PDC is responsible for the day-to-day staffing of the strategy development and for the development and coordination of the implementation plan. Upon completion of the plan, PDC will direct the negotiation and drafting of the necessary intergovernmental agreements and memoranda of understanding between the entities responsible for particular elements of the strategy. PDC will retain lead responsibility for the implementation of the action steps related to the Competitiveness and Neighborhood Business Vitality sections of the strategy and will collaborate with the Bureau of Planning and Sustainability (BPS) regarding the implementation of the Urban Innovation action steps.

For more infromation about our economic development strategy, visit http://www.pdxeconomicdevelopment.com

For more information about the Portland Development Commission, visit http://www.pdc.us

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                                                       CHAPTER 1
INTRODUCTION AND THEORETICAL BACKGROUND

Economists through out the world are searching for what really are the major determinants of growth of an economy and different policies have been used in pursuit of the answers. The world as large has gone through a lot of economic problems, such as depressions of 1930s, 1970s and 1980s. The 1930 depression led to employing of the Keynesian policies of strict government intervention. However, the 1970s depression made policy makers lose faith in Keynesian economics. Nevertheless, most Third World countries continued with their central planning type of economic policies. There was strong disenchantment with this type of policies, which led growing number of economists and influential international development organisations to begin, in recent years, to advocate the increased use of the market mechanism that is to liberalise the markets, as the key instrument of promoting greater efficiency. In this regard economic liberalisation implies minimisation of government intervention in allocating economic resources and letting the market forces play the cardinal role, doing away with all forms of government distortions in running the economy. The market forces should play a leading role in financial, trade, labour, commodity markets and other sectors, increasing reliance in market forces is normally accompanied by stabilisation programs, (Krueger 1978,1985).

        There has been an increasing call for the private sector to take up the challenges of national development. According to Robert Barro (1996), most empirical facts point to primacy of government choices; countries that have pursued broadly free market policies, in particular trade liberalisation and maintenance of secure property rights, have experienced higher growth, than those which pursue central planning type of policies. For this reason, there have been calls for the privatisation programs.

  On the other hand Rodrik, (1992) argues that trade reforms is frequently met with scepticism on the part of the private sector and may lack support, the country implementing them suffers from terms of trade deterioration which may result into reduction of capital inflow and increase capital flights. He goes on to say that this is coupled with inflation and low zero growth. Krueger (1978) points out that to avoid this, appropriate macroeconomic policies need to accompany the increase in price of foreign exchange (devaluation), or else domestic inflation would soar and affect the intended benefits of liberalisation. That is why stabilisation programs, such as reduction in government expenditures, accompany liberalisation by cutting on government consumption, which is often negatively related to the growth of an economy.

         However Wha Lee (1993)’s findings in the case of Korea are very interesting, Korea gave subsidies to some firms manufacturing exports, managed to grow faster. He argues that the theoretical predictions about the link between growth and open trade may be ambiguous and misleading. According to critics, tariffs can either enhance or decrease growth rates, depending on which sector is protected. This is the argument of infant industry. Krueger (1985) notes that LDCs have been protecting infant industries for decades, but they have still remained infants; this is an indication that there is something wrong with the economics of protectionism. Nevertheless Wha Lee (1993) notes that since the current theory of liberalisation is inconclusive, as is the empirical evidence, the link between trade policy and dynamic efficiency is vague, depending on the industry considered.

Kirkpatrick (1995) argues that the orthodox arguments concerning the role of trade policy as the determinant of industrial performance are seen in the major role of creating price incentives. This is because liberalisation and a neutral incentives structure between import substituting and export activities is expected to yield both static and dynamic effects, static in form of technical efficiency and dynamic in the form of switching process. However, many models, both for planning and explaining the development process, according to Krueger (1978), have made a foreign exchange central to determination of the growth rates. This focus is on the role of foreign exchange (forex) in complementing domestic savings needed to support domestic investment. The effect on economic growth will be via an increased volume of exports and reduced imports due to liberalisation and devaluation respectively. It is argued that if trading partners removed tariffs, we expect the market to expand which will ultimately lead to growth of exports. Exports are also viewed as a stimulus to greater capacity utilisation, greater horizontal specialisation, increased familiarity with absorption of new technologies transmitted through trade, greater learning by doing, as a result of the increased market size and output levels and stimulation effects of having to achieve international price and quality. Expanded market economies of scale enable a producer to cast or spread a “net” widely on various consumers who may be helpful by sending back comments on how to improve the quality of the products. Since tariffs tend to be reactionary, if a country adopt liberalisation policies, its trading partners will also do away with tariffs the moment one country scraps trade restrictions, so the market size will expand.

           However, Trade liberalisation alone is not an answer. For this to be successful, there is a need to liberalise the financial sector, so that exporters can have ready capital for re-investment; nuisance taxes have to go, so that most of the foreign exchange earnings are retained by the exporters. This creates incentives to them. Macroeconomic stabilisation also has to be enforced so that inflation will not impede planning, and if this creates confidence in investors, exports should increase.

 Pro-liberalisation economists have argued that more open economies are more efficient in absorbing exogenously generated innovations, since, without barriers, not only will this increase the volumes of essential imports, but it will also facilitate the entry of new technology which developing countries are able to absorb and assimilate easily in order to expand their manufacturing base. Edwards (1992), finds strong evidence supporting the hypothesis that, with other things being equal, more liberal economies tend to grow faster than those which are not. He calls this learning by doing type of process, “technical progress ” where more contact with new commodities and technology enhances efficiency, which result in higher production. He argues that if the rate of technical progress is positively affected by the gap between the stock of the world and domestic knowledge with respect to the foreign source of technological improvement, then the country’s ability to appropriate world technical innovations depends positively on the degree of economic trade liberalisation. Therefore more open economies have an advantage of absorbing new ideas from the rest of the world. He finds that countries with more open and less distortive trade policies have tended to grow faster than those with more restrictive commercial policies. His results are in conformity with the catch up theory effect. Wha Lee (1992), points out that international trade is perceived as a vehicle through which foreign inputs are provided to domestic production. According to him trade distortions caused by tariffs and exchange rate controls decrease the long run growth rates more significantly in a country that needs to import more.

            Therefore, it can be summarised that liberalisation enhances international trade which provides comparative advantage and also provides an additional source of competition to domestic firms. Subsidies to ailing industries, no matter how much they may alleviate economic distress in the short run, represent an effort to decelerate growth, reduce incentives for mobility and lock in resources in the inefficient industries that should contract in the process of economic growth.

 However, there is a problem of measuring the benefits of trade liberalisation, which even Kirkpatrick (1995) acknowledged. Kirkpatrick admits that measuring of trade liberalisation benefits is a difficult and frustrating task. It involves two considerable methodological problems; it is important to assess the extent to which the World Bank’s conditions have been adopted. This is because most of the liberalisation policies of LDCs are not unilaterally adopted, but imposed, and therefore may lack consistency. The other problem is the assessment of the reforms that were implemented. It is complicated by problems of separating causality from association. According to him, it is difficulty to establish counter factual, and separating out the effect of multiple influences on economic performance.

             Larry Sjaastad (1982) noted that the economic liberalisation that swept Southern cone during the 1970s and 1980s was a clear reaction to the failures of preceding economics of protectionism. Uruguay and Argentina, once prosperous nations had fallen on hard times by the mid 1970s. Real per capita income in Uruguay had been declining at a rate of 1 percent in 20 years. Chile, though never a prosperous country, was crippled with a continuos fiscal deficit and an inflation of 1000 percent. Their economies were characterised by inefficient state enterprises, which despite massive tariff protection, regularly required subsidies to sustain their operating loses. Price controls, tariffs, subsidies and export taxes severely distorted relative prices with much of the private enterprises devoted to production of luxury goods. Regulatory bodies administered import duties and quotas, interest rates, credit allocation and wages. The monetary and financial sectors were dominated by the state banks with special rediscount privileges at the central bank. Their economies were in a bad state. Therefore all these countries introduced liberalisation programmes in the1980s, but their results were disastrous. The Southern cone experiences, according to Sjaastad (1982) are widely interpreted as evidence of the failure of economic liberalisation.

Zambia like Argentina, Uruguay and Chile had almost the same type of economic policies, with nationalised economy before the liberalisation program which swept the country in 1991. Its economy was characterised by inefficient state enterprises with massive tariff protection in order to enhance import substitution industries. Price controls, nuisance custom duties, subsidies on production and consumption, export taxes, foreign exchange controls. Private enterprises had to declare all their export earnings to the central bank, as it was illegal to hold forex. Zambia, before privatisation and liberalisation, had regulatory bodies to administer import quotas, interest rates, credit allocation and wages. All the macroeconomic factors were determined by political decree. The monetary and financial arenas were dominated by the state banks, with special rediscount privileges to the Bank of Zambia. According to the advocates of the liberal markets, poor rates of growth, massive inflation and balance of payment problems experienced by LDCs, and Zambia in particular, during the 1970s and 1980s were because of the rising burden of public spending through parastatal companies, excessive price distortion and inward looking trade policies which are the order of the day in the planned economy.

       Zambia today, according to the World Bank Report (December, 1997), has the most liberal and least nationalised economy in Africa. In 1991, more than 80 percent of the economy measured as a percentage of GDP was state owned. Now, as at 1997, more than 80 percent of the economy is in private hands. The one party state, which ruled Zambia since independence in 1964 from the British, chose the path of nationalisation and centralisation. According to the World Bank report (Dec., 1997), this was ruinous. The government and international organisations such as the World Bank and IMF believe that macroeconomic stability and growth are being achieved after years of inflation and decades of stagnation. According to them, the foundation for higher growth have been laid by liberalising the markets, broad tax and tariff reforms, financial sector reforms and by privatising the state enterprises. The key element in the government’s programme has been the reduction of inflation, which has fallen from 200 percent in 1990 to 20 percent in 1997. This helped the GDP to grow by 6.4 percent in 1996/7 period.

         This dissertation investigates whether there are genuine reasons behind economic liberalisation and related austerity measures, using Zambia as the case study, by describing and comparing its economic performance before and after liberalisation. We then use panel data and cross-section regression analysis on selected African countries to see if the econometric analysis results support the calls for liberalisation measures.  The dissertation is organised as follows Chapter 1 has provided introduction and theoretical background to economic liberalisation. In chapter 2, Zambia’s detailed account of its pre-liberalisation economic policies is presented. Chapter 3 looks at post-liberalisation economic policies of the country. Chapter 4 presents econometric analysis and empirical results, and Chapter 5 concludes the findings.  It should be borne in mind that this study is not about the direct measurement of the effects of liberalisation policies on economic performance. This is due to the problems cited by Kirkpatrick (1995) and the unavailability of many of the data required for undertaking a more detailed study of the country.

                                   CHAPTER 2

THE PRE-LIBERALISATION ECONOMIC POLICIES OF ZAMBIA

          Zambia’s economic history traces back to the colonial era. Zambia a former British colony was known as Northern Rhodesia. The British’s main emphasis was the mining of copper, which they exported as a raw material. Zambia obtained independence on 24 October 1964 with an economy characterised by an industrial enclave based on copper mining using British and USA capital (Hawkins, 1991). During this time there was little or no significant investment apart from the mining sector, and before independence most of the copper profits were expatriated and very little was re-invested. However, in the first years of independence 1964-69 the economy unfolded and great progress was recorded (Turok, 1979). The country had a GDP per capita that was amongst the highest in Africa; according to Turok, 1979, it was just below that of South Africa. Copper prices were high and the industry was profitable, so every indication was towards rapid growth and development. The economy was more of a capitalist than a state led.

2.1-Post-Independence Economic Reforms

          Few years after independence in 1968 and 1969, President Kaunda, with the then ruling United Nation Independence Party (UNIP), initiated reforms. According to him, this was to lead state control of the whole economy to enhance growth and equal distribution of income. It was also aimed at empowering the indigenous people to control and decide the destiny of their country’s economy. This was characterised by developmentalist philosophy (command economy) and recognition of political realities (Turok, 1979).

          The 1968 and 1969 Mulungushi and Matero economic reforms were meant to repossess the foreign economic and business interests, which now became under the state control. The UNIP government also introduced indigenous import substitutions in the industrial sector, this was aimed at reduction in the dependence on foreign manufactured goods. Although a small indigenous and foreign private sector was left, a large public sector was created and maintained by copper revenue and protected and supported by government controlled markets. As a result of the state controlled type of the economy, which emphasised the creation of industrial capacity, commercial agriculture perished and the private sector was crowded out.

          According to Turok(1979), it is commonly accepted that the weaknesses of the economy, which levelled off in 1972 and then began declining, cannot be solely blamed on the falling copper prices, though this might have been one of the contributing factors. This is because, even by 1974 before the collapse of copper prices, foreign exchange had started posing a serious constraint on economic development. A major explanation lies in the economic policies of the day. Despite its inheritance of highly concentrated and buoyant foreign owned mining enclave, the Zambian government was determined to use the state for development. The state sector share of manufacturing output was growing almost every year. Four years after Mulungushi reforms in 1968, in which the government announced its acquisition of major companies it was 53 percent of total manufacturing output and this was concentrated on essential consumer goods required by Zambia. However, despite its size and scope, the state sector which included parastatals had not established an integrated economy with forward and backward linkages, parastatals, though they were import substitution industries (ISI) deeply depended on essential inputs from abroad. The government intervened extensively and imposed a number of restrictions on the private sector, while parastatals’ decisions were made by political leaders and ministers who sat on their boards. The parastatals were to be organised on lines of the country’s philosophy of ‘Humanism’, which was coined by the President as an African socialism. There was intervention in pricing policy, which seemed to be concerned more with social welfare than with pursuing economic development goals.

In 1970, barely two years after the Mulungushi and Matero reforms capital expenditure was only growing at a marginal increase, while consumption expenditure soared. Table 2.1 shows the higher government consumption and lower gross domestic consumption from 1964-90. Due to little emphasis which was made on capital expenditure, in 1973, value added in manufacturing recorded only a marginal increase from 106 Million Kwacha to only 107.5 Million Kwacha in 1976, compared to 480 Million Kwacha in 1965 a year after independence (GRZ Economic Report, 1977). Value added by manufacturing in 1978 real terms was 15 percent lower than 1974. Hence by the mid 1970s, the bells of economic doom were loud enough in politicians’ ears, but pretended to be deaf. They instead nurtured and guarded the inefficient parastatals and the command economy. To make the situation worse, some more parastatals were created and added to the list of inefficiency. After 1970, a substantial part of Zambia’s economy was dominated by parastatal organisation, about 60 percent of the economy in terms of GDP was now in parastatal hands. Most larger companies which had been run and owned by foreigners came under government control through Industrial Development Corporation (INDECO), an agency of a government holding company.

These newly nationalised companies were especially active in such industries as food processing, textiles, auto assembly and mining. Through large- scale capitalisation, using copper revenue, these parastatals became the pillar of the Zambian formal sector. They employed 1/3 of the workforce and maintained their employment levels even during the recession, for political reasons. For instance during recession, the number of employees in private manufacturing fell from 27,370 to 23,390 in 1977, about 14.5 percent reductions, while in the parastatals they remained constant over the same period (Turok, 1979). In these parastatal bodies there were rampant and continuing reports of corruption, inefficiency and mismanagement, but government decided to give it a deaf ear. The Kayope Commission (1976), revealed catastrophic failures in major parastatals and widespread misappropriation of funds, but still the government shelved the report, and continued to give subsidies and protection to these inefficient parastatals.  Real Gross domestic fixed investment declined as there was no significant capital formation. The emphasis was put on government consumption while the economy continued   to decline. This can be seen in the decrease in capital expenditure which fell in 1979 to its lowest since independence in 1964 as Table 2.1 shows. This shows that INDECO, on which the government relied as agency of intervention was performing poorly.

 At independence, Zambia’s economy had poor foundation, domestic production supplied less than one third of the local market for manufactured goods, while total manufacturing goods accounted for only 6 percent, the same setting continued even 10 years after independence, domestic economy was not integrated lacking forward and backward linkages. In trying to enhance domestic integration the government after its 1968 Mulungushi and 1969 Matero economic reforms bought out the private share holders in INDECO which was established in 1965, but reinforced after these reforms, and obtained a larger share of profits from copper by means of higher taxation, which was then used for public investment.

TABLE 2.1: GOVERNMENT CONSUMPTION IN COMPARISON TO GROSS DOMESTIC FIXED INVESTMENT 1964-90 (IN KWACHA MILLION)

   Year              Government consumption                     Gross domestic fixed 

                                                                                             investment

1964

309.2

76.2

1965

383.4

120.4

1966

435.8

175.8

1967

558

225.8

1968

594

264.7

1969

589.4

253.6

1970

717.5

279.8

1971

801.9

264.7

1972

857.3

381.1

1973

900.7

426

1974

1083.1

560

1975

1241.8

510

1976

1337

483

1977

1547.8

437

1978

1789.3

450

1979

2045.6

65.8

1980

2473.5

566

 

Francis Mulenga Muma

Introduction

Everybody who is in the business of New Product Development knows what a complex process it is. This is a multidisciplinary activity requiring coherence between almost all the functions of manufacturing firms.

Until recently though those who were called ‘product designers‘ played in this process a role of rather a secondary importance. They were briefed by marketing, engineering departments, ad agencies with an only task: ‘We want this look nice‘…

Then something went wrong. And those days are over. Today, Design Council Chairman prepares reports to the UK Prime-minister on how ‘UK businesses can stay ahead of their global rivals by drawing on the country’s world-leading design capabilities’. And at Davos, during the World Economic Forum held under the theme ‘The Creative Imperative’, world leaders discuss how to apply design thinking to survive in the uncertainty and complexity global economy brings.

Approach to design in Russia is still at the level of aesthetics and, at best, ergonomics. In the meantime, design can be applied as a strategic business tool at least in the two directions. Inside the company design can become a strong management tool for aligning – and, thus, optimization – all the processes of NPD through focusing on the needs of all stakeholders for whom the product is developed, through creating consumer-based innovation culture. Outside the company designers have proved to be excellent observers researching into people’s unmet needs and, thus, discovering new niches and even new markets.

Developing innovative product: Seven reasons to think about the future is searching into the ways which made design shift from aesthetics towards strategy and discussing how to make most out of design thinking when developing really innovative new products, – both tangible and intangible.

«Only one company can be the cheapest, the others have to use design.»

Rodney Fitch, Chairman Fitch & Co

Reason #1. Fundamental Changes in the World Design Industry

The industry of design is undergoing deep transformation: from now on design is not only for appearance and style. Design is dramatically changing its role from being simply a tactical device to becoming a strategic business tool.

How does it have to do with NPD?

Design today is playing a much more important role during the first, probably, the most critical phase in the whole process of developing new product. This is a stage of strategic planning when you need to understand what to do, what target audience will be involved, what brand values will be pronounced, what new value to your customer this product will bring. It will not be an overstatement to say that it is from this stage success and failure of the new product depends. After all, it is not by accident that this ‘0‘ phase is called the Fuzzy Front End of Innovation…

What happens with designers today?

They expand their capabilities into new to them areas until then being ‘occupied’ by marketers, brand specialists and management consultants. They obtain degrees in business and anthropology, psychology and ethnography. And more and more they become ‘human factors’ specialists.

«We investigated into fourteen large companies with an annual sales volume from $500 million to $10 billion. We discovered that only four of them had managed to meet plan in terms of timing, functionality of new products and market share. In five cases companies designed new generation’s products which were positively evaluated by experts, but at the end these products failed. As it turned out, every time when in an NPD process difficulties occurred, the roots of problems could easily be found at the stage of early planning, when the company had to decide what design the new product will have.»

«In search for new generation’s product», Harvard Business Review, 2007

Reason #2. Transformation of Consumption Culture

What are the reasons for the changes in the role design plays in NPD?

Technological revolution provides customers with real power in the market. Today, the question of the utmost importance for brands is how to satisfy people who have an almost endless choice reinforced by instant access to global market.

Thus, the main issue of NPD has dramatically changed:

Until recently it was: ‘What technical/organization/financial/manufacturing possibilities for designing new product we have’ (Technology-Driven Strategy);

Now: ‘What else does our customer want?/How can we emphasize with him?/What should we design to make our new brand/product experience as interesting, amazing, exciting as possible’(Consumer-Driven Strategy).

«It’s About Wants, Not Needs.

Consumers are saying they have enough stuff, want more experiences – 59% of them say they have all the material things they need.»

Fitch, 2005

Moreover, fusion of virtual and mobile cultures give people the power to manage their own ‘marketing environment’ regardless of companies business aims:

«3000: Number of advertising messages people are exposed to per day;
90%: Proportion of people who can skip TV ads who do skip TV ads;
80%: Market share of video recorders with ad skipping technology in 2008;
69%: Proportion of people interested in technology that enable them to skip of block advertising.»

Justin Kirby & Paul Marsden (2006). Connected thinking, Oxford, UK

Reason #3. Marketing Research vs. Design Research

Who meets new challenges?

Traditional marketing tools are good to shape already existed in the market ideas, understand whether these ideas have huge market and potential. All anything, but the larger demand for innovation, the more problems with identifying new product opportunities marketing has. Thus, companies have huge difficulties with identifying unmet customer needs since these are largely latent and not easy to formulate by the customers themselves.

By this, intuitive thinking, qualitative approach used by designers is very good for imagining new possibilities. Designers proved to be those folks who have managed to accomplish traditional marketing research with its design research methods based on approaching to human life in all its complexity and versatility.
This was the reason the whole NPD chain turned upside down and today it is not marketers and so called creative agencies tell designers what to do, but design consultancies identify new product opportunities, create design briefs, conduct research, develop a platform for further innovations and even brief ad companies on how to promote the new product.

«Eìery year brings 30,000 new products.
About 90% of the fail despite thorough and expensive market research…»

Harvard Business Review, 2005

«If I’d asked people what they wanted, they would have asked for a better horse…»

Henry Ford

Reason #4. From ‘Consumer’ to ‘Human’ Experience

What philosophy is behind design research?

Unlike artificial situations of focus group discussions, designers prefer conducting in-context observations looking at the world through their customers’ eyes, empathizing with the soul, mind and body of customer. Philosophy of Zen Buddhism with its total immersion in reality, attention to ordinary life and day-to-day experiences is possibly the best way to describe how they like approaching to work.
Those who combine design thinking with interest in user research are called human fa?tors specialists. They research into total human – not merely customer – experience, investigate how people approach the world, what nuances of interaction with the product, brand, environment is of the most importance for them, what they expect from usage. That’s why in development divisions of many companies we can find such new positions as cognitive psychologists, social anthropologists, cross-cultural specialists who adapt products of global brands to markets with different values and mentality, as well as ethnographers. For example, Intel has more than twenty ethnographers among its employees. Microsoft, British Telecom, AT&T, HP, IBM – these and many other companies hire ethnographers who are excellent at watching people during design research.

If in a focus group you ask your potential user what characteristics should product of the future possess, high chances the answer will be in an area of the already known. At best, you will be said how to improve already existed aspects of using, say, a drill. The point is that the customer comes to a shop not to buy the drill. He is looking for a hole in the wall and you can endlessly redesign drill until some day somebody solves the issue of ‘a hole in the wall’ in some different way. And this will be the innovation.

It is not by accident that design thinking is often called ‘out-of-the-box thinking’: it is this way of thinking which helps come out beyond ‘consumer’ experience approach and see a human who has home and in this home he or she wants harmony and cosiness and to reach these one requires a means of mounting the picture they like to the wall. After all, should it be a drill or something else, for this human is not that important…

Reason #5. Design Thinking – Best Tool to Tackle Tacit Knowledge

But why design??

As a real power in the market goes to the customer, and knowledge worker accumulates critical for companies survival knowledge in his/her head, the problem of efficient dealing with tacit knowledge is becoming a real challenge within businesses and organizations. In other words, New Economy requires new way of thinking to tackle ‘ill-defined’ tacit knowledge – call it synthetic, lateral, innovative, right-brain, divergent and, of course, design thinking.
In fact, to go from a business concept of a new product to its actual realization, from the world of idea to its materialization, means to be able to combine together controversial, on the one hand and underdetermined, on the other, demands:

1. Consumer’s need in the product or service;
2. Viability of new product development for business;
3. Feasibility from the point of view of the required technologies.

«In poems, in novels, in painting the brain seems to find itself able to work very well with material that any computer would have rejected as formless.»
Norbert Wiener

«Today perceptiveness is more important than analysis.»
Peter Drucker

Reason #6. From Product Design to Experience Design

What does all this mean for “new designers”?

An ability to create diverse human experiences, not just physical shapes. Content, not simply form. Workplaces not merely furniture. This is a gift of co-creation, of holistic approach to life and ability to fill it with meaning, emotions and lifestyle drivers.

Today, leading design consultancies position themselves as talents in creating a “complete product, brand, customer experience”. They regard this as their main competitive advantage. And it is well explained: ‘industrial design’ as a creation of the product appearance has moved to the Chinese – the chances you outperform them in therms of speed, price and even quality are neat to zero.

It is quite interesting, that the word “experience” is one of the most difficult for translating into the Russian language…

«Truth cannot be defined, although it can certainly be experienced.

But experience is not a definition. Definition is done by the mind, experience is done by participating. If somebody asks, «What is a dance?» how can you define it? But you can dance and you can know the inner feel of it.»

Osho

Reason #7. From the Knowledge Economy to the Creativity Economy

What does all this mean for businesses?

A new stage in the evolution and, first of all, an urgent search for new type of employees who are able to work with fuzzy, ‘sticky‘ and vague information – the stuff inside employees’ and customers’ heads so critical for companies survival.

That’s why we hear about ‘The Creative Imperative’ and observe deep interest of businesses in design, its methods and tools. For apply of such unique design tools, as design iconography, prototyping, scenario planning, storytelling, storyboards, videos have proved themselves as highly efficient in compressing and transferring multiple and complex concepts in the form which is easy to comprehend by a variety of audiences.

Moreover, design thinking being intrinsically synthetic type of thinking – read, leading to innovation – can be highly appropriate to co-create tacit knowledge of the network by:

1. Tapping tacit knowledge
2. Processing it into tangibles
3. Transferring it both inside and outside the company.

‘The Knowledge Economy is being eclipsed by the Creativity Economy…

What was once central to corporations — price, quality, and much of the left-brain, digitized analytical work associated with knowledge – is fast being shipped off to lower-paid, highly trained Chinese and Indians, as well as Hungarians, Czechs, and Russians. Increasingly, the new core competence is creativity – the right-brain stuff that smart companies are now harnessing to generate top-line growth. The game is changing. It isn’t just about math and science anymore. It’s about creativity, imagination, and, above all, innovation.’

Business Week, 2005

Questions and more information

Ekaterina Khramkova
CEO, Founding director, Lumiknows

MA: Design & Branding Strategy (Brunel University, UK); PhD (Russian Academy of Sciences); MSc (Moscow State University);
Member of the Design Committee by the Russian Ministry of Economic Development;
Lecturer at the British Higher School of Art and Design in Moscow on Design Research, Foresight and Trends Forecasting;
Coordinator for reddot Design Concept in Russia.

In 2005, Ekaterina was awarded a Chevening scholarship from the Foreign and Commonwealth Office of the British government to enable her to undertake the Masters course in Design and Branding Strategy at Brunel University – one of the first programs in the world designed to bring
benefits of design thinking to the needs of business and society. For the first time in Russia, this prestigious scholarship was given in the area of New Product Development.

Contacts

www.designresearch.ru

Lumiknows RUSSIA: Moscow, St.-Petersburg

New Product Development
+7 495 585 7289
info@designresearch.ru

Speaking Engagement & Coaching
coaching@lumiknows.com

Dr Ekaterina Khramkova
http://www.articlesbase.com/management-articles/new-product-design-and-development-the-seven-reasons-to-think-about-the-future-593741.html

Portland’s Economic Development Strategy:
A Five-Year Plan for Promoting Job Creation and Economic Growth

In the midst of a period of extraordinary change, Portland needs a strategy to guide the city’s economic growth over the next five years. Under Mayor Sam Adams leadership, the Portland Development Commission has drafted a five-year plan to direct the investment necessary for Portland to compete in a transformed global economy.

Portland seeks to build the most sustainable economy in the U.S. and, in the process, create 10,000 new jobs. The city already possesses unique competitive advantages that make it a front runner to be the center of the U.S. green economy: an existing concentration of firms in wind, solar and green development clusters; years of recognized leadership in all facets of sustainable living — green building, transit, land use recycling, and bicycle use; and supportive state and local policy.

To build a sustainable economy, Portland must assert leadership in three overlapping areas: sustainable job growth, a sustainable way of life and inclusive prosperity. The interplay of these three elements creates a resilient economy where business activity reinforces our shared values, our way of life contributes to a thriving local economy and all Portland residents share in the benefits of this growth.

We hope you enjoy this short video that explains a few of the challenges Portland’s top business leaders face and how this new Economic Development Strategy will meet those challenges. For more information about the Economic Development Strategy, please visit http://www.pdxeconomicdevelopment.com

For more information about the Portland Development Commission, please visit http://www.pdc.us

This video was produced by John Cárdenas and Anne Mangan.

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In these hard economic times, there is need to be creative in terms of looking for a supplementary source of income to our salaries. Developing a small business may be a good point to start from. By so doing, one will also create job opportunities for the jobless youths. This is especially true if the person setting up the venture is not able to run the enterprise alone.

Small businesses create avenues for new jobs for people who get laid off from the formal employment sector year in year out. The government, having realized this, has even set up an agency; Small Business Administration, that helps individuals develop such enterprises. It does so by extending loan facilities to the entrepreneurs and giving then technical advice on how to run the ventures.

Small Micro and Medium Enterprises (SMMEs) are therefore on the rise today. They fall under many categories and a just to describe a few, there is the survivalist enterprise which operates in the informal sector and is run by the unemployed persons. The income generated is below the poverty line and hence it only meets the basic needs of the operators.

Another example is the Micro enterprise. This one is usually rum by family members, who must not exceed five in total. It also operates informally, meaning that no license is required. Unlike the survivalist enterprise, the micro enterprise requires one to have at least basic skills of running an enterprise. It also holds a great potential of turning into a viable formal small venture.

Peter Gitundu
http://www.articlesbase.com/small-business-articles/small-business-development-creating-avenues-for-new-jobs-1088481.html