Michael Porter essay

Question 1

Harold Domar Model main concern:

Answer 1

investing savings into the economy

Question 2

HDM: rate of growth=

Answer 2

savings ratio/capital output ratio

Question 3

HDM so what leads to growth?

Answer 3

increase in savings rate or decrease in capital output
If the capital-output ratio is low, an economy can produce a lot of output from a little capital. If the capital-output ratio is high then it needs a lot of capital for production, and it will not get as much value of output for the same amount of capital.

Question 4

HDM: capital accumulation -

Answer 4

in sync with the growth of the labor force

Question 5

HDM weaknesses:

Answer 5

too idealistic, assumes all savings will get reinvested back into the economy

Question 6

Lewis: main concern

Answer 6

improving the economies of LDCs

Question 7

Lewis: two sectors

Answer 7

agricultural and modern/industrial

Question 8

L: labor movement

Answer 8

surplus ag –> modern

Question 9

L: next step for industrial firms

Answer 9

reinvest earnings back into the economy to create self-sustaining growth

Question 10

L: weaknesses

Answer 10

assuming that there will be surplus labor, that that labor will be hired in industrial sector, industrial sector will reinvest earnings

Question 11

1970s movement

Answer 11

International Dependence Revolution Models

Question 12

3 IDRMs:

Answer 12

Neo-Colonial Dependence Model, False Paradigm Model, Dualistic Development Thesis

Question 13

NCDM: main points

Answer 13

Marxist, anti-imperialist based, underdevelopment is due to capitalism

Question 14

FPM: main points

Answer 14

current experts are uniformed which is causing underdevelopment

Question 15

DDT: main points

Answer 15

there are only two possible outcomes, a bad and good and for economics that meant that some people will gain a lot and others will lose a lot so the gap between rich and poor will grow

Question 16

weaknesses with IDRM

Answer 16

only describe why underdevelopment occurs without offering any prescriptions for increasing development or growth

Question 17

response to IDRMs

Answer 17

1980s Neoclassical Counterrevolution Models, aligned with Conservative govs who were in power (i.e. Reagan and Thatcher)

Question 18

Main concern of NCMs

Answer 18

emphasizing free market, limiting or eliminating government intervention

Question 19

Three compositional approaches to NCMs

Answer 19

Free market analysis, public-choice theory, market friendly approach

Question 20

FMA: definition

Answer 20

markets are sufficient on their own, no government intervention necessary, firms will be able to see where they should invest

Question 21

PCT definition:

Answer 21

people in governments only do things for their own interests so any kind of government intervention won’t benefit the market, the economy, firms, or consumers

Question 22

MFA defition

Answer 22

the market is imperfect so governments will need to intervene a little bit by providing infrastructure and a good environment for the market to function

Question 23

weaknesses of NCM

Answer 23

government non-intervention is unrealistic, people aren’t going to be fully informed enough to be able to participate in the economy without help, no public benefit, only private benefit

Question 24

primary difference between porter and these conventional models

Answer 24

these models just look at the inherited factors that a country has to explain growth or non growth. Porter looks at other factors that give firms and people a more active role in determining the economy and clusters them into four points on the diamond

Question 25

Four factors for competitive advantage

Answer 25

factor conditions, demand conditions, firm strategy, structure, rivalry, and related and supporting industries

Question 26

Factor conditions defin:

Answer 26

resources, both human and material that a country has AND how they use them

Question 27

Factor conditions: importance of use

Answer 27

countries without many resources can be successful by being innovative (like Japan) whereas countries with lots of resources can be unsuccessful (Africa)

Question 28

Demand conditions defn

Answer 28

the home demand of a product or service belonging to a specific firm

Question 29

what determines home demand

Answer 29

customer needs and wants, firm capabilities, growth rate, and ability to integrate domestic and international preferences

Question 30

importance of demand

Answer 30

allows companies to be innovative and improve themselves to suit consumer demand

Question 31

firm SSR defin

Answer 31

the infrastructure and management of local companies and how they compete with each other

Question 32

firm SSR importance

Answer 32

by competing locally, companies improve which allows them to contribute more effectively to the national economy and competitive advantage

Question 33

Relating and supporting industries

Answer 33

spatial proximity of upstream and downstream industries facilitating exchange of ideas and promotes continuous exchange of innovation and information

Question 34

importance of R&SIs

Answer 34

industries in multiple sectors can all grow and improve together

Question 35

role of government in the diamond

Answer 35

the catalyst that encourages companies to strive for higher and better performance in the economy and increase the national competitive advantage

Question 36

weaknesses of the diamond

Answer 36

only looked at developed economies not developing, implies that countries are competing in a zero sum game, focuses on manufacturing not at service industry, doesn't address the role of multinational corporations