The competitive advantages of nations: Applying the “Diamond” model to Armenia

Abstract

Purpose

To apply the Porter “Diamond Model” to the case of Armenia, a small and land‐locked economy, in order to draw conclusions about its current situation, future prospects and appropriate development policies.

Design/methodology/approach

The paper analyses the shape of the Armenian “National Diamond” drawing on published statistical data and the authors' familiarity with the country.

Findings

Although controversial, the “Diamond Model” provides a useful basis for making appropriate policy recommendations for fostering competitiveness. The authors conclude that while achieving the required legislative and institutional framework, market liberalization and a stable macroeconomic environment are necessary, they are not sufficient conditions for ensuring continued economic growth and the achievement of sustainable development. In particular, based on the “Diamond Model” framework, they advocate Government policies to attract foreign direct investment with the objective of creating new industrial “clusters”.

Practical implications

The case study demonstrates that, despite possible limitations, the “Diamond Model” provides a valuable starting‐point for analysing appropriate development policy in emerging markets such as Armenia.

Originality/value

This is the first case study of its type written about Armenia. It is of value not only as a guide to policy‐makers in Armenia but also as a model for development specialists and policy‐makers in other industrializing economies.

Citation

Chobanyan, A. and Leigh, L. (2006), "The competitive advantages of nations: Applying the “Diamond” model to Armenia", International Journal of Emerging Markets, Vol. 1 No. 2, pp. 147-164. https://doi.org/10.1108/17468800610658316