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Competitiveness & Economic DevelopmentCED
  • Competitiveness & Economic Development
  • Frameworks & Key Concepts
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Frameworks & Key Concepts
  • Frameworks & Key Concepts
  • Drivers of Competitiveness
  • The Diamond Model
  • Clusters
  • Stages of Development
  • Levels of Government
  • Economic Strategy
→The Diamond Model
Competitiveness & Econom... → Frameworks & Key Concepts →
The Diamond Model
×Frameworks & Key Concepts
  • Drivers of Competitiveness
  • The Diamond Model
  • Clusters
  • Stages of Development
  • Levels of Government
  • Economic Strategy

The Diamond Model

Every business operates within a playing field—the environment where it is born and where it learns to compete. The diamond is a model for identifying multiple dimensions of microeconomic competitiveness in nations, states, or other locations, and understanding how they interact.

By identifying and improving elements in the diamond that are barriers to productivity, locations can improve competitiveness.

Key Concepts

The CENTRAL ROLE of Business

Businesses create jobs and wealth, not governments.
 

The Business Environment

Understanding the way the elements in the business environment fit together and interact is critical for improving productivity.
 

HOW Locations COMPETE

Locations compete to offer the most productive environment for business.
 

Quality of the Business Environment

Firm Strategy, Structure,
& Rivalry
Factor (Input) Conditions
Demand
Conditions
Related &
Supporting Industries
Many things matter for competitiveness. Successful economic development is a process of successive upgrading, in which the business environment improves to enable increasingly sophisticated ways of competing. This environment is embodied in four broad areas as captured in the diamond model.
The nature of home-market demand for the industry’s product or service.
The location’s position in factors of production, such as skilled labor or infrastructure, necessary to compete in a given industry.
The conditions governing how companies are created, organized, and managed, as well as the nature of domestic rivalry.
The presence or absence of supplier industries and other related industries that are internationally competitive.
Many things matter for competitiveness. Successful economic development is a process of successive upgrading, in which the business environment improves to enable increasingly sophisticated ways of competing.
 

Related Resources

  • 09 Sep 2008
  • Harvard Business School Publishing

On Competition, Updated and Expanded Edition

by Michael E. Porter
 
  • 26 Feb 2011
  • National Governors Association Winter Meeting

State Competitiveness: Creating an Economic Strategy in a Time of Austerity

by Michael E. Porter
 
  • 14 Feb 2012

New Jersey Life Science Super-Cluster Initiative

by Michael Porter & Monitor Group
 

View All Related Resources

  • “Many things matter for competitiveness. Successful economic development is a process of successive upgrading, in which the business environment improves to enable increasingly sophisticated ways of competing.”
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