Spurring Economic Development through Exportation of Value-Laden Efficiencies

The authors Ha and Swales (2012) attempt to determine the single-region IO analysis of a stylized export-base model. They found that improvements in value-added efficiencies also improve upon the GNP of countries and the labor market. There were also regional improvements in exportation which helped to sustain growth.

Exports are the underpinning of strong economic activity. The export-base model is a simplified version of the Keynesian demand-driven approach whereby exports and regional productivity are linked. As market demand increases so does the need to produce more products for export. This in turn can increase economic activity to meet market demands.

Generally, when policy makers want to increase exports in the export-based model they introduce and spend money on the port and other export functionality. It is hoped that by reducing the costs through investments that it will make exportation cheaper and encourage more use of the facilities. This has a positive effect but can be limited if the internal regional mechanics are not improved for greater competition.

Exports have an impact on the region. Furthermore, they can also influence surrounding areas that contribute to the exportation of products. There is a separation between domestic production and export production. Export production being that which is sold to other markets while domestic production serves the needs of locals. At times these are blended together because they relate to each other.

Increases in efficiency also increase other areas of the sector. There is a cross-breeding that creates higher levels of adaptation within the market. In turn, increased value-added efficiencies also improved the Scottish Gross National Product. As companies produced more efficient products that were demand laden in the market the wealth of the region increased.

Improvements in the exporting of products are also not the only benefit. The local economy also improves through growth within the labor market. The fundamental aspects of the economy improve through the creation of stronger efficiencies, value-added products, improved exportation, and general employment opportunities.

To further the reports findings, GNP improvements can be fostered through improvements such as deep sea ports that help to create efficiencies in exportation. Yet, in alignment with the report, true improvement is outside massive spending and instead lies in the efficient development of new products and services that improve upon market principles. These improvements enhance the labor market, bring more relevant products to the international market, and create stronger regional growth. Through rejuvenated products and services comes growth.

The simple Keynesian model used to do similar analysis is as follows:

AD=C+I+G+(X-M)

C=Consumer Spending

I=Investment

G=Government Spending

X-M=Exports minus Imports. 

In the model when a shock has occurred government can increase spending to improve other areas. The problem with prolonged government spending is that it throws the equilibrium out of balance as that spending must either be paid for by increasing taxes or increasing debt.  It is better, at least in the long-run, to improve upon the market principles of creating more relevant value-laden products and services for exportation. Improved exportation improves upon the fundamentals of the local economy, improves labor opportunities, increases tax revenues through expanded economic activity, and develop higher levels of sustainable growth. Where government does wish to spur activities it should focus on those areas where it improves upon efficiency for multiple industries such as ports, collaborative development, infrastructure, improved market information, market hubs, drawing foreign investment, educational improvements for labor/innovation development, etc. It is important to remember that government spending and influence should be to improve upon the economic fundamentals and the environment versus short-term purchasing of inefficient economic activity.

Ha, S. & Swales, K. (2012). The export-base model with supply-side stimulus to the export sector. Annals of Regional Science, 49 (2).

Wine Review: Kendall-Jackson Vintner's Reserve Summation

The Kendall-Jackson Vintner’s Reserve Summation is a light aroma California blend. It contains flavors of raspberry jam, black cherry, chocolate and pomegranate. It is blood red color with deep contour. The wines contains a blend of 28% Zinfandel, 27% Merlot, 18% Syrah, 14% Cabernet Sauvignon, 7% Petite Sirah, 3% Grenache, 2% Petit Verdot. The mix offers quick tears and slightly bitter tannin taste. 

It is an everyday household wine that works well with meat, heavy cheese, and spicy foods. The type of pairing is more on par with heavy steak, greasy burgers, and thick sauced pasta. Cheese offerings could include goat cheese, blue cheese, Muenster, and cheddar. Spicy foods such as Cajun, Thai, and Mexican may also work well.  

The Kendall Jackson winery is a family owned affair that seeks to offer high quality products. They grow their grapes in the cool air of Northern California mountain side. The company seeks to maintain sustainability in their products. They continually develop methods to protect the environment while still offering a solid product.

Bonding in Online Communities

Group attachment is an important aspect of retaining and maintaining customers. As groups begin to identify and interact with new members, they build additional identities with the service or product. Research by Yuquing Ren, et. al (2012), focuses on communication and the understanding of identity, bond, and community identity in online forums. Their study helps highlight how different types of attachment strengthen online interaction and customer retention. 

The far majority of business that seeks to build online communities fail to attract a critical mass of customers even when over a million dollars have been spent (Worthen, 2008).  The primary problem is that they have not been able to create and develop a level of attachment among members. Customers simply come and disappear after a few posts. 

Understanding that there is identity attachment, bond attachment and community attachment can help in fostering the right type of activities that create positive identity with the service. People must feel connected to other members of the group if they are to return to the site on a regular basis. 

Identity attachment can be seen as attachment to members who are similar in appearance or other difference that separates them. It is a primarily visual and surface type identity. Bond based attachments are focused more on connection to group members and seeing similarity in belief, interests or values. Group based attachment is focused on connecting to an entire community of online users. 

The researchers found that identity based attachment is much easier to foster in online communities. One generally must provide an identity, familiarity around products, and in and out-group type dynamics to encourage retention (i.e. you’re different because you use our service). Bond based and community based attachment requires the ability to have personal communications. This is much more akin to social networking than it is other types of online communities. 

Online communities act in the same manner as real life communities. Communication is the key component that allows people to feel connected to others and form an identify around particular aspects of interest. In the online world identity groups and community groups are easier to establish based upon the specific and genera interest in products or identity. Social bonding is more difficult and takes considerable amount of time and energy. It is difficult to determine precisely when and how long bond identity can be formed. However, the use of profiles and communication around topics can encourage this knowledge of other members.

Worthen, B. (July 16,2008). Why most online communities fail. Wall Street Journal.

Yuqing Ren, et. al. (2012). Building member attachment in online communities: applying theories of group identity and interpersonal bonds. MIS Quarterly, 36 (3).

Synergy Development in Economic Hubs

Successful development in Southeast Asia often rests partly in foreign direct investment and multinational firms. The author studied the investments between Malaysia and Singapore to determine that two-way investments embedded within business networks fostered synergy for economic growth (Yeung, 1998). It is a process of creating linkages between two economies, or entities, to ensure they develop from each other to create products for the market. 

What makes this process possible is that Malaysia and Singapore invest in each other’s economies. For example, Singapore invests primarily in services within Malaysia’s primary manufacturing base. Malaysia becomes an exporter of finished products and returns investment profits back to companies in Singapore. 

As the cross regional investments increase so does the business connection between the areas. The use of these connections and cross-capital investments creates a type of synergy based upon the varying skill sets embedded within each economy. Together they are able to provide stronger and better products and services that have more appeal on the market. 

When countries develop they change from importers to exporters (Dunning, 1998). This happens when the environment is conducive to local offerings; competitive strategy effectively reflects that need and the organizations are aligned to provide adequate products/services (Porter, 1990).  The area must align its business operations and offerings to the market need to effectively grow. 

Firms do not need to be owned by the exporting locality but the region should be the home location where investments turn into exports (Porter, 1986). The firms were the primary source of success in creating synergy. At a firm level it was these personal and business connections between companies that helped to create greater investment and cooperation for economic growth (Chandler, 1990). 

Most of the major firms from each country have cross operations. These cross operations connect to other networks within the countries and begin to share resources and knowledge. Significant competitive advantages can arise when companies from different countries and firms work together (Yeung, 1998). These are a result of:

-       Long-term relationships that reduce business uncertainty. 

-       Shared resources and information that offer “first mover” advantages.

-       Increased credit worthiness that improves financial flow.

-       Once established the system protects itself. 

Chandler, A. (1990) Scale and Scope: The Dynamics of Industrial Capitalism. Harvard University Press, Cambridge, MA.

Dunning, J. (1998)  Explaining International Production. Unwin Hyman, London.

Porter, M. (1986) Competition in global industries: a conceptual framework, in PO RT ER M. E. (Ed) Competition in Global Industries, pp. 15± 60. Harvard Business School Press, Boston.

Porter, M. (1980). The Competitive Advantage of Nations. Macmillan, London.

Yeung, H. (1998). Transnational economic synergy and business networks. Regional studies, 22 (8). 

Yeung, H. (1998a) The political economy of transnational corporations: a study of the regionalisation of Singaporean firms, Pol. Geogr., 17, 389± 416.

Communication Creates Higher Cognitive Models for Team Building

Workplace communication and cross-culture interaction can help foster greater levels of collaborative effort. A paper by Huber & Lews (2011) highlights how heuristics and bias are a platform for first understanding others but additional information creates stronger cognitive models. It is these models within groups or across groups that adjust overtime to create mutual development. 

When individuals understand each other’s cognitive models they create cross-understanding (Huber & Lewis, 2010). Cross-understanding can also occur on a group level whereby a cognitive model for a group and their vantage point has been developed. Knowing how your communication partners think and understand can be beneficial for relating information in a way in which it is palatable and creating shared understandings.

Shared understandings range from low to high in terms of their accuracy and quantity of information. Some may know very little about other groups while some may have a great deal of experience. This is a level of shared social theory or shared social understanding. This is generally based in familiarity, cross-communication, and reflection. Even members within the same group may have different understandings of others even though they have shared similar traits. 

 People come to understand others through default templates that are full of assumptions. As they interact with others, communicate, share experiences, and see how others act in certain situations they come to update those templates. It is a process of offering new information based within real life experience. 

Conflict is often caused by misunderstandings or unreasonable behavior. The more groups interact and share relevant information the better the decisions of the group. This process can only work if members are free to talk, share ideas, and brainstorm the possibilities. Group think occurs when individuals are not free to communicate leading to one sided vantage points and strategies. 

Over compliance to group norms, assumptions and rules creates 1.) a lack of new information, and 2.) poorer overall decisions that limit cross understanding.  Group assumptions based on heuristics create faster reactions but also limit the potential to be accurate in decision-making. Quick assumptions are regularly faulty as they are confined by a lack of available information. 

The paper brings forward concepts that may be useful to businesses that are either in the process of developing stronger teams or would like to reduce encampment within their ranks. People often choose to work with others that are similar to themselves. Each brings forward their own cognitive model based with quick heuristic platforms. As they interact with each other it broadens their ability to understand the other. When these cognitive platforms are different than other members of the same group there is pressure overtime to solidify them into shared conscious understandings (i.e. the stream of conscious). 

Huber, G. & Lewis, K. (2011). Cross-understanding and shared social theories. Academy of Management Review, 36 (2). 

Huber, G. P., & Lewis, K. 2010. Cross-understanding: Implications for group cognition and performance. Academy of Management Review, 35: 6–26.