Diamond of National Advantage VS FDI

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Diamond of national advantage VS FDI
By (Name)
Course
Instructor’s Name
Institutional Affiliation
The City and State
The Date

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Introduction
The major objective of this paper is to make an evaluation of the "Diamond of national
Advantage" and discuss the country can attract and retain Foreign Direct Investment. In this case,
the flow of foreign direct investments is not only driven by the country capital of the host
country but also, various ways of understanding on how to uses and access markets so as to earn
profits. Further, Foreign Direct investment helps in solving various national problems by;
providing capital used in enhancing economic development and growth (Porter 2011).Further,
Foreign Direct Investment also helps in the transfer of knowledge and technological skills. Also,
Foreign Direct Investment enables the country to gain access to different foreign markets. A
country's competitive market is majorly determined by its capacity of various industries to carry
out upgrade and innovation. To note, most countries have gained their advantages over various
worldwide competitors’ dues to challenge and pressure. Additionally, countries gain from having
genuine domestic rivals, demanding home-based customers and continued local-based suppliers
(Riasi 2015).
For the purpose of this paper, "diamond of National Advantage" will be applied to
discuss various ways of attracting and retaining Foreign Direct Investment (Porter 2011). In this
case, the "Diamond of National advantage" was created by "Professor Michael Peter" with an
aim of explaining why given countries experience wide internationally competitive markets in
various industrial sectors (Porter 2011). The framework involves major 6 national level elements
that focus on the country's competitive advantage. In this case, the most common factors include,

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supporting industries, firm rivalry, factors supporting and demand. Further, more two factors
include chance and government. To note, most countries have applied the "Diamond of National
Advantage" framework to concentrate on the development of their regional policies in the market
entry and public sector strategies by multinational firm managers (Porter 2011).
The following "Diamond of National Advantage" factors by Porter can be used by the
country to attract and retain Direct Foreign Investments; factor conditions; this involves the
position of the country the production factors that is to say; infrastructure, labor and many other
(Mulder 2016). In this case, such factors of production are important in ensuring competition in
various industries. To note, the factors are arranged according to human resources such as
(commitments, the level of qualification and many others), material resources like (vegetation,
space, and natural resources), financial and capital resources. In this case, the national factors
always provide the country with a major competitive advantage that is subsequently considered.
To note, every country has different factor conditions that it should develop in regards to its
optimal conditions. Therefore the country is required to specialized factors that generate genuine
competitive advantage. To note, specialized elements involve sustained and heavy investment
which are not simple to be duplicated. Therefore, this helps the country to gain a competitive
advantage over others hence attracting foreign investments. Also, the country gains the
competitive advantage because of the uniqueness of its firms (Mulder 2016).
Demand conditions; in this case, if the customers in the country continuously demand the
products in a given economy, more pressure is put on firms so that they can continuously
improve their market competitiveness by using various innovative goods (Mulder 2016). This
factor also involves various questions like, "what reasons are there for a successful market?",
"what is the nature of the market and what the market size is?" To note, the factor involves the