1Copyright©2009ProfessorMichaelE.Porter20090515–AMP–final.pptTheCompetitiveAdvantageofNations,StatesandRegionsProfessorMichaelE.PorterHarvardBusinessSchoolAdvancedManagementProgramOctober23,2009ThispresentationdrawsonideasfromProfessorPorter’sarticlesandbooks,inparticular,TheCompetitiveAdvantageofNations(TheFreePress,1990),“BuildingtheMicroeconomicFoundationsofCompetitiveness,”inTheGlobalCompetitivenessReport(WorldEconomicForum),“ClustersandtheNewCompetitiveAgendaforCompaniesandGovernments”inOnCompetition(HarvardBusinessSchoolPress,2008),andongoingresearchonclustersandcompetitiveness.Nopartofthispublicationmaybereproduced,storedinaretrievalsystem,ortransmittedinanyformorbyanymeans-electronic,mechanical,photocopying,recording,orotherwise-withoutthepermissionofMichaelE.Porter.FurtherinformationonProfessorPorter’sworkandtheInstituteforStrategyandCompetitivenessisavailableat©2009ProfessorMichaelE.Porter20090515–AMP–final.ppt$20,000$25,000$30,000$35,000$40,000$45,000$50,000$55,000$60,0002%4%6%8%10%12%PPP-adjustedGDPperCapita,2008($USD)GrowthofRealGDPperCapita(PPP-adjusted),CAGR,1999-2008Note:highlightedcountriesarepartoftheEastAfricanCommunity(EAC).Source:EIU(2009),authorscalculationsBahrainTaiwanGermanyOmanCzechRepublicSaudiArabiaEstoniaUAEFranceIsraelSlovakiaHungarySloveniaSingaporeNorwayProsperityPerformanceUpperIncomeCountriesGreeceSouthKoreaItalyAustraliaUKSwedenKuwaitJapanSpainHongKongNewZealandUnitedStatesFinlandAustriaBelgiumDenmarkCanadaCyprusIcelandIrelandMaltaNetherlandsPortugalSwitzerlandUnweightedAverage:5.61%UnweightedAverage:$33,2703Copyright©2009ProfessorMichaelE.Porter20090515–AMP–final.ppt$0$4,000$8,000$12,000$16,000$20,0003%5%7%9%11%13%PPP-adjustedGDPperCapita,2008($USD)GrowthofRealGDPperCapita(PPP-adjusted),CAGR,2001to2008Source:EIU(2009),authorscalculationsChinaVietnamSouthAfricaLatviaCroatiaThailandRussiaBrazilIndiaTurkeyEgyptHungaryMexicoJordanArgentinaProsperityPerformanceLowerandMiddleIncomeCountriesChilePolandIndonesiaCambodiaBangladeshLaosMalaysiaPhilippinesSriLankaPapuaNewGuinea(-2.6%)BulgariaPeruColombiaKazakhstanRomaniaUruguayUkraineTunisiaGuatemalaGeorgiaTanzaniaKenyaPakistanLithuaniaVenezuelaSyriaIranEcuadorCostaRicaAlbaniaMoroccoNigeriaDominicanRepublicBotswanaBelizeBelarusAlgeriaBosniaBoliviaHondurasElSalvadorLebanonLibyaMacedoniaPanamaNicaraguaTrinidad&TobagoParaguayUnweightedAverage:6.89%UnweightedAverage:$8,6744Copyright©2009ProfessorMichaelE.Porter20090515–AMP–final.pptWhatisCompetitiveness?•Onlycompetitivebusinessescancreatesustainablejobsandattractivewages•Nationscompetetoofferthemostproductiveenvironmentforbusiness•Thepublicandprivatesectorsplaydifferentbutinterrelatedrolesincreatingaproductiveeconomy•Competitivenessdependsontheproductivitywithwhichanationusesitshuman,capital,andnaturalresources.–Productivitysetsthesustainablestandardofliving(wages,returnsoncapital,returnsonnaturalresources)–Itisnotwhatindustriesanationcompetesinthatmattersforprosperity,buthowproductivelyitcompetesinthoseindustries–Productivityinanationaleconomyarisesfromacombinationofdomesticandforeignfirms–Theproductivityof“local”ordomesticindustriesisfundamentaltocompetitiveness,notjustthatofexportindustries–Productivitygrowthdrivenbyrelentlessinnovationintechnology,products,andorganizationalmethodsisnecessarytosupportarisingstandardofliving5Copyright©2009ProfessorMichaelE.Porter20090515–AMP–final.pptDeterminantsofCompetitivenessNaturalEndowments6Copyright©2009ProfessorMichaelE.Porter20090515–AMP–final.pptMacroeconomicCompetitivenessMacroeconomicPoliciesSocialInfrastructureandPoliticalInstitutionsDeterminantsofCompetitivenessNaturalEndowments7Copyright©2009ProfessorMichaelE.Porter20090515–AMP–final.pptDeterminantsofCompetitivenessMacroeconomicCompetitivenessSocialInfrastructureandPoliticalInstitutionsNaturalEndowments•HumanDevelopment:basiceducationandhealthcare•RuleofLaw:propertyrightsanddueprocess•PoliticalInstitutions:stableandeffectivepoliticalandgovernmentalprocessesandorganizationsSocialInfrastructureandPoliticalInstitutionsMacroeconomicPolicies8Copyright©2009ProfessorMichaelE.Porter20090515–AMP–final.pptMacroeconomicCompetitivenessSocialInfrastructureandPoliticalInstitutionsNaturalEndowmentsMacroeconomicPoliciesDeterminantsofCompetitiveness•Fiscalpolicy:publicspendingalignedwithrevenuesovertime•Monetarypolicy:lowlevelsofinflation•Macroeconomicmanagement:avoidingstructuralimbalancesandcyclicaloverheatingMacroeconomicPolicy9Copyright©2009ProfessorMichaelE.Porter20090515–AMP–final.pptMacroeconomicCompetitivenessMicroeconomicCompetitivenessSophisticationofCompanyOperationsandStrategyQualityoftheNationalBusinessEnvironmentMacroeconomicPoliciesSocialInfrastructureandPoliticalInstitutionsStateofClusterDevelopmentDeterminantsofCompetitivenessNaturalEndowments10Copyright©2009ProfessorMichaelE.Porter20090515–AMP–final.pptMacroeconomicCompetitivenessMicroeconomicCompetitivenessSophisticationofCompanyOperationsandStrategyQualityoftheNationalBusinessEnvironmentSocial