Jul 21, 2015
David Ricardo, in 1817, enunciated hisrefinement ofSmith'sconcept bypostulating theprinciple ofcomparativeadvantage
"... the principle of comparative
advantage: a nation, like a person,
gains from the trade by exporting
the goods or services in which it has
its greatest comparative advantage
in productivity and importing those
in which it has the least
comparative advantage."
It states that a country will exportgoods that use itsabundant factorsintensively, andimport goods that useits scarce factorsintensively.
( The Diamond – Four Determinants of National Competitive Advantage)
a model that can help understand the comparative position of a nation in global competition.
1. Land
2. Location
3. Natural resources (minerals, energy)
4. Labor, and
5. Local population size.
groups of interconnected firms, suppliers, related industries, and institutions, that arise in certain locations
Factor conditions
Demand conditions
Related and supporting industries, and firm strategy
Structure and Rivalry
Four attributes of a nation comprise Porter’s Diamond of national advantage:
THE DIAMOND AS A SYSTEM
-the effect of one point depends on the others.
-it is a self-reinforcing system.
Thank you for attention!