A major shift is occurring in the nature of global competition, but it’s widely misunderstood. Emerging markets are no longer competing solely on price—by offering the lowest-cost manufacturing, for instance. Rather, they are increasingly competing with sophisticated skills in key sectors like health care, software, entertainment, consumer products, and manufacturing. They’re leveraging a fast-growing ability to create economies of expertise and market their specializations anywhere in the world. They are developing and marketing products that are not only cost competitive but as innovative and as high in quality as any produced in developed markets.
A version of this article appeared in the May 2005 issue of Harvard Business Review.