National Competitive Advantage Theory

The National Competitive Advantage Theory explains why some countries excel in certain industries. It suggests that a nation's success depends on factors like its resources, infrastructure, firms’ skills, and supporting institutions. Key concepts include "factor conditions" (like skilled labor), "demand conditions" (strong local customers), "related industries" (connected suppliers), and "firm strategy" (how companies compete). When these elements align and are favorable, they create a "diamond" that boosts a country's ability to produce competitive goods and services internationally. Essentially, it shows that a country's unique environment shapes its industries’ global success.