Global Strategy - blog

Whereas the recent Nobel laureate Paul Krugman somewhat opposes the whole idea of pondering how "competitive" a given country is (see also Kalle Pajunen's entry "Location matters" below), the world's most famous strategic management scholar Michael Porter has always held that very question close to his heart. And he still does. Namely, in his new article(available at MSNBC website), Porter expresses his serious concern about the current competitiveness of his home country, the United States of America.

The article is worth reading in its entirety; it should not take more than 15 minutes.

Personally, I found a few of Porter's remarks especially poignant.

With regard to the strengths of the USA, it is interesting how Porter emphasizes the role of the decentralized and specialized regional economics of the country. As examples, Porter refers to the entertainment complex in Hollywood and the life sciences sector in Boston. Porter's emphasis on the importance of decentralization and heterogeneity should be of interest at least to scholars and government officials abroad -- who often tend to assume that the strength of the US economy lies in the unity and homogeneity of the country in terms of markets and culture, rather than in decentralization and heterogeneity.

(Yet, I'm not exactly sure how professor Porter would respond if asked about the current, unprecedented survival struggles of certain regional, specilized economies of his country. Such as the automobile industry around Detroit or the financial services sector in New York).

Another US strength mentioned by Porter is one that can never be emphasized too much to people on the Old Continent (i.e., Europe). Namely, one of the unquestionably greatest strenghts of the US economic system is its capital market for risk capital -- by far the world's deepest and most efficient (regardless of its recent troubles). Note that this system also includes the following cultural aspect: "Only in America can young people raise millions, lose it all, and return to start another company."

On the other hand, it is interesting to note a few aspects that Porter raises on his list of greatest concerns. One great concern for Porter is the high-cost health care system (the extremely privatized nature of which seems not to have produced the cost-efficiency that the free-market ideologists have spoke for). Another is the poor public education system which fails to educate enough people at affordable enough cost.

When it comes to the last two aspects, it seems that US scholars at last start to -- or at least ought to -- become seriously interested in some of the advantages of the Nordic "welfare systems", exemplified by Finland, Sweden, and Denmark. (Assuming that there are some advantages in such systems ,if not also disadvantages.)

Note however, that at the level of political rhetoric, the Americans have a long journey ahead of them, in case they desire to considerably improve their welfare, healthcare, and educational systems. This is because great many Americans sincerely believe that Nordic countries are fundamentally "socialist countries" -- and the mere thought of learning something from such countries is simply horrifying to them. See for example a recent interview in which the vice president candidate Joe Biden is asked to comment the great fear that some Americans have: "that Barack Obama will want to turn America into a socialist country, much like Sweden" (available at Youtube, fast forward to 4:35 if you lack time).