Microeconomics of Competitiveness:

Firms, Clusters and Economic Development

Spring 2017
Y schedule, 80 minutes, 10:05-11:25am
Hawes Hall, Room 102, HBS Campus

Harvard Business School (1260)

Kennedy School of Government (PED-329)

Instructor:
Professor Laura Alfaro, Warren Alpert Professor of Business Administration, HBS

COURSE DESCRIPTION
This course is concerned with the determinants of competitiveness and economic development
viewed from a bottom up, microeconomic perspective. The strategies of firms, the vitality of
clusters, and quality of the business environment in which competition takes place are what
ultimate determines a nation or region’s productivity. This course covers both developing and
advanced economies, and addresses competitiveness at multiple geographic levels, from groups
of countries (e.g., the European Union) to cities (e.g., New York City).

The particular focus of the course is on the role of business in driving competitiveness and
economic prosperity. In modern international competition, the roles of key stakeholders,
including companies, governments, and NGOs, have sifted and expanded, and the traditional
separation between them works against successful economic development. Additionally, the
ability to mount and sustain a competitiveness strategy for a nation or region is a daunting
challenge. The course will explore note only theory and policy, but also the practical
implications for all stake holders.

Global Reach – This course is taught not only at Harvard, but by faculty at approximately 100
universities around the world. These faculty are affiliated through a HBS-managed network to
enable the sharing of course materials, research, and ideas globally. As this network expands,
there is an even greater advancement of competitiveness theory and practice.
 COURSE EXPECTATIONS
Course Structure and Pedagogy

The students in the course will be diverse, coming from Harvard Business School, the Kennedy
School, and other schools within Harvard, MIT, and Tufts communities. Advanced training in
economics or management is required. The course will provide a sufficient foundation in
industry competition and competitive strategy to allow students without management training to
grasp course concepts.

The course will be taught using the case method, together with readings, lectures, and guests.
The case method requires extensive advance preparation for each class, and a significant part of
the course grade will be based on participation. This allows students to test their understanding
of theoretical tools by applying them to real-life situations. There will also be a major team
project focusing on the competitive assessment of a particular country or cluster. The success of
the course relies heavily on the active participation of all students in the preparation of cases, in
class discussions, and in their team projects. All students are expected to make their best effort to
participate actively in the case discussions, and encourage and support the participation of others.

Additional Information for MBA Students

This course is different from most MBA courses in a number of respects. First, it is not a
management course but a course focused on economic development. While it does explore
implications for companies, companies are only one of the several important constituencies.
Second, the course will involve the use of economic theory, through it does not require a mastery
of mathematical economics. Third, the course will cover not only advanced nations, but also the
developing world. Fourth, the course will require more readings than is typical in an HBS
course. Although a portion of almost every session will involve a case, there are additional
readings that cover the relevant concepts. Finally, the course will involve a substantial project in
lieu of an exam.

Attendance and Preparation

Given the cumulative nature of the course and the relatively small number of class sessions,
attendance at every class is mandatory and important. Students must notify the instructor of any
absence in advance of class by e-mail (afleming@hbs.edu) in addition to utilizing the HBS
Student Absence Notification Application. In the case of an emergency, contact us as soon as
possible afterward. Even for absences due to illness, students are responsible for assignment
preparation and for discussing the class with colleagues.

The course utilizes the case method in most sessions. Students are expected to complete all the
background reading and thoroughly prepare the case, guided by the assignment questions posted
on the Canvas.

Classroom Discussion

Primarily, MOC is a course about a way of thinking about competitiveness. The “answer” is less
important than the thinking process. Analytical rigor is highly valued.
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Class discussions will consist of a combination of volunteers and students called on by
instructors. Students may be called on to start the class or at any time during class. In their
participation, students will be expected to assimilate and build on the class contributions of other
students. Students who volunteer to contribute by raising their hand should be prepared to do so
in a concise and logical manner, marshaling evidence to support their views. The capacity to
integrate across facts, issues, and cases is valued. All discussions should be constructive in
approach and tone. No outside-of-case data should be used. Students should be prepared for
follow-up questions from the instructor and/or other students.

Team Project

A central part of the Microeconomics of Competitiveness course is the team project on a chosen
cluster within a country. The purpose of the project is to allow students to apply the concepts
and frameworks in the course to a particular case, under the supervision of experienced
instructors. The projects develop knowledge about competitiveness in disparate countries, which
is shared across teams. This also provides important factual and benchmark knowledge, while
adding to the body of course materials over time.

The team project will address the following areas:

Outline for the country/regional context:

– Short profile of the country/region, including, endowments, locational factors, size,

legacy, political system
– Overall economic performance, including economic growth, GDP per capita level and
growth, productivity, rate of innovation, and social development measures
– Composition of the economy by cluster and the relative performance of the chosen
cluster
– Performance on macro competitiveness, with a focus on areas relevant to the cluster
– Quality of the national business environment, with a focus on areas relevant to the cluster
– Identification of key country/regional competitiveness issues that are important to the
cluster

Outline for the chosen cluster:

– Profile of the cluster including its products and services and types of customers
– Description and mapping of the cluster actors (end producer, firms, suppliers, service
providers, related industries, research and educational organizations, institutions for
collaboration, etc.)
– Historical timeline of the cluster: birth, development and (if relevant) decline and their
causes
– Cluster performance; current and trends over time
– Identification of key competing clusters in other countries/regions; overview of
similarities/differences with the chosen cluster
– Cluster competitiveness assessment: strengths and weaknesses in the cluster; nature and
evaluation of diamond of cluster-specific government policies; extent of IFCs and
collaboration
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 – Identification of key competitiveness issues facing the cluster

Recommendations

– Policy recommendations to increase the competitiveness of the cluster, including

recommendations for national and regional governments, cluster participants, and other
relevant stakeholders

We expect every team to cover these topics in their analysis, presentation, and final report. For
teams examining clusters in large countries, broader competitiveness contexts should focus
mostly on the regional level, though national contexts essential to the cluster should be included.

Detailed guidelines for the team cluster competitiveness project are described in a separate
memo.

Grading

Students will be graded on the following basis:

 Class participation in all sessions, including the team
presentation sessions. 50%

 Team Project. The same grade will be awarded to 50%

each member of the team except in unusual
circumstances.
100%

Feedback

 Class participation  Students with insufficient class participation midway

through the course will be notified.

 Team Project  Reviews with Instructor

 Class discussion of team presentations
 Faculty Comments

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 KEY DATES AND COURSE SCHEDULE

Key Dates
Please check the Canvas for all up-to-date course dates and assignments.

January 24 First Session

February 3 Team Registration
February 17 Select Country/Cluster Selection Deadline
February 22 – March 3 Schedule Meetings Discuss Project if needed
March 13-17 Spring Break
April 5-14 Project Presentations
April 20 Last Session
May 3 (6 p.m.) Final Project Report Document Deadline

Office Hours

Office hours are 3:00-4:00 on Thursdays. Other arrangements may be made by appointment
through Kate Barry at kbarry@hbs.edu.

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Microeconomics of Competitiveness: Firms, Clusters and Economic Development
Harvard Business School (1290) and Harvard Kennedy School (PED-329)
Hawes Hall, Room 102
Professor Laura Alfaro
Y schedule, 80 minutes, 10:05am-11:25am

Spring 2017 – Course Outline

Module Date Session Case Study Readings

Part I: Firms,  On Competition
 Building a Cluster: Electronics and
Industries and Competitiveness: Overall Chapters 6, 7
1/24 Information Technology in Costa
Cross-Border Framework
Rica (9-703-422)
Competition
Part II:  California Wine Cluster (9-799-124)  On Competition
Locations and Clusters and Cluster  Australian Wine Cluster: Chapter 7
Clusters 1/26
Development Supplementary Information (9-703-
492)

2/1 Key Concepts  No Case

 Asociación Colombiana de Plásticos

(Acoplásticos) (9-703-437)
 Centre Suisse d’Electronique et de
Role of Institutions for
2/2 Microtechnique (CSEM) (9-703-
Collaboration
438)
 Institutions for Collaboration,
Overview (9-703-436)
 The Dutch Flower Cluster (9-711-
2/3 Cluster Internationalization
507)
Part III: Strategy Economic Strategy: Advanced
2/8  Remaking Singapore (9-710-483)
for Nations and Economies
Module Date Session Case Study Readings
Regions Economic Strategy: Developing  Vietnam: Sustaining the Growth of
2/9
Economies an Asian Tiger (9-713-480)
Economic Strategy: Early Stage  Rwanda: National Economic
2/16
Developing Economies Transformation (9-706-491)
Economic Strategy: European  European Integration: Meeting the  The Basque Country: Strategy
2/17 Integration Competitiveness Challenge (9-714- for Economic Development (9-
405) 713-474)
Economic Strategy: European
2/23  Brexit (717-028)
Integration and Exit
 New York City: Bloomberg’s
Economic Strategy: Cities
2/24 Strategy for Economic Development
(9-714-404)
 Resources:
http://www.hbs.edu/competitive
ness/Pages/default.aspx “An
Special Session: U.S. Economy Doing Half Its Job:
3/1  No Case
Competitiveness Findings of Harvard Business
School’s 2013-14 Survey on
U.S. Competitiveness” (Porter
and Rivkin, 2014)
Part IV: The  The New Carolina Initiative (9-713-
3/2 Competitiveness Initiatives
Process of 462)
Economic  Colombia and the Economic
Development Premium of Peace (715-011)
Organizing for Competitiveness:
3/3  Colombia: the National System for
National Level
Competitiveness and Innovation
(717-031)
Organizing for Competitiveness:  Cluster Mobilization in
3/9
Cluster Initiatives Mitteldeutschland (9-707-004)

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Module Date Session Case Study Readings

 India: Special Economic Zones (A)

Organizing for Competitiveness:
(9-709-027)
Export Processing Zones and
3/10  Tata Motors in Singur: Public
Foreign Investments
Purpose and Private Property (B)
(9-709-029)
Organizing for Competitiveness:
3/22  TBA
Entrepreneurship
Organizing for Competitiveness:
3/23  TBA
Entrepreneurship
3/24 TBA  TBA
3/29 TBA  TBA
Part V: Project
4/5 Team Project Presentations  Team Project Presentations
Presentations
4/6 Team Project Presentations  Team Project Presentations

4/7 Team Project Presentations  Team Project Presentations

4/12 Team Project Presentations  Team Project Presentations

4/13 Team Project Presentations  Team Project Presentations

4/14 Team Project Presentations  Team Project Presentations

FINAL PROJECT REPORTS DUE
4/20 Wrap-Up/Feedback  No Case
5/3 at 6:00pm