In 1990, Michael Porter published The Competitive Advantage of Nations, an examination of how prosperity is created and sustained in the modern global economy. The book—which has shaped national policy in countries around the world and transformed thinking in states, cities, and regions—defines competitiveness based on the measure of productivity, and focuses on the microeconomic foundations of competitive advantage.
These frameworks and key concepts can be used to better understand the competitive position of any location, and to guide policymakers and industry leaders on strategies for economic development.
Professor Porter’s research identifies a comprehensive framework for the drivers of national competiveness.
The diamond model of the business environment shows how the multiple dimensions of microeconomic competitiveness in a location are interrelated.
Clusters are groups of interconnected firms, suppliers, related industries, and specialized institutions that arise in particular locations.
Successful economic development is a process of successive upgrading, often through a sequence of stages.
Competitiveness, in particular microeconomic competitiveness, is shaped by policy decisions at many different levels of government.
Nations, regions, states and cities all require clear economic strategies that engage all stakeholders, boost innovation and ultimately improve productivity.
“National prosperity is created, not inherited. It does not grow out of a country’s natural endowments, its labor pool, its interest rates, or its currency’s value, as classical economics insists. A nation’s competitiveness depends on the capacity of its industry to innovate and upgrade.”