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Monday, September 18, 2017

Export Patterns in the Creative Destruction Process

Some companies are more likely to go global and make their way into a larger world of economic activity. An article in The Journal of International Trade & Economic Development Journal seeks to help us understand what the global landscape looks like (Hansen, et. al. 2015). From the study we find that there are a number of factors that help identify export environments:

Market Equilibrium: To gain financial foot hold and be an established company often requires three product innovations. Once these are gained and finances meet production needs a company can consider moving to supplying the needs of the global economy.

Labor Equilibrium: When there is sufficient skill available in the market to build new products and feed production. Highly developed industries need an educated and skilled labor force that fill open positions and compete on a global scale.

Big and Little Innovators: Some companies will invest heavily into product innovations that lead to global exports and some companies will be focused on smaller innovations that are within their financial and personal expertise that contribute to overall knowledge.

When companies have the financial strength and access to the capital they need they are more likely to innovate. They will then need to match that innovation with the labor skills available to build the products. Some companies will do this better than others and will hit the global market stronger than others. The market environment will have big and little innovators.

Hansen, J. et. al. (2015). Creative destruction and export patterns. The Journal of International Trade & Economic Development, 24 (3).

Articles may be distributed with attribution to authors Murad Abel


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