The four determinants in diamond are not only interrelated but they also reinforce
each other as a system. That is the effect of one determinant is dependent on the state of
others.51 When it comes as a system, the combination of each effect of one determinant
would not be only a summation of the total effect; the total competitiveness would also
count on the result from the interactions among each variable within the diamond, which
could be both negative and positive reinforcement. A complex interaction in the diamond
system would give the nation a sustainable competitive advantage since it is difficult for
other nations to imitate the system.
The four determinants of national advantage reinforce each other and multiple over
time in fostering competitive advantage in a nation.
52 These are the examples on how each
variable are related:
Firm strategy, structure, and rivalry: [Large, growing or sophisticated home
demand], [the existence of related and supporting industries], and [sufficient and qualified
factor conditions] support a nation’s firms to implement a proper strategy and compete
effectively.
Demand condition: Intense rivalry makes home demand larger and more
sophisticated. Sophisticated factors attract foreigners such as students or expatriates into a
country (increased quantity demand) and upgrade the quality of buyers. Related and
supporting industries increase the income (through more industrial output) and brain
(knowledge spillovers) for buyers.53
Related and supporting industries: A group of domestic competitors encourages the
formation of more specialized suppliers and related industries. Large or growing domestic demand stimulates the growth and deepening of supplier industries. Basic and particularly
specialized factor pools are transferable to related and supporting industries.