Question Each nation is supposed to create level playing field for its firms to equally gain competitive advantage in various industries. However, some countries focus only on one or few industries...

Some Nations have a distinct competitive advantage over the others. A country such
as Saudi Arabia has a competitive advantage over other countries in terms of its energy
resources. Relying on only one industry for a competitive advantage has various benefits. The
entire focus of the government remains on that industry. The government knows that this is
the industry which is contributing maximum to its economic growth and can make it a market
leader globally. Thus the government tries it's best to provide maximum subsidies and
support to this particular industry which makes it even more competitive.
However, relying on competitive advantage for economic growth is not the best
strategy in today's global world. This is because products can be efficiently sourced from
distant markets through global channels and efficient networks. This ultimately nullifies the
source of competitive advantage. Reliance on competitive advantage can be a good strategy
initially but it cannot continue for a very long time. Countries such as Bahrain, Saudi Arabia,
Kuwait, Oman and Sudan have a competitive advantage due to their location. Saudi Arabia
for instance is heavily blessed with oil and petroleum. This has given the petroleum industries
in the country a competitive advantage globally.
However more than using location as an advantage it is more important to focus on
productive use of imports and continuous innovation in the relevant field. If a country relies
on only one industry for its competitive advantage it will soon be over taken by the other
countries. This has actually happened in the real world with the USA producing massive
amounts of natural gas and Ethane which are low priced. This has led to the decline of
competitive advantage of Saudi Arabia. A similar trend can be seen in refining. The US
refiners have been taking advantage of the lower prices of the products to increase the exports
of Petroleum based products. This has again led to the decline of the market share of Saudi
Refineries not only in Asia but also across the world. Hence, if Saudi Arabia continues to rely
only on energy based products for its economic growth it will soon be wiped out by the other
countries especially United States.
When one particular industry becomes the dominant one due to competitive
advantage there is excessive reliance on this industry. The industry takes away a large chunk
of the workforce. If there is a decline in this industry there may be high levels of
unemployment in the economy. Moreover, many ancillary Industries develop around the
industry with the competitive advantage. Any decline in this industry may snowball into an
economic recession which is detrimental to the growth of the economy.
The best strategy for a country should be to use a particular industry to leverage its
position globally and then diversify into other areas. Countries such as Saudi Arabia should
use their advantage to develop its infrastructure and global presence in various other
industries so that a decline in one industry does not destroy its economy.
PART 2
Even during the widespread Global decline Saudi Arabia has been on the path of
economic growth. However, it is yet to succeed in global integration. The...