ManagerialEconomicslecture13GlobalAlternative02

ManagerialEconomicslecture13GlobalAlternative02 -...

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Unformatted text preview: Managerial Economics Lecture Thir teen: Alternative perspectives on globalisation Recap Theory of comparative advantage Appeals to economists because Fits within age-old paradigm of speation Consistent with usual static equilibrium method But fails as empirical model (a flop) Some better recent results really test absolute advantage because drop factor price equalization Dynamic model & analysis rejects zero tariff bias This week: alternative (you guessed it!) Schumpeterian theory Porters Competitive Advantage of Nations Competitive Advantage Direct attack on relevance of conventional economics: Why do some nations succeed and others fail in international competition? This question is perhaps the most frequently asked of our times Yet it is the wrong question We must focus instead on another, much narrower one why does a nation become the home base for successful international competitors in an industry?... why is one nation often the home for so many of an industrys world leaders? How can we explain why Germany is the home base for so many of the worlds leading makers of printing presses, luxury cars, & chemicals? Why is tiny Switzerland the home base for international leaders in pharmaceuticals, chocolate? (1) Competitive Advantage Focus not on natural endowment (comparative advantage) & broadly defined industries (labour-intensive, capital intensive) but I nnovation & very specific industries Luxury cars (Germany) Ski boots (I taly) Mobile phones (Finland!) Porters theory aware of recent economic trends: The long-dominant paradigm is inadequate the rise of the multinational corporation [has] weakened the traditional explanations of why and where a nation exports (2) Porter instead seeks to isolate the national attributes that foster competitive advantage in an industry (3) Competitive Advantage Dismisses other conventional explanations for trade Good macroeconomic policies? Nations have enjoyed rapidly rising living standards despite budget deficits (Japan, I taly & Korea), appreciating currencies (Germany & Switzerland), and high interest rates (I taly & Korea) (3) Cheap labour? The ability to compete despite paying high wages would seem to represent a far more desirable national target. Natural resources? Even within nations such as Korea, the United Kingdom, and Germany, it is the resource-poor regions that are prospering relative to the resource-rich ones (4) Government intervention? has occurred only in a subset of industries, and is far from universally successful even in Japan and Korea. Competitive Advantage Management style?...
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This note was uploaded on 09/09/2010 for the course ACCOUNTING 2345 taught by Professor Dr.ijueh during the Spring '10 term at twsu.edu.

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ManagerialEconomicslecture13GlobalAlternative02 -...

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