INDUSTRY-LEVEL

DETERMINANTS
Sound country-level foundations such as macro-economic fundamentals
and science and innovation are necessary for enhancing country
competitiveness. Within a country, different industries are not the same in
terms of comparative advantages. Economically, it is neither necessary nor
realistic to expect high competitiveness in every industry of the economy.
A new perspective called the "diamond framework," developed by
Michael E. Porter, offers an analytical tool for international managers to
appraise a country's competitiveness advantage in particular fields.
According to Porter's diamond framework, there are four
broad attributes, which individually and collectively
constitute the diamond of national advantage in particular
fields:
1. Factor Conditions 2. Demand Conditions
- This concerns the nation's - This involves the nature of market
position in factors of production, demand for the industry's product
including basic factors such as or service. Nations can gain
labor, capital, land, and natural competitive advantage in industries
resources, and sophisticated where the market demand gives
their companies a clearer or earlier
factors such as skilled picture of emerging buyer needs as
workforce, scientific base, well as where demanding buyers
infrastracture, and information. pressure companies to innovate
Country competitiveness is likely faster and achieve more
to be higher in industries in sophisticated competitive
which the country has superior advantages than their foreign rivals.
factors of production.
3. Related and Supporting Industries
- This refers to the presence and
support level of a nation's suppliers or
other related industries. For foreign
investors, the availability and
supportiveness of local suppliers as
well as other related industries such as
banking, foreign exchange services, and
infrastracture services are fundamental
to their routine operations. For the
country itself, the competitiveness of
related industries provides benefits of
information flow and technical
interchange among related industries,
which in turn speeds up the rate of
innovation and upgrading.
4. Rivalry and Business Practice
- This entails the nature of
domestic rivalry in addition to the
conditions governing how
businesses are organized,
managed, and operated in a nation.
International investors may select a
country in which local rivalry is low.
However, in term of
competitiveness, the presence of
strong local rivals is a powerful
stimulus to the creation and
persistence of national competitive
advantage.
Industry-Level Determinants of country
competitiveness
 The Microeconomic competitiveness
scoreboard
(Top 20)

COUNTRY 1998 Rank 1999 Rank 2000 Rank

Finland 2 2 1
United States 1 1 2
Germany 4 6 3
Netherlands 3 3 4
Switzerland 9 5 5
Denmark 8 7 6
Sweden 7 4 7
United Kingdom 5 10 8
Singapore 10 12 9
Australia 15 13 10
 The Microeconomic competitiveness
scoreboard
(Top 20)

COUNTRY 1998 Rank 1999 Rank 2000 Rank

Canada 6 8 11
Belgium 19 15 12
Austria 16 11 13
Japan 18 14 14
France 11 9 15
Hong Kong 12 21 16
Iceland 24 22 17
Israel 21 20 18
New Zealand 17 16 19
Norway 14 18 20
 E-COMMERCE AS AN ELEMENT OF
COUNTRY COMPETITIVENESS
• E-commerce capabilities can help boost a country's
competitiveness in many ways.However, many
countries lag behind in the e-business race, and in
many cases, the e-business laggards are at the
bottom of the competitive rankings.