Porter's Diamond-Model for Regional Economic Development Programming

Abstract

In recent years, the issue of regional economic development has attracted a lot of attention and has been the subject of many studies in Hungary. The purpose of regional economic development is to increase economic prosperity, wage level and employment rate. The economic prosperity of regions is associated with their ability to generate economic activities which are able to improve their competitiveness.

This study tries to survey the Porter's diamond-model which is one of the well-known model of regional economic development programming. Porter measures a region's competitiveness on level of productivity and productivity growth. Porter identified four geographically development determinants that contributed to an industry's and/or region's competitive capabilities: (1) factor (input) conditions; (2) demand conditions; (3) related and supporting industries; (4) context for firm strategy and rivalry. These four determinants mutually reinforce one another and the interactions existing within a region. In Porter's theory, regional clusters have a prominent role. This study suggests that regional planners can make use of diamond-model of regional/local competitiveness.