Jump over the developing economy ‘middle income’ trap and developed economies by exporting national wisdom
Wisdom advantage of Nations
Wisdom Network organise and focus the wisdom of crowds in a community. The competitive advantage of nations was primary focussed on productivity in the physical world. A Network Society that organises and aggregates wisdom in a Network Society has another opportunity. The wisdom networks that organise their network society (or a specific community within it) can be used to bring wisdom to anyone else in the world. This means that a national, organisation or individual wisdom network can focus the wisdom and effort of crowds for any community in the world. It also provides a source of competitive advantage and the opportunity to jump over the 'middle income' trap which has plagued developing countries.
From Competitive advantage (physical productivity) ....
- Competitive advantage seeks to address some of the criticisms of comparative advantage. Michael Porter proposed the theory in 1985. Porter emphasizes productivity growth as the focus of national strategies. Competitive advantage rests on the notion that cheap labor is ubiquitous and natural resources are not necessary for a good economy. The other theory, comparative advantage, can lead countries to specialize in exporting primary goods and raw materials that trap countries in low-wage economies due to terms of trade. Competitive advantage attempts to correct for this issue by stressing maximizing scale economies in goods and services that garner premium prices (Stutz and Warf 2009).
- Competitive advantage occurs when an organization acquires or develops an attribute or combination of attributes that allows it to outperform its competitors. These attributes can include access to natural resources, such as high grade ores or inexpensive power, or access to highly trained and skilled personnel human resources. New technologies such as robotics and information technology can provide competitive advantage, whether as a part of the product itself, as an advantage to the making of the product, or as a competitive aid in the business process (for example, better identification and understanding of customers).
- The term competitive advantage is the ability gained through attributes and resources to perform at a higher level than others in the same industry or market
To .... Wisdom advantage (virtual prosperity)
The reality is that developed and developing economies are increasingly dominated by services. The services sector accounts for more than 70% in most major economies. Those sectors that deal with a large proportion of non-physical activity can be organised by Wisdom Networks. Equity market, education and health come to mind, but there are others. Given anyone, anywhere can participate in a wisdom network, this means that local or national communities can become global and transcend national boundaries that provided a physical participation.
After the first step of establishing National Wisdom, it could can export its national wisdom to the world in two ways. It can pursue regional wisdom. This means earning export revenue by providing services to the region. It also means greater benefit from comparative advantage by facilitating greater integration and specialisation. Secondly, it could service a global community in a specific vertical. Most interestingly. the people that it requires to service the global vertical could be sourced globally. This is similar to Japan that imports iron ore and exports cars. A country could virtually import people, and derive export revenue from the wisdom and services they provide to the world.
Jumping the inevitable "middle income trap" with a National Wisdom strategy
- The middle income trap is an economic development situation, where a country which attains a certain income (due to given advantages) will get stuck at that level.
- As wages rise, manufacturers often find themselves unable to compete in export markets with lower-cost producers elsewhere. Yet, they still find themselves behind the advanced economies in higher-value products. This is the middle-income trap which saw, for example, South Africa and Brazil languish for decades in what the World Bank call the “middle income” range (about $1,000 to $12,000 gross national income per person measured in 2010 money).
- Typically, countries trapped at middle-income level have: (1) low investment ratios; (2) slow manufacturing growth; (3) limited industrial diversification; and (4) poor labor market conditions.
- The Middle Income Trap occurs when a country's growth plateaus and eventually stagnates after reaching middle income levels. The problem usually arises when developing economies find themselves stuck in the middle, with rising wages and declining cost competitiveness, unable to compete with advanced economies in high-skill innovations, or with low income, low wage economies in the cheap production of manufactured goods.
- Avoiding the Middle Income Trap entails identifying strategies to introduce new processes and find new markets to maintain export growth. Ramping up domestic demand is also important—an expanding middle class can use its increasing purchasing power to buy high-quality, innovative products and help drive growth.
- The biggest challenge is moving from resource-driven growth that is dependent on cheap labor and capital to growth based on high productivity and innovation. This requires investments in infrastructure and education. As the Republic of Korea has proven, building a high-quality education system which encourages creativity and supports breakthroughs in science and technology is key.
National Wisdom provides developing countries that have been unable to compete with the more developed nations with a means to compete. Traditional economic development means that
Size doesn't matter - every country can export wisdom!
A country of any size can export national wisdom. If 30 networks can achieve global wisdom, then any country, government or organisation can deliver these networks. The United States private sector has organises social wisdom to the world. Any country could organise health wisdom, equity market wisdom, education wisdom or another sector. Only 30 people could operate a wisdom network. This means that a small country has the people to organise global wisdom. They could also offer other regulation, policies and incentives that attract a global audience to participate in their local market. Ofourse, first mover advantage may also play a role.
15 minute crash course
If you haven't seen them, we recommend the 15 minute crash course in wisdom. It is provided below for your convenience.
Which countries will lead the world in remote services, virtual workers, virtual exports and harnessing the wisdom of the global community to improve prosperity?
This video summarises the shifts from Information Age to Network Society. Specifically, it compares the processes and outcomes within each of these economic development stages.