The passage discusses shifting competitive advantages based on labor costs and knowledge over time. It provides examples of how Japan previously enjoyed labor cost advantages in manufacturing but those shifted to other countries like South Korea and now China. Similarly, countries like India and Singapore currently have labor cost advantages in IT and services but those may not be sustained as skills and wages rise in other nations. The passage also discusses how capital flows have become globalized and how regional capital centers alone no longer provide competitive advantages. It emphasizes that sustainable competitive advantages now depend on effectively applying combinations of resources like knowledge in a manner not readily imitable by competitors. Semiconductors are provided as an example of an industry where knowledge, not physical resources, provides the main competitive advantage.