Question

Michael E. Porter developed the “Diamond System” to challenge classical economists’ thoughts (e.g., David Ricardo’s). What are the differences among classical economists’ thoughts (western thoughts), Michael E. Porter’s thoughts (western thoughts), and Asian 4 Tigers’ methods of rapid economical growth (eastern thoughts)? Also, “fit” is the key reason for South Korea’s success during the 1963-1993 period of time. What does it mean?

Answer 1

Under diamond model, there are four chief categories liable for such diversity they mark the playing field for the nation's industries these determinants are factored conditions demand conditions related and supporting
industries and firm strategy structure and rivalry the model also points out that there are
two additional determinants that influence the four main determinants these are government policy and therefore the
role of chance events reviews the last of the determinants that are influencing the four main determinants this is often a chance. David Ricardo was a classical economist best known for his theory on wages and profit, labor theory useful, a theory of comparative advantage, and theory of rents.and Ricardo and a variety of other economists and independently find out the law of diminishing marginal returns. and Porter Diamond Model is a diamond-shaped thesis which concentrates on explaining why certain industries in a particular nation are internationally competitive while others are not. in highly competitive, small business markets Industrial growth and competition completely behind, from the most relevant approach to understanding the processes of economic growth. While Porter's Five Forces is a model that identifies and analyzes five competitive forces that shape each sector and helps determine an industry's weaknesses and strengths and The four Asian tigers are South Korea Hong Kong, Taiwan. Singapore These regions were the first newly industrialized countries and The four Asian tigers have a highly skilled and productive workforce compared to others in the region.
As you almost certainly know, in 1957, Korea was split into two halves after a war during which over 2 million people died. At that moment we could say that South Korea was the country that was in more trouble economically and The North had all the industries and corporations, while the south was an agricultural and underdeveloped region. Schools had no desks and most of the children got the majority of their nutrition from powdered milk given by the US and Europe. This is why, in 1963, after many protests, General PARK CHUN HEE organized a coup d’etat and took power in the country. And this is how the first South Korean dictatorship started. For the next 30 years, the country had 3 different dictators. And all of them violently came to power - by overthrowing the previous dictator. Nonetheless, despite the political instability, these were the days when the South Korean economic model was created and but hold on a minute because this economy is not as free as you might think. A free market is organized in a bottom-up fashion. The private businesses decide how, when and what they want to sell. PARK CHUN HEE´s system was the opposite and This was a TOP-DOWN system. His policy was to meet the most important families in the country, who controlled most of South Korea’s industries. This group included the founders of Samsung and LG. So essentially he put them during a room and said: “Look, from now on, I will be able to offer you whatever you would like for you to grow.” If one year you cannot pay taxes. it´s OK! I will forgive you! Do you need some grants?
Here you have it! Do you need to borrow some money from abroad? Well, the government will back your loan! Even if you cannot pay your debts, the state is going to help you! “If we are weak, our country is going to be in jeopardy. For a nation to never fall, it must cultivate its own strength-Park Chung Hee and, since that very first moment, the government guaranteed the rule of law and low taxes for all businesses, regardless of where did they come from. But not only that, Park Chun Hee gave all kinds of tax incentives for companies and individuals to invest and save money. In other words, the big conglomerates like HYUNDAI or LOTTE had to compete in an open market with other corporate juggernauts from Japan or the US. But, at the same time, they had help from the government. Since South Korea has no natural resources but an enormous population, those companies put attention on industries that required an outsized workforce: manufacturing. And this was the beginning of THE CHAEBOL NATION Imagine the lifetime of one among the 100,000 workers employed by SAMSUNG in South Korea. He gets up in the morning in a house built by CYT, the construction company run by the Samsung group.