The Impact

of National Design
Policies on Countries
Competitiveness
Faculty of Industrial Design
TU Delft

The Impact of National Design Policies

on Countries Competitiveness
group 1
Ferreira de Sá, M. | Kunst, G. | van der Linden, G. | Mallios, M. | Melgarejo, M. | Peterson, R. K.

Delft, The Netherlands

April 5, 2011
Abstract

The competitive nature of today’s global market pushes countries to

differentiate by strengthening and developing their competitive assets.
Design, understood as a key element in innovation and value creation, plays
an important role in strengthening these assets by promoting the
development and marketing of new businesses, products and services
inside and outside a country. The objective through this is for countries to
gain competitive advantages in regional and global industries in order for
the nation to progress socially and economically and remain competitive on
a global scale.

Porter has identified four main characteristics that allow nations to establish
competitive advantage within international markets. These are factor
conditions, demand conditions, related and supporting industries and firm
strategy, structure and rivalry. Based on these factors, a series of design
policy clusters set fourth by Qian (2010) will be compared to Porter’s
factors of national competitiveness. What we find is a clear relationship on
how the different clusters of design policy can be applied to each of the
factors indicated by Porter. This relationship is further tested through a
case study on how Design Policy is managed in the UK and its effects.

Key Words
National Competitiveness, National Design Policy, Porter’s Diamond Model,
Design Council

1
Table of Contents

1. Introduction 3

2. Methodology 4

3. Theoretical Framework
3.1 What defines National Competitiveness 5
3.2 Classification of Design Policies 6
3.3 Design Policy & National Competitiveness 10

4. Case study: Design Policy in the UK

4.1 Background and Objectives 12
4.2 British Design Policies 13
4.3 Impact of UK Design Policy on National Competitiveness 15

5. Discussion 16

6. Conclusion 17

7. References 18

Appendix A 19
Appendix B 20
Appendix C 21

2
1. Introduction

Design can be defined as the link between creativity and innovation. It

shapes ideas to become practical and attractive propositions for users and
customers. It is described as “creativity deployed to a specific end.” (Cox,
2005). In this context design can be used to inspire creativity in services,
industry and governments to implement novel ideas more competitive and
efficient than those in existence. Some nations have realized this value
and have adopted design policies to facilitate, help and promote the use of
design in several areas and levels of the economy. In general, design
policies are an instrument used by governments to coordinate activities
made to incentivize and foster this growth.

A national design policy is typically diverse in nature and focuses on a

multitude of aspects such as education, product/service innovation, public
policy and solving complex problems facing a nation, such as address-
ing the need for alternative fuels (National Renewable Energy Laboratory,
2008). Some countries such as Great Britain (UK), Japan, South Korea
and Finland have adopted design policies with much success. Accord-
ing to a report by the World Economic Forum 2009-2010 (Farías, 2010 ;
Schwab, 2010), these countries now rank among the 25 most economically
competitive nations in the world and are now looked up to as leaders in the
development and implementation of design as a strategic tool.

The demonstrated benefit of design policy has led several countries, such
as Brazil, to adopt or begin adopting a national design policy, however,
success levels have varied. Research suggests that this is because design
policies must fit within the unique context and situation of a nation in order
to be effective (Raulik, 2010). Because the management of design policy
and the impact of it on national competitiveness still remains an emerging
field of research, this report will focus on: (1) investigating what type of
national design policies are currently being used, (2) the motivation of
governments and societies for adopting design policies, (3) what effects
they have on a nation’s competitiveness.

3
2. Methodology

The information and evidence used in this report are based on secondary
data derived from various academic journals, books, reports and organiza-
tions. This was gathered by searching multiple databases and organization
where this information is published. To support this topic, a case study
illustrating the impact of design policy on national competitiveness was
developed. This group chose the case of the United Kingdom as it
particularly demonstrates the fundamental relationship we wish to
communicate in this paper. Information to build this case study was also
derived through secondary research.

By investigating this topic, we intend to gain insights into a phenomenon

that currently lacks support in research and theory (Design Council
Research Team, 2009a).

4
 3. Theoretical Framework

3.1 What Defines National Competitiveness

Fig.1 Porter’s diamond model

(Porter, 1990b)

Porter (1990b) developed a model to describe and understand the com-

petitive advantage of nations. The major components of the models are:



q
Factor conditions are the human, physical, knowledge, capital and
infrastructure resources of a nation. These are important as it affect the
nation’s ability to create, manufacture and deliver.



q
Demand conditions are the size and growth rate of home demand, and
the transferability of domestic demand into foreign markets. The level of
demand within a country raises the need for innovation and more advanced
products to satisfy the market demands. This results in higher technology
and the creation of more innovative products and services for the country.



q
Related and supporting industries are clusters and networks among
companies, suppliers, service providers, industries and associations

5
(i.e. trade associations) that provide cost effective support to individuals
and companies. They can provide a multitude of function from advice on
innovation; facilitate interaction between different stakeholders and facili-
tate employment. These organizations help support the general economy
by providing a safe haven for industry and improving efficiency and fluidity
among them.



q
Firm strategy, structure and rivalry refer to the competitive
environment within which companies operate in an economy. Higher rivalry
between firms results in a greater need to produce better products and
services, thus increasing the level of quality. High rivalry also leads to
identifying what strategies and structures are most effective, which adds
more efficiency to the economy.

According to Porter the mix of these four factors are the essences that
allow nations to grow and stay competitive. The role of the government is to
positively influence these four factors by managing them through different
policies, rules & regulations, laws and taxation (Porter, 1990b). This
suggests that if the government implements design policies, then
according to this model it would play an important role in distributing them
among the factors that determine national competiveness. Later we will
discuss how certain design policies address each one of these factors in
order to positively affect national competitiveness.

3.2 Classification of Design Policies and Their Uses

Design policies are developed and shaped in countries according to
different factors, such as economic situation, government, infrastructure,
design awareness and market demands amongst others. These design
policies direct their strategies towards the support, promotion, education
and resource generation of design. The level of commitment to each of
these activities differs based on the country’s needs and situation.
In researching national design policies Qian (2010) maps the role of
different stakeholders in the policy-making process and relates it to the
supply and demand of design inside a country. She identifies six natures
of design policy strategies that nurture the development of design, and
separates them into two levels: economic intervention and infrastructure
development.

3.2.1 Policy A: Subsidizing

Subsidizing involves the financial assistance of government or

charitable funds to businesses and organizations to stimulate growth
(Todaro & Smith, 2009). In design policy, subsidies can be used to com-
pensate for services, such as design consultancy to SME’s that typically
cannot afford them. The access to these services and knowledge is seen
to improve the competitiveness of these firms because it provides them
with the necessary support and resources that can positively impact busi-
ness performance. (Gemser & Leenders, 2001). In turn this is seen to
positively impact the economy and its competitiveness because it nurtures
the development of these firms, which typically represent the bulk of the
economy (Roy & Potter, 1993).

6
Fig.2 The implications for national design policy can be explored by mapping the role of each stakeholder in the policy-
making process. Each of the arrows linking any two stakeholders represents a potential area for deploying design policy.

3.2.2 Policy B: Investing

In design policy investing is primarily related to the promotion and effective

use of design. In countries this is often done by investing in established
design associations and networks that promote and assist other organiza-
tions in utilizing design as a strategic tool. The primary allocation of these
funds is to ensure that these support industries are up to date with
developments in the design discipline so that they can provide effective
support to organizations in need. The act of investing in these activities is
seen to increase national competitiveness by supporting industries that
support organizations, which in turn support the economy. It also
encourages organizations to seek advice from within a country as opposed
to seeking advice from outside, thus retaining the flow of assets within the
nation (Raulik-Murphy, et al., 2009).

3.2.3 Policy C: Accreditation / Leadership

National design policies can include the implementation of design

accreditations. Accreditations can exist in the form of awards or certifica-
tions, acting as a benchmark in good design practice (Temple & Swann,
2006; Gemser & Wijnberg, 2003; Whan, Kyung-Won & Ki-Young, 2009).
Besides the many effects awards can have on the competitiveness of a
firm, design accreditation can also affect a country’s competitiveness by
promoting the development of design industries and stimulating the pur-
chase behavior of consumers (Ahn & Song, 2010).

7
3.2.4 Policy D: Promotion

Design promotion is a fundamental part of any design policy because it

encourages various stakeholders to adopt its practices. It is achieved
through a variety of means with different purposes and scopes (Park, Nam
& Chung 2010), such as promoting individual designers, firms, products or
simply the general use of design. Guides, pamphlets, exhibitions, festivals
and websites are tools often used to support these promotional activities.
They are used to encourage the application and practicality of design to
firms and their managers, as well as the general public.
Governments play an important support role in this by assisting in the
distribution of these tools, particularly tangible ones. This gives design
organizations greater leverage in spreading their message and allows them
to target a larger audience at a significantly reduced cost (Raulik-Murphy,
2010). The promotion of Design is seen to positively affect an economy,
because it endorses organizations to adopt practices that can be used to
establish competitive advantages. It also generates public demand for
practical and well-designed products.

3.2.5 Policy E: Curriculum Skills

Design education is vital for the full exploitation of design in a national

economy because it is the primary source of human capital and talent de-
velopment. As the demand for design rises through successful case stud-
ies such as Apple and other initiatives, greater numbers of designers will be
needed. This situation makes it important for design policies to advocate
attention to the design curricula, as it must safeguard an adequate number
of quality graduates that can leverage the demand (Raulik-Murphy, et al.,
2009).
Fostering the education of design also has other benefits. First it reflects
the ambition and competitiveness of a nation’s design sector and second it
produces more graduates, which thus increases the probability of producing
a greater number of high quality designers. Only if these professionals
remain available to the industry, can design succeed as a tool to
supplement a nation’s economy and it’s competitiveness.

3.2.6 Policy F: Public Awareness

Activities aimed at generating public awareness in design are focused

on public relations and sponsoring popular activities and awards. Design
organization often lead these activities by publishing reports, guidelines,
research papers and case studies that communicate the advantages and
achievements of design use. These stories are then funneled to the media
where they can generate greater public exposure (Qian, 2010).
Design themed activities and awards are also another tool used to
promote design awareness among the public. These may be exhibitions
about design or awards and certifications that represent a mark of design
quality (Ahn & Song, 2010). Both are used as tangible tools to educate the
public about design and design quality. Examples of these can be found in
appendix C.

8
Table 1.* Areas of Operation of a National Design Policy

* *The contents of this table

were derived from Qian (2010).

9
3.3 The Impact of Design Policies on National
Competitiveness

Porter’s theory (1990a, 1990b) and the design policy categories set by
Qian (2010) can be combined to illustrate how specific design policies
can influence factors that define national competitiveness. Using Porter’s
diamond model as a base, we can clearly identify how each policy type is
distributed among the competitive factors:

Figure 2. How Qian’s

categories fit into Porter’s theory.

10
Factor Conditions: to stimulate competitiveness, design policies relating
to curriculum skills such as education, must be attributed. This will help
develop the necessary human resources and infrastructure to employ
design practices and skills throughout the economy to improve the status
quo of industry and firm performance and thus establish greater national
competitiveness.

Demand Conditions: to stimulate competitiveness, design policies relating

to Accreditation & Leadership and Public awareness must be implemented.
These activities include i.e. design awards, publications, and certification.
Attributing these policies will help raise demand for design among the
general economy and stimulate the adoption of it as a competitive tool.

Related & Supporting Industries: to stimulate competitiveness, design

policies relating to investing, promotion and curriculum skills are needed.
These can include i.e. public funding for organizations that help other
organizations grow and promoting usage of design in firms as a strategic
tool. Policies will support firms to adopt design practices and tools that will
increase their competitiveness.

11
4. CASE STUDY:
DESIGN POLICY IN THE UK

This section will present a valuable case study for the understanding of how
the theories of Porter (1990a, 1990b) and design policies by Qian (2010)
are being applied and how it is influencing the United Kingdom’s national
competitiveness.
The UK is a country that has long pioneered design and design
policy-making. Today the country boasts the largest number of employees
working in the design sector as a percentage of population and one of the
most prominent design service sectors in the world. Design and design
policy are active throughout multiple levels in the British economy and
public sector and have had a positive impact on the country’s economic
productivity and competitiveness. In fact many countries around the world
have adopted similar policies in efforts to replicate the same benefits
(Dumas, 1996).
Much of the promotion and policy management of design in the UK are
managed by the British Design Council, a non-department public body
registered as a charitable not-for-profit organization. Although legally
independent from the British government, Design Council is the central
authority in proposing and implementing design policies. Their activities are
widely ranged and vary from supporting design and innovation mentorship
to Small-Medium Enterprises (SMEs) to advising the government on policy
management and decision-making. From this wide range of activities, the
most significant reasons for the existence of the Design Council and British
Design Policy for that matter are the following:



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4.1 Background and Objectives

The UK is a country with modern historical interest in design issues and
was one of the first post war nations to adopt a national design policy. The
UK’s interests in design issues can be traced back to the mid 19th century
during Britain’s heyday as the world’s leading industrial power.
After the Second World War, design promotion and government support for

12
the industry emerged. This was particularly evident in the architecture and
design sectors because they played an important role in the reconstruction
of the country and economy. From this climate, the Council of Industrial
Design, now known as the British Design Council, was founded in 1944
(Design Council, 2011).
Since its establishment the aim of the Design Council has been “to promote
by all practicable means the improvement of design in the products of
British Industry.” In its earlier existence its primary role was to implement
reforms in design education and promote the concept of good design
among the whole supply chain of goods – from manufacture to retailers
to consumers. In the past decade the organization’s focus has shifted to
promoting design as a strategic tool in businesses and now offers more
services and tools, particularly to SMEs, on utilizing design (Temple, 2010).

4.2 British Design Policies

Although British Design Policies are broad in scope, the overall aim of them
is to create national design assets, enhance ability for innovation, and to
strengthen the design profession as a whole. To achieve this the Design
Council is involved in a multitude of activities and programs designed to
promote these aims. How this is being achieved can best be described
using the same categories detailed above.

4.2.1 Subsidizing
Policies in the UK are active in providing tactical seed funding to
organizations and projects aimed at advancing design education, skills and
infrastructure. An example of such a program is the UK Design Alliance, a
partnership between Design Council and Creative Cultural Skills (an
organization dedicated to the education of creative arts). Through this
program grants are distributed from a £50,000 fund to organizations
involved in developing ideas and concepts designed to fulfill certain aims,
such as developing sustainable products. In addition to these grant
programs, the British government offers tax incentives to companies invest-
ing in R&D, which encompasses investments in engineering design,
ndustrial design and research. The aim of this is to allow companies to
allocate more resources for innovation (Temple, 2010).

4.2.2 Investing
The UK concentrates its investments in design in both the private and
public sectors. In the private sector, programs exist for providing support
and mentoring to businesses in the form of networking, education and
consultancy. One program in particular, Designing Demand, is aimed at
helping and providing SMEs with support and mentorship from a panel of
accomplished Design Associates that consult the company on design and
innovation. Many businesses go on to generate new products and services,
and secure investment profits.
In the public services sector, public service teams are guided into using de-
sign methods to inspire and enable public service transformation and cost
effectiveness. (Design Council Research Team, 2009b).

13
4.2.3 Accreditation / Leadership
Design accreditations and leadership policies are aimed at promoting
innovation, recognition and high quality solutions to general issues that
daunt governments and economies. In the UK these are typically set fourth
in the design challenge projects, where design is used to find new creative
solutions. These competitions are designed to challenge designers, manu-
facturers and students to develop prototype solutions.
Some notable competitions include Design Bugs Out, Design for Patient
Dignity and Design Out Crime, which together produced some 31 innova-
tive prototypes that were eventually launched. Other projects address top-
ics such as community regeneration, reduction of water consumption and
working with school children. (Temple, 2010).

4.2.4 Promotion
In the UK the promotion of design is often spread via certifications and
awards such as the British Design Awards and UK Design awards. In ad-
dition the Design Council, as well as other design promoting organization,
produce exhibitions and publications regarding the value and impact of
design (Swann, 2010).

4.2.5 Curriculum Skills

Curriculum skill policies are aimed at promoting the advancement of skill
and education in design. In the UK R&D partnerships between
universities and companies are being promoted as a way to better prepare
and challenge students in designing new concepts. One particular
program, Innovate for Universities, is a program specifically aimed at
promoting this (Swann, 2010).

4.2.6 Public Awareness

Public awareness for design is for the most part generated from media
attention for the various programs being managed by the Design Council
and other design organizations in the UK. One of the most successful
methods for spreading awareness about design has been through design
challenges regarding popular subjects, such as the design competition for
the 2012 Olympics torch (Temple, 2010).

4.2.6 UK Design Policy vs. Porter’s Theory on National Competitiveness

The following is an illustration of how the UK design policies from this
case study apply to Porter’s theory on factors that define national
competitiveness:

14
Figure 3. UK’s Design Policies
attributed to Porter’s theory and
Qian’s design policy factors.

4.3 Impact of UK Design Policy on National

Competitiveness
Design policy has had a profound impact on the UK economy. According
to research lead by the Design Council, some 63 design-led companies
outperformed key stock indices in the FTSE by 200% from 1993 to 2003.
During this period, the Design sector also grew into the second largest job
generator in the London area bringing larger flows of assets and productiv-
ity into the city and economy (Ravi, 2006).
Some of the more measureable programs in UK design policy have also
seen healthy returns on investments. The program Designing Demand, for
example, produced £9.9 Gross Value Added for every £1 spent on provid-
ing services to SMEs, and also provided opportunities for 11,500 potential
high growth firms (Swann, 2010).. Another example, Innovate for Universi-
ties, has produced several startup companies (e.g. Navetas) and filed over
150 patents to the Technology Transfer Offices, all of which contribute to
the national economy and knowledge power (Swann, 2010). Finally, design
policy programs have also allowed participating public sector organizations
to identify efficiency gains saving each of them on average £750,000 per
year (Swann, 2010).

15
5. Discussion

Our research shows a useful way to analyze the different areas of action
in which national design policies can operate in the context of Porter’s
competitive model. We found overall that the attempts to measure their
effectiveness in competitiveness show generally positive results, however,
it is our impression that more research has to be done in order to achieve a
better understanding of how they work at micro/macro economic levels, as
well as consideration of developed vs. developed economies.
At the micro level we intend the design environment; most of the literature
mentions the effects that design, as a whole, has in different industries,
however there is a lack of understanding of how design policies impact on
the different procedures and stakeholders involved inside design compa-
nies, therefore we propose:
31 What is the impact that national design policies have in design com-
panies and design management?

At the macro level we are looking more broadly at the way that national
design policies work, for example, the way that they are funded:
31 What is the difference in the outcome between governmental,
non-governmental and mixed national design associations?
We noticed also at the macro level that almost all design institutions try
to justify their work by promoting the impact that their policy has on the
economy, it would be useful to explore the following possibility:
31 Can the relationship of national design policies and country’s competi-
tiveness be measured in a standardized way?

Design policies have an influence on how design practice is developed on

a national and international level, it is important therefore for designers to
be aware and critical of them with the support of more research and related
publications.

16
6. Conclusion

The main focus of this paper was on three research questions:

(1) identifying types of current national design policies; (2) the motivations
for adopting them and ultimately (3) the effects they have on nations’ com-
petitiveness. We used Porters diamond model to define the framework for
nations’ competitiveness and built on that by studying how the 6 points on
which policies act: subsidizing, investing, accreditation, promotion, curricu-
lum skills and public awareness could play a role in Porters different char-
acteristics. Where the emphasis lies between these points depends on the
motivations of the countries economic direction.

The effects of policies range from increasing competitiveness of a nation

as a whole to establishing a nation as a design leader. Although there has
not been much research on quantifying the effects of national design poli-
cies, we can state that they have a positive effect on a number of important
parameters that are connected to the design industry within a nation.

17
7. References
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Design Council Research Team (2009a). Design
Council Briefing: Measuring Design. London: De-
sign Council
Design Council Research Team (2009b). Design
Council Briefing: Driving Recovery with design.
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about-us/Our-History/
Dumas, A. (1996). From Icon to Beacon: The New
British Design Council and the Global Economy.
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Farías, J. (2010) Designing a National Design
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Design Systems’ a tool for policy-making. Research
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Appendix A

Work Distribution
Given the extent and novelty (for us) of the topic: Impact of design policies
in country’s competiveness, an overview of: firstly what are design
policies and secondly how are they being implemented around the world,
was needed for the entire team.
Therefore to write this paper, almost all of us started by researching
(broadly) design policies. After this first stage two members of the team
were more focus on the case study whereas the other’s in the first part of
the paper.
The distribution of the work can be outlined as follows:
Dimitris Mallios
Research about Porter’s model.
Contributions to introduction and promotion sections.
Geert van der Linden
General research about national design policies.
Contribution to the state of the art of national design policies and accredita-
tion / leadership section.
Gijs Kunst
General research about national design policies.
Contribution to the state of the art of national design policies, curriculum
skills and investing sections.
Miguel Melgarejo (project leader)
General research about national design policies.
Contribution to introduction, classification of national design policies, subsi-
dizing and public awareness sections.
Marta Ferreira de Sá
General research about national design policies.
Contribution to case study.
Robert Kadoi Peterson (editor)
General research about national design policies.
Contribution to case study.

Although divided, the team has always worked in direct contact. Facilitating
the communication to achieve some coherency and giving inputs for others’
parts. Overall we can state that this method worked well and that at the end
we all had an important and equal contribution to the paper.

19
Appendix B

Paper Review (by group 13)

The review given to us made some value recommendations for the improve-
ment of our paper. We will proceed with the analysis and explanation of it,
following the same points of the revision:
1. Content/ the connecting thread:
In the review provided group 13, they mentioned that most of our content
was “treated positively or left uncritical”, although given the nature of this
paper we aimed to, by the data and examples gathering it self, provide our
critical view on the topic.
By addressing our research question, we wanted to show the value of na-
tional design policies and not only pinpoint fails on the existent ones.
The same for the focus of the paper, hence the broadness of the topic it is
difficult to have only a clear focus without leaving out important parts for
the general understanding of the topic. Although, they made a valuable
point when stating that “big parts of sections could be written much short-
er”, therefore some section were shorten up so the reading would be clear
for our peers.
2. Structure/ guiding the reader:
Regarding what was mentioned about structure, we believe that the im-
portant factor when writing a paper is to create a good flow and connec-
tions within sections. Thus structure can be achieved in the overall picture,
instead of writing a conclusion and guiding too much the reader in every
single section.
Nevertheless, a conclusion in the case study was needed and that was
what we changed.
The group also asked “You decide to build a case study on a country
instead of a company – That is interesting, but we would like to know why
you decided to do so: why do you think it is more relevant to use a coun-
try?”, hence we focused our topic in design policies and their influence in
countries competitiveness with was logical for us the use of United King-
dom (UK Design Council) as a case study. The use of a company would
not make sense; it would create a less direct connection in between design
policies and countries competitiveness.
3. Formalities:
From the comments made in this section we do agree that a better conclu-
sion and a better connection between research proposition and discussion
were needed. However, what they point regarding the course manual, we
don’t fully agree with.

Overall we can state that it was interesting to have both feedbacks from
colleagues and from our coach. So we could improve and reflect in our work
according to different perspectives.

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Appendix C

Example Design Certifications

Korea’s GD Mark
(Ahn & Song, 2010)
“KIDP has been the primary agent for the improvement of design in
Korea, providing primary support to industries that needed help in the field
of design. The institute inaugurated Korea’s Good Design (GD) Selection in
1995, and it has been contributing to Korean quality of life ever since by im-
proving product designs and expanding public awareness of design. Nearly
12,000 products were submitted for GD consideration between 2001 and
2009, and 4,919 were selected. (Although the GD is an international award,
most of the products currently submitted are Korean.) KIDP also struck a
deal with the Australian Design Award (ADA) in 2005, which means that
selected entries are able to sport a double branded design label. KIDP’s
business model now focuses on education and designer training.”

Japan G Mark
(Ahn & Song, 2010)
“In 1957, the government launched the Good Design Products Selection
system (commonly known as the G-Mark system), and followed that by
opening a Design Policy Office. In 1959, the Exported Product Design Law
was enacted as a way to encourage the creation of designs by promoting
their protection.” “The Good Design Award received 24,265 product nomi-
nations and selected 9,976 products between 2001 and 2009; about 9
percent of the selected products are from outside Japan.” “Upon reviewing
2,015 valid responses, JIDPO found that people did in fact consider buying
G-Mark products, and that positive responses increased with age.”

Red Star Design

(Ahn & Song, 2010)
Evaluating the Effectiveness of Asian Design Policies
“The Beijing Design Center has instigated many design policies, most
notably the China Red Star Design Award, which was launched in 2006 to
promote the development of the Chinese design industry and enhance the
competitiveness of Chinese products. The Red Star Design Award received
6,967 products and selected 1,323 products

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