Productivity is the prime determinant of a nation's long run standard of living (Clark and Guy 199!"#$%& it is the root cause of national per capita income ('eller 19$! $9%. Nation's standard of living depends on the capacity of its companies to achieve high levels of productivity+and to increase productivity over time. The ideal is to deploy the nation's limited pool of human and other resources into the most productive uses.
Productivity is the prime determinant of a nation's long run standard of living (Clark and Guy 199!"#$%& it is the root cause of national per capita income ('eller 19$! $9%. Nation's standard of living depends on the capacity of its companies to achieve high levels of productivity+and to increase productivity over time. The ideal is to deploy the nation's limited pool of human and other resources into the most productive uses.
Productivity is the prime determinant of a nation's long run standard of living (Clark and Guy 199!"#$%& it is the root cause of national per capita income ('eller 19$! $9%. Nation's standard of living depends on the capacity of its companies to achieve high levels of productivity+and to increase productivity over time. The ideal is to deploy the nation's limited pool of human and other resources into the most productive uses.
Productivity is the prime determinant of a nation's long run standard of living (Clark and Guy 199!"#$%& it is the root cause of national per capita income ('eller 19$! $9%. Nation's standard of living depends on the capacity of its companies to achieve high levels of productivity+and to increase productivity over time. The ideal is to deploy the nation's limited pool of human and other resources into the most productive uses.
The only meaningful concept of competitiveness at the national level is productivity.
Productivity is the value of the output produced by a unit of labor or capital. Productivity is the prime determinant of a nation's long run standard of living (Clark and Guy 199!"#$%& it is the root cause of national per capita income ('eller 19$! $9%. The productivity of human resources determines employee (ages& the productivity (ith (hich capital is employed determines the return it earns for its holders (Porter 199)! #%. * nation's standard of living depends on the capacity of its companies to achieve high levels of productivity+and to increase productivity over time. * nation's companies must relentlessly improve productivity in e,isting industries and develop the necessary capabilities to compete in more and more sophisticated industry segments- (here productivity is generally high. .ltimately- they must finally develop the capability to compete in entirely ne(- sophisticated industries (/einhocker- 0))#%. 1nternational trade and foreign investment improves a nation's productivity by allo(ing a nation to speciali2e in those industries and segments of industries (here its companies are more productive and to import (here its companies are less productive. 3o nation can be competitive in everything. The ideal is to deploy the nation's limited pool of human and other resources into the most productive uses. Classical theory e,plains the success of nations in particular industries based on so+called factors of production such as land- labor- and natural resources (4icardo- 1951!1s15%. 3ations gain factor+based comparative advantage in industries that make intensive use of the factors they possess in abundance. Classical theory- ho(ever- has been overshado(ed in advanced industries and economies by the globali2ation of competition and the po(er of technology. 6ichael Porter (Porter- 199)a% advanced a ne( theory to e,plain (hy some countries are more successful in particular industries than others. 7e argues that sustained industrial gro(th is not feasible in overly dependence on inherited factors such as lands- nature resources- cheap labour forces that build comparative advantages. 1n the modern economic system- countries or regions need to build their competitive advantages in obtaining international competitiveness. Porter8s 3ational 9iamond underlies the national competitive advantage of a nation in the determination of competitiveness. These are factor conditions- demand conditions- related and support industries- and company strategy- structure and rivalry (Porter 199)- 199%! 1. :actor conditions. 0. 9emand conditions in the domestic market. ". 4elated and supporting industries. ;. :irm strategy- structure and performance refer. Porter believes that the four factors affect each other in a t(o+(ay form in the diamond model. 7e also proposes t(o other factors- namely government policy and chance that support and complement the system of national competitiveness but do not create lasting competitive advantages. Chance and opportunities are beyond control and the impact of Porter claims due to the factor of clusters being geographic pro,imity& it can- in three aspects- pushing regional economic development for(ard! 1. 1t can increase the production efficiency of the companies in the clusters to achieve economic of scales. 0. 9omestic pressure and challenge drives innovation activities (ithin the clusters. ". The clustering effect that leads to demands increase (ithin the regions- (hich attract inflo(s of supporting industries. 1n addition- the government can proactively influencing these four factors and activities in favour the clusters to be healthily gro(ing. *ccording to Porter- the attributes are a mutually reinforcing system so that they have to be systematically organi2ed to be fully effective- and they are 1% factor conditions- 0% demand conditions- "% related and supporting industries- and ;% firm strategy- structure and rivalry (Porter 199)- 199%. 1) Factor Conditions :actor conditions refer to inputs used- like factors of production + such as labor force- natural resources- land- capital and infrastructure (hich sounds similar to standard economic theory. 7o(ever- Porter argues that the <key< factors of production (or kno(n as speciali2ed factors% are created- not inherited. They are skilled labor- capital and infrastructure. <3on+key< or general use factors- for instance ra( materials and unskilled labor can be obtained by any firm and of course these kinds of factors cannot generate sustained competitive advantage. 7o(ever- speciali2ed factors are more difficult to duplicate because they involve heavy- sustained investment. Thus these factors lead to a competitive advantage (Porter 199)%. 2) Demand Conditions Porter points out that a sophisticated domestic market is an important element to upgrade competitiveness. 1n such a market- firms have to sell superior products because the market demands high =uality and a close pro,imity to such consumers enable the firm to understand the needs and desires of the customers better. 1f the nation8s discriminating values spread to other countries- then the local firms (ill be competitive in the global market (Porter 199)- 199%. 3) Related and Supporting Industries Porter also argues that a set of strong related and supporting industries (hich include suppliers and related industries are very important to the competitiveness of firms. *nd the studies usually focus on a regional level in regard to the national level. 7e reminds us that the phenomenon of competitors and (ith upstream or do(nstream industries as (ell- locating in the same area is kno(n as cluster. >ne advantage locating closer to your rivals may be to profit from the potential technology kno(ledge spillovers. >ne disadvantage locating nearer to your rivals is the potential poaching of your employees by rival companies and the obvious increase in competition costs. 7o(ever- clusters (ill increase local industrial competitiveness- as (ell as the national competitiveness as a result of the race among rivals (Porter 199)- 199%. 4) Firm Strateg! Structure and Ri"alr The business environment is dynamically changing- in (hich industries are being created- organised and managed. 1n other (ords- rivalry impels industries and enterprises to innovate and to upgrade. 7o(ever Porter claims regional level of rivalry is the most important competition out of all- because enterprises might feel comfortable to stay (ithin the regions if there is not enough competition- (hich not only discourage enterprises to seek bigger market- but also it reduces firms8 motivation to continuously innovate and upgrade (Porter 199)- 199%. (1) Strategy Capital 6arkets + The strategy of firms (ould be affected by the domestic capital markets. ?ome countries capital markets have a long+run outlook- (hile others have a short+run outlook. 1ndustries vary in length of the outlook. Countries (ith a short+run outlook (ill tend to be more competitive in industries (here investment is short+term. Countries (ith a long run outlook (ill tend to be more competitive in industries (here investment is long term. (2) Structure Porter argues that no uni=ue management model fits each country (hich means the best management styles vary among industries. ?ome countries may be oriented to(ard a particular style of management. Those countries (ill be more competitive in industries for (hich that style of management is suited. (3) Rivalry Porter points out that intense competition (ould al(ays spurs innovation. 1nternational competition is not as intense and motivating. Through the international competition and comparing the corresponding products- firms can get ne( ideas to satisfy the market demand locally. CONC#$T OF C%UST#RIN& 'ND '&&%O(#R'TION *ccording to 6ichael Porter! @The enduring competitive advantages in a global economy are often heavily locali2ed- arising from concentrations of highly speciali2ed skills and kno(ledge- institutions- rivalry- related businesses- and sophisticated customersA (199- p.9)%. Porter defined clusters as @geographic concentrations of interconnected companies- specialised suppliers- service providers- firms in related industries- and associated institutions (e.g.- universities- standards agencies- trade associations% in a particular field that compete but also co+operateA (0)))- p.1$%. The t(o key features of this are that companies are linked in some (ay (through inter+firm trade- or the use of common inputs- or shared techni=ues% and are located in pro,imity. Porter8s central argument (as that areas (ith strong inter+firm and institutional relationships of this kind are more internationally competitive- innovative and capable of gro(ing faster than places (ith (eaker local connections (3advi 1995- 1999%. C)ina Special #conomic *ones +S#*) China is the (orld8s foremost success story in the use of industrial clustering concept for economic success in the form of ?pecial Bconomic Cones. The creation of ?BCs played a strategic role in China8s early economic reforms. 1n 1959- four 2ones D ?hen2hen- Chuhai- ?hantou and Eiamen D(ere set up as e,periments in the management of market liberalisation- and as magnets for foreign investment. Today China hosts at least a hundred 2ones in a gro(ing variety! free trade- economic and technological development- and high+tech 2ones. ?pecial economic 2ones have been specifically characteri2ed by the follo(ing! (a% * geographically delimited area- usually physically secured& (b% * single management or administration& (c% >ffers benefits based on physical location (ith in the 2one& and (d% 1t has a separate customs area (duty free benefits% and streamlined procedures (Forld /ank 0))9%. Shenzen SEZ The ?hen2hen ?BC set the pace for moving to(ard a more technology+intensive- higherDvalue+ added stage of development- a goal since the late 19)s. T(o telecommunications companies- 7ua(ei Technologies Co.- Gtd. and Chong,ing Telecommunication B=uipment Co.- Gtd. (CTB%- founded in 19 and 19$- respectively have become ?hen2en ?BC biggest success stories. They took off in the early 199)s to become t(o of the (orld's largest companies in the field today. The t(in successes namely- 7ua(ei and CTB have come to be kno(n t(ins of ?hen2hen (Heung- Gee- and 'ee 0))9%. ,ua-ei Tec)nologies 7ua(ei is one of the (orld8s ten+largest producers of telecom e=uipment. 1ts main products include s(itching systems- intelligent net(orks- ?ynchronous 9igital 7ierarchy (?97% transmission net(orks- (ireless- datacoms- broadband integrated services (/1?93%- po(er supplies- and free space optical systems. 7ua(ei's products and solutions are deployed in over 1)) countries and serve "1 of the (orld's top $) operators- as (ell as over one billion users (orld(ide. 1n 0))#- it had annual revenues of .?I.0 billion and over ;; ))) employees. >ver half its revenues came from overseas sales (.?I;.billion%. *T# Communications Chong,ing Telecom (CTB% has gro(n to become China's largest listed telecommunications e=uipment manufacturer and (ireless solutions provider. 1t lists shares in 7ong 'ong and ?hen2hen and is China's second+biggest telecom e=uipment vendor after 7ua(ei Technologies Co. The company develops and manufactures telecommunications e=uipment for fi,ed- mobile- data and optical net(orks- intelligent net(orks and ne,t generation net(orks as (ell as mobile phones. The company has aggressively e,panded in developing markets by e,porting net(orking products- establishing Joint ventures and investing in local communication operations. CTB confirmed in >ctober 0))# that the *frican market has been targeted by the company as its @ne,t business hub.< Chinas SEZs in !rica China8s ?BC policy has been (idely lauded for its remarkable success as a tool for attracting :91- promoting e,port+oriented industriali2ation- and cataly2ing market+(ide reforms. *s a result- there has been an especially strong interest in many countries to emulate the e,perience of China in developing ?BCs as a policy instrument in economic liberali2ation and e,port+led gro(th- attracting foreign investments and enhancing the competitiveness of the manufacturing sector (Brutigam and Tang 2010). 1n keeping (ith the e,pansion of policies in support of trade and overseas investment sometimes called KGoing Global8 or Cou Chu=u%- the Chinese Government encouraged Chinese companies to target ne( markets- build global brands- and invest abroad. >ne component of this policy (as the establishment of overseas industrial and trade 2ones believed to serve several strategic obJectives including! a. 7elp increase demand for Chinese+made machinery and e=uipment- (hile making it easier to provide post+sales product support. b. ?econd- by producing overseas and e,porting to Burope or 3orth *merica- Chinese companies (ould be able to avoid trade frictions and barriers imposed on e,ports from China. c. *ssist China8s efforts to boost its o(n domestic restructuring and move up the value chain at home. d. Create economies of scale for overseas investment- and in particular- to assist less e,perienced ?6Bs to venture overseas @in groupsA. e. *s a (ay to transfer one element of China8s o(n success to other developing countries& a strategy that the government believed (ould be helpful for recipient countries. 6ore than ten *frican governments e,pressed interest in hosting cooperation 2ones and by 0)1) si, 2ones (ere under construction in *frica (/o 0))#%. 6inistry of Commerce of China (6>:C>6% emphasi2ed on 2one proJects driven by market conditions (ith the companies taking the lead on the business decisions and the Chinese Government only playing a supporting role. %e..i Free Trade De"elopment *one +T)e C)ina/Nigeria #conomic and Trade Cooperation *one) Case Stud 1n 6arch 0))#- a Chinese consortium- CCBCC+/eyond (China Civil Bngineering Construction Corporation Gtd) (as set up in /eiJing. 1n 6ay 0))#- CCBCC+/eyond entered into a Joint venture (ith the Gagos ?tate Government to establish a special purpose vehicle- the Gekki :ree Trade Cone 9evelopment Company. CCBCC+/eyond successfully bid for 6>:C>6 support in 3ovember 0))5. There have been changes (ithin the Chinese consortium (ith the most recent involving the participation of the China+ *frica 9evelopment :und (C*9:% in 0))9. The Chinese consortium currently is China+*frica Gekki 1nvestment Co. Gtd (C*G1C% (hich is an investment holding company registered in China solely for the purpose of investing in the Gekki :TC(Brutigam and Tang 2010). /ased on the 0))9 :easibility ?tudy- the 2one is targeting four types of activities! a. Gight industry including furniture- te,tile and garments- foot(ear and head(ear production- construction and building materials- household electrical appliances and other consumer products& b. Lehicle assembly including buses- trucks- tractors- motorcycles as (ell as construction and engineering e=uipment& c. Farehousing and logistics including for petroleum products& and d. 4eal estate development for urban services- finance- trade- hotel- recreational and business and residential facilities. CONC%USION 9ue to the 4eform policies initiated in 195- China recorded a fast sustainable economic gro(th (ith an estimated average G9P gro(th rate of 9.5M in the period of 19)+0))- turning China++ in 0))9 D into the (orld8s second largest economy- Just after .?*. Fith an e,port oriented economic model- highly supported by :oreign 9irect 1nvestments (:91%- China has since 0))0 been the most attractive developing country for :91 flo(s- becoming not only the (orld8s factory- but also its number one e,porter- after surpassing Germany in 0))9. The establishment of special economic 2ones and industrial clusters has made crucial contributions to China8s economic success. :oremost- the special economic 2ones successfully tested the market economy and ne( institutions and became role models for the rest of the country to follo(. The numerous industrial clusters in the special economic 2ones have contributed significantly to China8s national competitiveness by increasing productivity as evinced in rising gross domestic product- employment- e,ports- and attraction of foreign investment. The special economic 2ones have also played important roles in bringing ne( technologies to China and in adopting modern management practices. 9uring the last ten years- China8s economic engagement (ith *frica has (itnessed e,plosive gro(th surpassing trade (ith partners such as the .nited ?tates. 1n 0))9- China became *frica8s largest trading partner. *nchored in the burgeoning trade bet(een China and *frica- is the Chinese establishment and investments in *frican ?BCs. 9riven by dramatic gro(th of manufacturing e,ports to *frica- the ?BCs serve a key role as logistics and production platforms for Chinese companies to further penetrate the national and regional markets for goods and support services in *frica among various other strategic obJectives- inter alia! 1. 1ncrease demand for Chinese+made machinery and e=uipment- (hile making it easier to provide post+sales product support. 0. *voidance of trade barriers imposed on Chinese e,ports by manufacturing in end markets and in countries (ith trade preferences to attractive third country markets. ". *ssisting China8s efforts to boost industrial restructuring at home and nurture companies to move up the value chain. ;. Creation of economies of scale in production- in particular- to assist less e,perienced small and medium+si2ed enterprises (?6Bs% to venture overseas. $. *s a (ay to transfer an element of China8s o(n success to other developing countries. 0I0%IO&R'$,1 /einhocker- Bric 9. (0))#% "he #rigin o! $ealth. /oston- 6*! 7arvard /usiness ?chool Press /o Eilai. 0))#. K?annian 2hihou Jianshe " dao $ ge JingJi maoyi he2uo =u8 NKConstruct "D$ economic cooperation 2ones (ithin three years8O- intervie( transcript- China Central Television- 1".11.0))#- available at! http!PPne(s.sina.com.cnPcP0))#+11+1"P1)1#11;99#$.shtml- accessed 1#.$.0)1). /rQutigam- 9.*. and E. Tang (0)1)%- @China8s 1nvestment in *frica8s ?pecial Bconomic ConesA- 6imeo- Ranuary 0)1)- Forld /ank. Clark- R. and Guy- '. 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