce goods and services that meet the taste of foreign consumers while simultaneously maintaining and expanding domestic real income.
The economic concept of competitiveness of industry and/or firm is based on four abilities, namely, ability to sell, ability to adjust, ability to earn and ability to attract. The ability to sell is defined as the ability of the industry or firm to sell products in domestic and/or foreign markets. The ability to attract refers to the ability of the industry or firm to attract domestic and foreign production resources including investments. The ability to adjust means above all the ability to adjust quickly and adequately to changes in international and domestic economic environment. The ability to earn refers to the income level of the investigated subjects; it includes the synthesis of all other three abilities – ability to sell, adjust and attract (Reiljan and Tamm, 2006).
The broader concept of competitiveness has been defined as the favourable business environment (i.e., competition of the systems). The indicators describing the level of competitiveness in this case are: the country’s economic policies, infrastructure, level of education, etc. With the help of the international agreements and differences in national laws, the international competitiveness is created.
The narrower concept of competitiveness is defined as the possibilities and means accessible by the firm. It used to include, for example, the international cost or price competitiveness, which is measured by comparison of the costs and prices of goods in different countries, industries and firms (Siggel, 2003).
Siggel (2003) stated that the variety of concepts of competitiveness proposed in the economic and business literature is large and much greater than that of comparative advantage. This owes to the fact that competitiveness has not been defined as rigorously as is the case of comparative advantage. Some authors use the concept as synonym of comparative advantage; others conceive it as an economy-wide characteristic.
This paper distinguishes between microeconomic and economy-wide (macroeconomic) concepts. This distinction is most fundamental because, first, the simple expansion of micro concepts into macro level generates problems, as is obvious in the case of comparative advantage. Second, the one dimension that the various concepts of competitiveness integrate and measure is distinguished from the multi-dimensional concepts. A further criterion for distinction is the number of countries or competitors, with which a particular country is being compared. Unilateral concepts are distinguished from bilateral and multi-lateral concepts, where bilateral and multi-lateral concepts always require data from one or more foreign countries, whereas unilateral concepts are based on the data of a single country. Lastly, characteristics that are important for the interpretation of concepts are the distinctions between static and dynamic approaches, positive and normative ones, deterministic and stochastic ones and, finally, ex-post and ex-ante-type concepts.
Hence, the concept of competitiveness has different aspects. It is possible to differentiate between macroeconomic and microeconomic concepts. Microeconomic competitiveness is generally defined as the ability of a firm to increase in size, market share and profitability. Macroeconomic concept is cohered with competitiveness of a country or economy. At the same time, we have to bear in mind that enterprises and industries are selling their products in the world market not countries.
Export competitiveness of a firm is connected with several factors that include, among others, labour cost, production costs, productivity, price, quality of factors and/or products, innovations and economic and political environment (Reiljan and Tamm, 2006). Some research stresses the role of labour costs and/or production costs, in general, in the process of gaining export competitiveness. The price of labour differentiates between countries more than the price of capital and materials since labour is considered to be more immobile than capital and materials. Other factors of export competitiveness such as productivity, innovations and/or, quality of the products are becoming more important, since exports based only on low labour and/or production costs is not sustainable.
Bartels and Pass (2000) stated that “To achieve the sustainable competitiveness, important aspects besides production costs are also important as adequate reaction to market changes, increasing the productivity and exploitation of innovations in production and in marketing. Important preconditions are research and development programs and human capital. In developing countries firms are usually internationally competitive due to low level of production costs. The competitiveness of more developed countries is not based only on cost advantage, as enterprises and industries are internationally competitive because of the low unit costs of production input, higher productivity and/or innovations”.