The ‘Cluster’: Feature of an Advanced Economy
An advanced economy is quite different from one dominated by oligarchs. Michael Porter’s analysis on the characteristics of an advanced economy has highlighted the role of the ‘cluster’ of specialist businesses. Yet consideration of such factors does not seem to inform decision makers at a macroeconomic level when considering the prospects for economic growth.
The characteristics of a strong real economy are usefully grouped into four dimensions on what Porter calls the ‘diamond’. These are defined as
• Factor conditions, such as skilled labour, natural resources and infrastructure, necessary to compete in a given industry
• Demand conditions
• Related and supporting industries, that are internationally competitive
• Firm strategy, structure and rivalry.
