Towards A Competitive Malaysia #13

Chapter 3: The Diamond of Development (Cont’d)

Diamond of Development (1)

Modeling after Porter’s diamond of competitive advantage, I have formulated my own conceptual framework of a “Diamond of Development” for a competitive Malaysia. Malaysia with its plural society is a microcosm of the world in this era of globalization. If Malaysia were to be successful, it would offer important lessons for the world.

Like Porter’s, each of the four elements of my diamond of development influences and is in turn being influenced by each of the other three, as captured in the diagram of the cover design. The four are:

• Leadership

• People

• Culture (including institutions)

• Geography.

For a society to blossom, all four elements should ideally be favorable. Of significance is that only one of the four—geography—is the gift of nature, and thus essentially unalterable. A nation is either lucky to have favorable geographic attributes, or it does not. There is not much that can be done to alter that. Singapore is blessed with a deep, protected, natural harbor and located on an important trade route, while Brunei has abundant oil and gas. Those are the realities of geography. The other three—culture, leadership, and people—are not endowed features, and thus could be changed. In the language of biology, geography is an “inherited” attribute; the other three, acquired.

There are six possible paired dynamics. The three important ones are: leaders and people (followers); leaders and culture; and people and culture. The remaining three—leader-geography; people-geography; and culture-geography—play lesser roles. Whether we elect competent or corrupt leaders is our choice, not ordained by God. Likewise, leaders decide whether the citizens should be educated or kept in ignorance. Leaders and people would together determine (through their acceptance and tolerance) whether their institutions (a component of culture) remain strong and honest or weak and corrupt.

One would think that the fourth element—geography—as something solid and neutral, and thus cannot influence or be influenced by the other three factors. Consider this. A river delta can be the source of pestilence, as the Sacramento River delta was in the early part of the last century, plagued with malaria. If that was not enough, there were the frequent floods. With proper leadership and right institutions, in this case the Army Corp of Engineers, levees were built. Today the delta is a rich agricultural area, and home to many marinas and waterfront mansions. The Corp itself was a creation of an enlightened leader (Franklin D. Roosevelt) and his New Deal initiative responding to the massive unemployment of the Great Depression.

Another example would be Cancun, Mexico. Up until the 1970s it was an impoverished fishing village, like similar villages along east coast Malaysia. By employing the skills and knowledge of its planners, the Mexican government successfully transformed Cancun into a Caribbean Riviera. Its previously impoverished fishermen now work in hotels and resorts. For those who still have salt in their veins, they now have a more rewarding career taking wealthy sports fishermen out to sea. These guides earn considerably more than when they were fishing commercially. They are also not depleting their fishery resources as rapidly as before. Instead of breaking their backs hauling their catch, they now have the tourists doing that, and enjoying and paying to do that. A dramatic demonstration of the power of knowledge, effective institutions, and capable leadership to leverage the assets of a country!

I never underestimate the power of corrupt and ineffectual leaders to squander a nation’s wealth, the “curse of bounty.” Vast tracts of Malaysia’s virgin jungle have been denuded with little benefit to the citizens. On the contrary, they are now burdened with soil erosion, landslides, polluted rivers, and flooded homes. With inept leadership and corrupt institutions, even sand could be made scarce in Saudi Arabia. With enlightened leadership and effective institutions, the desert could be made to bloom (California’s Central Valley), turned into a flight testing area (Edwards Air Force Base), or be an arena for testing vehicle land speed (Oregon’s Alvord Desert).

The four elements of my Diamond of Development provide the macro environment that would determine the potential trajectory of development. It is not necessary for all four factors to be favorable. If one is unusually strong, it could initiate the process and stimulate the other three with it. Singapore had an unusually strong and effective leader in Lee Kuan Yew. He was able to pull along the citizens, even changing their traditional habits and culture. If anyone belittles his success in making the Chinese give up spitting in public or hanging their laundry out of their windows, just visit Beijing and Hong Kong. Lee made even the most chauvinistic Chinese learn English; he converted Nanyang University, their pride and joy, into an English-language institution. He was also greatly helped by the British bequeathing many effective institutions.

It is more effective to have all four be favorable, if only slightly, than having only one element be unusually strong. Together and acting synergistically, they would exert a far greater effect.

A lesson from medical therapeutics would help clarify my point. For a long time physicians believed in using single rather than multiple drugs in treating diseases, even if we have to use very high doses and thus risking intolerable side effects. Today, as we are learning from our cancer specialist colleagues, it is far more efficacious to use multiple synergistic drugs in combination and at lower doses instead of a single drug at high doses. There would also be less risk of side effects, or if there were they would be more tolerable.

Likewise with my Diamond of Development; it would be far more effective and much more easily attainable to make small improvements on all four factors than to concentrate on maximizing the favorable attribute of any one factor.

Enhancing all four factors is important for if any one factor is unfavorable or negative, it could drag down the other three. Focusing on improving only one factor would also increase the vulnerability. If we focus on getting a strong leader, he or she could be killed in an accident or be assassinated. Worse, that leader may be strong and effective but in all the wrong areas a la Stalin or Hitler.

If a nation were blessed with all four factors being unusually favorable, there would be the potential of a quantum leap or at least a steep slope of progress. I say potential, because a favorable macro environment alone is not enough. It is the enabling and necessary condition; ultimately progress depends on the collective choices of individual citizens, families, companies, and organizations. It is their aggregate decisions and actions that would determine the fate of a society. This microenvironment too must be nurtured. I will explore this macro- and microenvironment further in the next chapter.

1. Not to be confused with the World Bank’s concept of “Development Diamond.” See

Chapter 4.

Next: Primacy of Individuals