The competitive advantage of nations by Michael porter
The central question in economics is why a nation becomes a home base for successful international competitors in an industry? Hence why are firms in a particular nation able to create and sustain competitive advantage against the best competitors? The answers to these questions are of central concern to firms that must compete in the international markets. These answers have implication to all firms in a country.
A nation’s standard of living in the long term depends on its ability to attain a high level of productivity in the industries in which its firms compete. This rests on the firm’s capacity to achieve improved quality or greater efficiency.
Changes in the nature of competition internationally have weakened the traditional explanations of dominance of international trade. Some see national competitiveness as a macroeconomic phenomenon while others see it as function of cheap and abundant labor. Plenty of natural resources have also been expounded as one reason for competitiveness, while some have looked it as an influence of government policy. Management practices have also been put forward to explain competitiveness.
These conflicting explanations merit the asking of the question” what is competitiveness”? Is a competitive nation:
1. one competitive in all industries
2. who has favorable exchange rate
3. ability of a nations industry to command high prices in markets
4. large positive balance of trade
5. rising share of world exports
6. one that creates jobs
7. low labor costs
The principal economic goal of a nation is to produce a high and rising standard of living for its citizens. This ability depends on the productivity with which nations resources are employed. Productivity is the value of output produced by a unit of factor input. This depends on the quality and features of products and the efficiency with which they are produced. National productivity...