Hi, guys. Welcome back to Global Business Environment. This is module six, and it will be part four of module six, in which we continue to try to answer our question, is today's world dominated by free trade, freer trade, or managed trade. If you recall, we spoke earlier in the course about the models and frameworks developed by Adam Smith and David Ricardo, absolute advantage and compare advantage and we talked about the great impact that those models had on today's philosophy of freer trade. As we've seen in this module, the world hasn't completely embraced freer trade. It's very difficult to move from a world of, of protected industries to one of zero tariffs overnight. And as the world has evolved, and as we continue to see trade agreements signed and tariff barriers decline, we've seen new models that have been embraced by government leaders and others to explain and understand and to try to improve their positions in the world, while still allowing for a win win situation to emerge. What I have the screen here is a model that's often called the diamond, And it was developed by a Harvard professor named Michael Porter in the 1980s, and we often call it Porter's Diamond of National Advantage. And it's one of the most widely utilized models and frameworks today by governments and economic development professionals and departments across the world. And these, this model, this framework, is trying to explain how countries, economies, or even regions, cities, communities might develop competitive advantages, or comparative advantages upon which they can build their economies. And upon which they can build exports. And, upon which they can buy the best products in the world from other economies in the form of imports. And so, this model is utilized by companies by countries that are trying to attack, attract companies to invest or trade in their economy. So, for example, what we see in today's world is countries, states, cities competing for business competing to try to attract companies to cross borders and have operations in their economy. Let me give you several examples. Here is a picture of a manufacturing plant for the United States company Intel, and this plant is in Costa Rica. This company and this plant employs thousands of workers in Costa Rica and has been a great benefit to their economy. How did this happen? How did, how did Costa Rican officials convince Intel to build this plant? Well, as you know if you've read the news or, or heard about tax incentives and other benefits that governments provide to companies that invest or trade in their economy we, we know that's what occurred. And so, it wasn't just a simple decision where Intel said, hm, Costa Rica is the best place in the world to do this. It was a decision based in managing trade or investment flows. It was clearly an example of competition. A number of countries across the world and even states within countries were competing for this type of investment. At one point I worked about ten years ago on a, on a consulting project for local economic development officials here in the city I live in the United States. It's a city called Albuquerque, in the state of New Mexico. And our city was attempting to attract, and our state, and our country a major manufacturer from Canada to come to, to provide jobs and to build our economy. And it would've been a major investment, and would have provided a lot of jobs, and would have, and it would have contributed to our local economy. We would have ended up exporting here in our community, a number of, of products worth billions of dollars from this company. Ultimately, the competition won out and the Canadian company decided to stay home and that was because of the trade incentives and investment incentives they received there. And so that's how today's world operates is it's one of competition between regions and communities and states and countries, to attract trade and investment. And this model or framework, helps us understand who wins or who, who can develop these comparative or competitive advantages. And so, we'll go through this example a little more formally in the next part as we try to understand how today's world is involved in a managing trade. Thank you very much.
