Analyze and Evaluate the Role of National Institutions in the Development of National Industries

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1. Introduction North (1990) claimed that "Institutions are the rules of the game in society or, more formally, are the humanly devised constrain that shape human interaction. " Institutions regulate the behaviour between individual and groups and institutions play an important role in the development of economic and political. Also, institutions are significant things to a society, as well as they make contribute to government and public service. This essay is aimed to analyze and evaluate the role of national institutions in the development of national industries. Something useful may can be discovered in it and these may useful to the IB mangers.The Porter's Diamond Model will be used in analyzing and evaluating, and this essay is divided by three parts,namely introduction, analysis basing on Porter's Diamond Model, and conclusion. 2. Analysis basing on Porter's Diamond Model Factor conditions: Porter (1991) claims that factors of production can be divided into two parts, general use factor and specialized factor. Facing different factor conditions, the institution should be different. The general use factors are the "non-key" factors, such as unskilled labor and raw materials. These factor can be meet easily, but they are still important. Institutions must ensure the supply of the general use resources is safe and rapid. For example, the water supply can not be interrupted during the production activities. When it comes to specialized factors,they are key factors of production, such as skilled labor, capital and infrastructure. The specialized factors are significantly important for an industry, and they can be created to competitive advantages, as well as to compensate disadvantages.(Porter, 1991) In order to develop the national industries, some institutions must be created and fully used to achieve competitive advantages. The governments enact

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