Assets versus Processes

According to IMD, some nations are rich in assets, such as land, people, and natural resources, but they are not necessarily competitive (natural resources in many African countries, land in Russia etc.). Other nations are poor in resources and rely therefore on transformation processes. The IMD argues that inherited assets, apart from natural resources, can also include infrastructure, industrial power, and even education and skills. All these assets that have been accumulated by past generations can generate complacency in nations. That would correspond in its impact to Porter’s lack of a demanding home market and rivalry, which serve as catalysts for innovation and sustained competitive advantages.

Social Cohesiveness versus Individual Risk Taking

The last force that influences the competitive environment of a country, according to IMD, is the distinction between a system, which promotes individual risk and one that preserves social cohesiveness.

Traditionally, the US model places more emphasis on individuals willing to take risks and promotes privatisation, deregulation and entrepreneurialism. This goes together with a limited welfare system. The Central European model has traditionally relied more on social consensus, a more egalitarian approach to responsibilities and a more extensive welfare system. Both models have coexisted and even competed during many years. In the last years, however, the Anglo-Saxon model has become dominant, witness the for example the blanket adoption in central Europe of social and economic reforms based on an Anglo-Saxon model.

What is the imd and who is the target audience of its work on competitiveness?

The IMD is a business school that developed out of two earlier schools founded by Nestlé and Alcan, two successful global firm agglomerates. In this business tradition, IMD specialized in providing Executive Education for large and medium size international businesses and for individuals. Their work on competitiveness, located within the IMD at the World Competitiveness Center, is therefore primarily targeted at the business community and has the aim of supporting them e.g. in determining investment plans. However, they claim that their flagship publication, the World Competitiveness Yearbook, can also be used by governments (to compare policy success with other countries) and by academia ("to understand and analyse how nations compete"). We will examine the Yearbook in detail in the next module to find out, if the Yearbook achieves those objectives.

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