Introduction Since its publication in 1990, Michael Porter's book The Competitive Advantage of Nations has attracted much consideration. The book's main analytical tool is the Competitive Advantage Diamond (Figure 1). This model is based on four country-specific “determinants” and two external variables. Porter's four determinants and two external forces interact in a "diamond" of competitive advantage, with the nature of a country's international competitiveness depending on the type and quality of these interactions. However, because it is fundamentally a national model of international competitiveness, the diamond theory is criticized by many international business scholars. Dunning and Rugman point out that the influence on competitiveness of two-way foreign direct investment (FDI) and the influence and interference of foreign governments on trade and investment have been overlooked. Rugman and Collinson also evaluated the model and identified eight areas for comment. This essay will examine Rugman and Collinson's criticisms of Porter's model, focusing on three main areas: the role of foreign direct investment, the influence of foreign governments and multinational enterprises (MNEs), before examining the developments of Porter's diamond with country-specific examples.RUGMAN'S AND COLLINSON'S CRITIQUE OF PORTER'S DIAMOND The eight areas identified for comment and evaluation are: the model is limited by being based on ten countries, which are industrialized or members of a triad; governance is critically important and has been overlooked by Porter; the case, although critical, is difficult to predict or defend against; Porter's model must be applied in terms of company-specific considerations and not in terms of national advantages; Porter outlines only four distinct phases of national competitive development; Porter argues that only outbound foreign direct investment is valuable in creating a competitive advantage and that inbound foreign investment is never the solution to a nation's competitive problems; dependence on natural resources is considered by Porter insufficient to create a globally competitive stature; the model does not adequately address the role of multinationals. FOREIGN DIRECT INVESTMENT Foreign direct investment tends to focus on opportunities in the same continental region. This often reflects attempts by multinationals to build regional networks from their bases. One of the main conceptual problems of Porter's model is due to the narrow definition it applies to foreign direct investment. Porter characterizes only outward FDI as "valuable in creating a competitive advantage" and that inward FDI is "not entirely healthy." It also states that foreign subsidiaries are importers and that this constitutes a source of comparative disadvantage .