Microeconomics of Competitiveness:
Firms, Clusters, and Economic Development

Washington, D.C.        SPRING 2011

Industries tend to cluster in distinct geographic districts, with individual cities specializing in production of narrowly related set of goods. — Alfred Marshall (1842-1924)

Local and regional economies are the building blocks of a region's and the nation's competitiveness. While sound macroeconomic policies, stable legal and political systems, and factors of production affect the potential for competitiveness, wealth is actually created at the microeconomic (local and regional) level.

The health of a region depends on its ability to produce high-value goods and support high-wage jobs. Such activities are typically concentrated in clusters within regions. According to Michael Porter of the Harvard Business School, clusters are geographic concentrations of interconnected companies, specialized suppliers, service providers, and associated institutions in a particular field that are present in a region. The strategies of firms, the vitality of industry clusters, and quality of the business environment in which competition takes place are what ultimately determine a nation's or a region's competitiveness and prosperity.

Clusters arise because they increase the productivity with which companies can compete. The development and upgrading of clusters is an important agenda item for governments, companies, universities, and other institutions.

The Robert H. Smith School of Business will be offering a graduate course on Microeconomics of Competitiveness, based on the course platform developed by Professor Michael Porter and his colleagues at Harvard Business School (HBS).

Special Features

• The course covers both developing and advanced economies, addressing competitiveness at the level of nations, states, regions, clusters, and groups of neighboring countries.
• The course is concerned with government policy, but also with the roles of business, universities, and other institutions in competitiveness.
• The course is taught using the case method, together with readings, lectures, and guests. The case method requires extensive advance preparation for each class. It also has a major team project involving the competitive assessment of a country, region, or cluster.
• The course is taught at HBS and at many universities around the world. Participants will have access to a variety of learning materials from HBS and the Smith School.