Investor Presentaiton

• Sources of Rising Prosperity A nation's standard of living (wealth) is determined by the productivity with which it uses its human, capital, and natural resources. The appropriate definition of competitiveness is productivity. - - - - Productivity depends both on the value of products and services (e.g. uniqueness, quality) as well as the efficiency with which they are produced. It is not what industries a nation competes in that matters for prosperity, but how firms compete in those industries Productivity in a nation is a reflection of what both domestic and foreign firms choose to do in that location. The location of ownership is secondary for national prosperity. The productivity of "local" industries is of fundamental importance to competitiveness, not just that of traded industries Devaluation does not make a country more "competitive”, rather it reveals a lack of fundamental competitiveness . Nations compete in offering the most productive environment for business The public and private sectors play different but interrelated roles in creating a productive economy CAON Taiwan Presentation 07-31-01 CK 10 Copyright © 2001 Professor Michael E. Porter

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