Guide Culture Matters: How Values Shape Human Progress

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The difficulties and likely results of such efforts must also be evaluated. Integrating value and attitude change into development policies, planning, and programming is, I believe, a promising way to assure that, in the next fifty years, the world does not relive the poverty and injustice that most poor countries and underachieving ethnic groups, have been mired in during the past half century.

He cites the enterprise of expatriate minorities - Chinese, Lebanese, Jews and Calvinists - and others - in various geographic regions and climates and even under various political regimes. However, ideology blocks examination of this vital subject. Experience in China shows that governance is also vital, he concedes.

Culture matters: How values shape human progress

With socialist governance that smothers enterprise, not even the Chinese can prosper. Improve economic governance, and development blooms. The same values thwarted by 'bad government' at home can find opportunity elsewhere, as in the case of China. Indeed, enterprising emigrants have thrived even amidst indigenous peoples who lack both enterprise and economic development.

Culture matters: How values shape human progress

The Thai now impose much shorter periods of spiritual learning on their young. Time is money, after all. Following the example of their Chinese inhabitants, economic learning and experience has become paramount. Victimization attitudes encumber Argentina and other Latin American nations that have repeatedly failed at democratization and development efforts. They believe that their failures are all the fault of those nasty Western European and North American capitalists who exploit local resources for their own purposes with no benefit accruing to the mass of the local people.

Capitalism and open markets had become recognized as absolutely essential.

Culture Matters How Values Shape Human Progress

However, capitalism and open markets - although essential - are not sufficient. Argentina and other Latin American nations suffered serious relapses after A century earlier, the Japanese chose to question their own policies and culture, and proceeded to make changes that launched them into the modern developed world.

The Protestant ethic breeds success, and success breeds optimism - and enterprise. Optimism is on occasion wrong - but only "educated, eyes-open optimism pays. Japanese culture - work ethic, effective government, self discipline, nationalism - made the difference. The Japanese determined to learn and adopt the best practices in the European world and the U. They were spectacularly successful.

Other countries imported foreign equipment and did their best to use it; the Japanese modified it, made it better, made it themselves. The difference was cultural - a deep sense of national responsibility. The new imperial state and its educational system brought the Japanese people a strong sense of nationalism and duty to the nation. It was a Japanese version of the "Protestant ethic" of work and responsibility described by Max Weber in "Economy and Society. These are not just platitudes. They are the wisdom behind modern economic development.

The role of attitudes and beliefs - of "culture" - in human behavior and progress was emphasized by Michael E. Porter concentrates on the cultural influences that impact economics. He emphasizes the importance of how these cultural virtues are directed. Hong Kong and Chile prosper and compete in North American markets across vast distances.

Culture matters: How values shape human progress

Hong Kong has no natural resources. Development is intimately connected to productivity growth. In the modern global economy, prosperity does not depend on what a nation produces. Only the productivity of its production matters. It doesn't matter whether firms are foreign owned or domestic - as long as they are productive relative to the competition. It doesn't matter if the industries are in international markets or are just domestic. The productivity of domestic industry affects living standards and has an impact on the efficiency of export industries.

Countries that improve their standard of living are those in which firms are becoming more productive through the development of more sophisticated sources of competitive advantage based on knowledge, investment, insight, and innovation. Economic development is the process of building an "array of interdependent microeconomic capabilities and incentives [that] support more advanced forms of competition. Relationships with local customers and suppliers - insights about local markets - access to technology and knowledge from local institutions - flexibility afforded by nearby suppliers - are all local advantages.

Sound macroeconomic policies are of course vital, as are infrastructure and legal and political environments that facilitate commerce. International capital markets will punish unsound macroeconomic policies. The microeconomic environment, however, is also vital. For example, operational efficiency is unattainable if regulatory red tape is onerous, logistics are unreliable, or firms cannot get timely supplies of components or high-quality service for their production machines.

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Weaknesses anywhere in the domestic business environment will reduce the competitiveness in international markets of a nation's exporting firms. Continuous improvements in quality and specialization of a nation's inputs are required for economic development. Consumer choice empowered by competitive domestic markets forces broad-based efforts at raising productivity and improving product and service quality.

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A firm that can't compete at home will be unable to compete abroad. A domestic monopoly will never be nimble enough to keep up with foreign rivals.

Factor conditions - determining the availability and cost of inputs for production of goods and services - are discussed by Porter. Quality and specialization are more important than quantity, he notes - especially with respect to human capital - both labor and management. Competitive markets empower consumer choice. Consumer choice assures broad-based efforts at raising productivity and improving product and service quality.

It increases the competitiveness of domestic products and services in international markets. On the other hand, if local demand is unsophisticated and a firm is simply imitating products developed elsewhere, productivity and international market prices will suffer.

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Thus, protectionism is a losing strategy. The development of clusters of supporting suppliers and related industries is vital if development is to advance beyond basic levels. Silicon Valley and Hollywood are American examples, but such clusters now exist for many industries all over the world. Local clusters are more productive and more innovative than solitary firms that rely on distant suppliers and compete in distant markets.

Government's role is indirect - to provide the indirect support needed for successful commerce.

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  8. Direct supports are counter-productive. Targeting industries for support - choosing the winners and losers - is a losing policy for the economy as a whole. Beyond this, government must ensure that high-quality factors - inputs - are available to firms - e. Government and other institutions such as universities, standards agencies, and industry groups must work together to ensure that the business environment fosters rising productivity. Porter summarizes what is needed to reach and maintain the most advanced levels of development.

    These are complex tasks for undeveloped and developing nations to undertake. The good news is that perfection is not required - and nowhere exists. China continues to demonstrate that any substantial effort at implementing appropriate economic reforms and supportive economic policies will rapidly reap a cornucopia of benefits.

    Business culture must focus on competitiveness - on productivity - not on "control of resources, scale, government favors, or military power. Approaches that encourage rent-seeking and monopoly seeking practices produce parasitic development. Which brings the story back to culture and attitudes.

    Business attitudes are central to this process, Porter points out.

    Approaches that encourage rent-seeking and monopoly seeking practices produce parasitic development, Porter notes.