Estonia & Chile (MOC, Tuesday, Week 3)
microeconomics-of-competitivenessyear-twoCritical elements of Porter's diamond model (gross generalization):
-- Demand conditions (quality of demand, not quantity of demand) => dramatically under-appreciated, usually most important
-- Related and supporting industries => close second
The "gold standard" in economic policy: everyone agrees on overall direction even if they disagree on the particulars of how to get there
Example: Estonia (lots of political infighting; general consensus which way the ship should go)
Success in macro = solving political, economic, and social equations all at the same time
=> Often tough because developing countries usually get more unequal as they get richer. Challenge: maintaining political stability in the face of inequality
Nice things about small countries:
-- Can't do everything; forced to specialize (i.e. pick what NOT to do)
-- Usually easier to make changes
-- Usually less temptation to build huge governments (pretty obvious that having a super-complex tax policy that requires tons of people to enforce is a non-starter)
Estonia: never bought into the "myth of Communism"
-- Always got Finnish TV stations. Grocery-store commercials with cuts of red meat, dairy, etc.
Qualifying for EU membership: Slowly replacing every bone in a country's body. Usually for the better, but takes time and strains government.