In a consulting project in Nepal, we used the concept of Systemic Competitiveness to analyse and promote the National Quality Infrastructure (NQI). The framework of Systemic Competitiveness works as thinking and structuring tool for traditional economic development in general. The frame is, however, equally useful for specialized fields of development, such as Quality Infrastructure.

The concept of Systemic Competitiveness was developed in the mid-nineties of the last century by a group of scholars at the German Development Institute (GDI), including the late Mesopartner co-founder Dr Jörg Meyer-Stamer. It is a heuristic model that combines crucial insights from economics, social science, and other disciplines to understand the driving forces of economic development better. It allows for the analysis of the relationship between four levels, namely the meta (cultural), macro (broad economic policies), meso (industry or issue-specific policies and programmes) and micro (network, hierarchy, and market-level performance) levels in an industrial system.

Following the logic of this framework, competitiveness should be understood systemically, and it can be structured into different layers (meta, macro, meso, micro) that interact and strongly influence each other. Economic development activities should ideally address all four layers to upgrade nations, locations and their enterprises in a sustainable way. Development cooperation should aim at supporting institutions and local actors from the political, business, administrative, technological, and civil society sphere to identify competitive advantages of a nation or sub-national territory and to design, fund and implement strategies and measures for economic and structural policy.

We frequently apply the concept of Systemic Competitiveness in our work to structure observations, findings and conclusions in economic development. The framework is also useful to map interventions into an economic system and brainstorming on how an initial response at one systemic level can trigger a systemic impact on the same or other levels. 

In the light of Systemic Competitiveness, Quality Infrastructure relevant aspects can be found on all systemic levels (see red entries in Graphic 1 below).

On the micro-level, enterprises try to improve product quality, use of quality management systems, and articulate demand for Quality Infrastructure services, ultimately aiming at creating a competitive advantage through better quality. On the meso level, all kinds of Quality Infrastructure institutions respond to the Quality Infrastructure demand of enterprises and help solve their quality-related problems. On the macro level, legislation, mandatory regulations and voluntary standards, as well as trade facilitation and quality agreements, are designed and implemented. On the meta-level, the quality culture and commitment are shaped and drives decision making in the fields of consumer protection and formulating technical regulations. 

Framework conditions that are relevant for Quality Infrastructure relate to the micro-level, such as entrepreneurship, demand conditions, and the macro level, such as cross-border trade regulations, decentralisation or law amendments. At the macro level, exports are challenged by diverging standards between an exporting and an importing country, lacking Mutual Recognition Agreements (MRA) to bridge those divergences, import restrictions or limited testing capacities for product quality in a country.

The meso space is the collection of public and private organisations with a mandate to strengthen the competitiveness of a locality. The current meso space in a place throws light on the past implementation of meso policies and the institutions or programs operating there to respond to enterprise demand. Meso institutions have the task to support enterprises in their development and operation process related to technology, education and training, finance, infrastructure, foreign trade, entrepreneurship or business membership. Measurement, standards and quality assurance as critical areas of Quality Infrastructure are a fundamental function in the field of technology. 

The four levels of Systemic Competitiveness do not correspond to administrative levels. Macro does not mean that things are only happening at the national level. Equally, there are meso policies and meso organisations at all administrative levels: supranational (e.g. regional or international associations of metrology, standards or accreditation institutes), national (e.g. National Metrology Institute – NMI), regional and local (e.g. local food laboratories). Often national government designs economic policy, such as a national trade strategy, which, however, the subnational level implements close to the final beneficiaries, such as farmers, traders and processors.

	Supranational	National	Regional (province)	Local
Meta	Culture of globalization	Quality awareness of national stakeholders (quality culture)	Quality Infrastructure commitment of the provincial government	Quality consciousness and expectations of consumers
Macro	South Asia Subregional Economic Cooperation (SASEC), WTO agreements, MRAs etc.	Legal Quality Infrastructure framework: Standards, Metrology Law, Food Law, Export Strategy, Fiscal law	The budget policy of the province government	The budget policy of the local government
Meso	Supranational Organisations, e.g. Asia Pacific Metrology Programme (APMP), ISO	National Quality Infrastructure institutions (National Standards Body, NMI, National Accreditation Body)	Provincial Quality Infrastructure institutions (NBSM, RFTQC, DPR etc.)	Local Quality Infrastructure institutions, e.g. food labs, custom labs, verification offices
Mi cro	Quality Infrastructure demand of global value chains (food, agriculture, medicinal plants etc.)	Consultancies, certifiers (ISO, GMP, HACCP etc.)Quality Infrastructure demand by national VCs	(Cross-border) networks/VCs of producers, processors in food, MAPS etc. and their Quality Infrastructure demand	Quality Infrastructure demand by farmers, processors, networks, supplier relationships

In Graphic 2, we map out the national Quality Infrastructure system of Nepal. The matrix presented here shows the four systemic levels in the left column and the different administrative levels in the upper row. Many Quality Infrastructure organisations are populating the meso level. These organisations include the supranational organisations such as ISO, all the fundamental Quality Infrastructure institutions at the national level, the provincial branches of the National Bureau of Standards and Metrology (NBSM) and the Food Testing and Quality Control department (RFTQC) or the Department of Plant Resources (DPR). Locally, meso Quality Infrastructure institutions are busy with food testing, quarantine and verification, especially in local municipalities like Nepalgunj and Dhangadhi directly located at the border to India. However, also on other systemic levels decisions are made that affect quality of products and services, such as quality awareness of consumers (meta), the food law (macro), demand for Quality Infrastructure services (micro).

Our focus of work was addressing the subnational (provincial, local) level where a variety of Quality Infrastructure institutions could be upgraded and strengthened through targeted Quality Infrastructure measures. Those measures could be sector-neutral in a location, but they could also be sector- or value chain specific. In our case, commissioned by the German Metrology Institute PTB we were identifying measures with the presumed highest systemic impact on all levels of competitiveness in two value chains: the dairy value chain and the medicinal and aromatic plants value chain (MAPs). For instance, introducing testing capabilities in border towns such as Nepalgunj would help to identify pesticide residues in essential oils made from MAPs. Testing services could increase oil product quality, reduce the rate of rejection of oil exports, increase the competitiveness of essential oils from Nepal and ultimately improve the product price. As a result, investments into essential oil extraction facilities in Western Nepal could rise, exports of raw, unprocessed material to India decrease and vertical value chain integration within Nepal take place, leading to more jobs and income in the sector.

In conclusion, Quality Infrastructure plays out on all systemic and administrative levels. Interventions ideally target those levels that most positively impact competitiveness and income or strengthen the resilience of the economic system. 

References

Esser, K. et al. (1995). Systemic Competitiveness. New Patterns for Industrial Development. London

Harmes-Liedtke, U. (2010). The Relevance of Quality Infrastructure to Promote Innovation  Systems in Developing Countries. Discussion Paper 27. PTB. Braunschweig

Schoen, C., Wältring, F. (2019). Study on experiences in non-agricultural Value Chain/Sector Promotion. Commissioned by GIZ. Mesopartner PartG. Mimeo. 11/08/2019

Meyer-Stamer, J. (2008). Systemic competitiveness and Local Economic Development. Large Scale Systemic Change: Theories, Modelling and Practices. S. Bodhanya (Ed.), Duisburg, Mesopartner.

Feature photo by Zoey Tian on Unsplash