Investor Presentaiton
Stages Of Economic Development
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Resource-
driven Economy
Basic factor conditions (low cost
labor, natural resources, geographic
location) are the dominant sources
of competitive advantage
Technology is assimilated through
imports, FDI, and imitation
• Companies compete on price and
lack direct access to consumers
•
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Companies have limited roles in the
value chain, focus on assembly,
labor intensive manufacturing, and
resource extraction
The economy is highly sensitive to
world economic cycles, commodity
prices, and exchange rates
Source: Porter, Michael E.,
The Competitive Advantage of Nations,
Macmillan Press, 1990
CAON Taiwan Presentation 07-31-01 CK
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Investment-
driven Economy
Efficiency in producing standard
products and services is the
dominant source of competitive
advantage
Technology is accessed through
licensing, joint ventures, FDI, and
imitation
The nation is not only assimilating
foreign technology, but has the
capacity to improve on it
The national diamond supports
heavy investment in efficient
infrastructure and modern
production processes
Companies serve OEM customers
and extend capabilities more widely
in the value chain
The economy is concentrated on
manufacturing and outsourced
service exports
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Innovation-
driven Economy
Innovative products and services
at the global technology frontier
are the dominant sources of
competitive advantage
The national diamond is
characterized by strengths in all
areas together with the presence
of deep clusters
Companies compete with unique
strategies that are often global in
scope
The economy has a high service
share, and is resilient to external
shocks
Copyright © 2001 Professor Michael E. PorterView entire presentation