Handbook on Small Nations in the Global Economy The Contribution of Multinational Enterprises to National Economic Success
The Contribution of Multinational Enterprises to National Economic Success
- Elgar original reference
Edited by Daniel Van Den Bulcke, Alain Verbeke and Wenlong Yuan
Chapter 1: Small Nations in the Global Economy: An Overview
1 Small nations in the global economy: an overview Daniel Van Den Bulcke, Alain Verbeke and Wenlong Yuan Professor Michael Porter (Harvard Business School) published The Competitive Advantage of Nations in 1990. This path-breaking book conveyed the message that the success (and international competitiveness) of specific industries in a nation critically depends on the configuration of – and interplay among – four sets of parameters: factor conditions; demand conditions; related and supporting industries; and strategy, structure and rivalry. The outcome of a favourable configuration and interplay, according to Porter, then leads to a strong national ‘diamond’ and, therefore, to an internationally competitive industry, as measured by exports or outward foreign direct investment (FDI). In Porter’s work, success in international markets follows prior domestic success in terms of innovation, productivity improvements, clustering etc. However, in the case of small open economies, favourable diamond conditions are unlikely to exist for each of the four sets of parameters simultaneously if only domestic elements are taken into account. Here, linkages with other nations, whether on the sourcing side or the demand side, are often critical from the outset to create strong industries. More specifically, both inward and outward FDI may be important tools to gain access to external resources that can complement national diamond determinants, and lead to high, sustainable domestic production and employment per capita vis-àvis other nations (sustainability implies the absence of government shelter as a critical factor explaining observed success). FDI should therefore be viewed not simply as an outcome of domestic...
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.