MGMT3102 Notes

5 Found helpful • 13 Pages • Topic Notes • Year: Pre-2021

Question 1: Briefly discuss the FG model to explain how latecomer countries develop through a process of TRANSFORMATION along three stages. Stage 1 developing country import consume goods from advanced nation and export primary products Stage 2 import substitution, import of manufactured goods decrease, and import of capital goods increase Stage 3 export orientation of consumer goods concentrating on specialisation and scale intensity, imports of machinery increase Stage 4 attainment of the same level of exporter as an advanced country - exports of consumer goods decline, exports of capital goods increase • Follower countries should follow the same level of progression • Diversification happens on two levels:; 1. Intra-industry (cotton-silk-woollen-synthetic or from crude to sophisticated/complex goods) 2. Inter-industry-development of new industries (from textiles/steel to shipbuilding-autos-computers and from consumer goods to capitals goods) Question 2: Is a latecomer country likely to sustain competitiveness by specializing purely in the intra-industry aspect? (In your answer, argue for and against). • Generally, the country catches up by capital and technology deepening process across vertical integration and diversification i.e. intra and inter industry wide • There is a need to diversify into related industries supplying parts and raw materials to the initial start-up intra-industry cycle - inter-industry cycle (textiles industry needing chemicals, dyestuffs, machinery etc.). Hence for a medium to large economy, diversification is critical • As a small country, Singapore/HK, specialised in high-tech fields together with forming linkages with suppliers and tech institutions- vertical specialisation has the highest index among Asia-Pacific countries. • Arguably for small states intra-industry creates specialisation and value addition to the industry and hence is the viable strategy

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