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Chapter 9

Chapter 9. Emerging Markets. Emerging Markets. Economic Development - an increase in production that results in an increase in a nation’s GDP. I. Theories of Economic Development A) Rostow’s Modernization Theory 1) Traditional Society 2) Transitional Society 3) Take-off

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Chapter 9

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  1. Chapter 9 Emerging Markets

  2. Emerging Markets Economic Development - an increase in production that results in an increase in a nation’s GDP. I. Theories of Economic Development A) Rostow’s Modernization Theory 1) Traditional Society 2) Transitional Society 3) Take-off 4) Technological Maturity 5) High Mass Consumption

  3. Emerging Markets Theories of Economic Development (cont.) B) Radical Theories C) Institutional theories II. NICs III. Infrastructure and Development

  4. United Nations Economic Development System More-Developed Countries (MDC) Less-Developed Countries (LDC) Least-Developed Countries (LLDC)

  5. Newly Industrialized Countries Growth Factors • Political Stability • Economic, Political, and Legal Reforms • Entrepreneurship • Central Planning • Outward Orientation • Factors of Production • Industries Targeted for Growth • Financial Incentives • Privatized State-Owned Enterprises • Large, Accessible Markets • Low Tariffs

  6. Infrastructure of Selected Countries Highways* Railways Trucks Electricity (paved km) (km) and Buses Production Country (000) (000) in Use (000) (million kwh) United States 6,243.2 214.3 42,298 3,268,200 Brazil 1,670.1 22.1 2,450 222,195 Japan 1,115.6 26.5 22,694 857,273 Colombia 12.6 3.3 4,154 36,000 Germany 618.2 43.9 4,145 440,400 Kenya 8.3 2.7 110 3,000 Mexico 242.3 26.5 3,679 150,800 Spain 318.0 15.3 2,959 141,000 India 1,100 62.4 1,839 380,100 South Africa 55.4 21.4 1,597 182,400 China 170 58.3 4,927 983,700 *Includes unpaved and paved. SOURCES: "Big Emerging Markets,"Business America, Special Issue 1994, pp. 59-65. For additional information, see “International Marketing and Statistics, 1997 (London: Euromonitor Publications, 1997) and "Indicators of Market Size for 115 Countries,” Crossborder Monitor August 27, 1997, p.4.

  7. Emerging Markets IV. Marketing in a Developing Country 1) Level of Marketing Development 2) Demand V. Big Emerging Markets VI. The Americas VII. Eastern Europe VIII. Asia

  8. CommonTraitsof Big Emerging Markets • Are physically large. • Have significant populations. • Represent considerable markets for a wide range of products. • Have strong rates of growth or the potential for significant growth. • Have undertaken significant programs or economic reform. • Are of major political importance within their regions. • Are "Regional Economic Drivers". • Will engender further expansion in neighboring markets as they grow.

  9. Big Emerging Markets Population GDP GDP Trade* (millions) ($ billions) (per capita) ($ billions) AsiaASEAN^ 413.7 $ 508.4 $ 12,192 $ 464.6CEA (Chinese Economic Area)‡ 1,188.0 435.6 367 135.9India 870.0 238.3 274 42.2South Korea 43.7 296.8 6,799 150.6 Latin AmericaMexico 89.5 333.3 3,722 85.9 Argentina 33.1 228.8 6,912 21.2 Brazil 156.8 409.2 2,609 55.8 AfricaSouth Africa 39.8 114.8 2,882 17.1 EuropePoland 38.4 83.6 2,178 35.6Turkey 58.8 156.0 2,747 38.9 Possible AdditionsColombia 33.4 43.5 1,303 12.3Venezuela 20.3 60.4 2,984 25.2 * Imports and exports. ^ASEAN includes Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam. ‡CEA consists of the provinces of Southern China, Hong Kong, and Taiwan. SOURCES: "Big Emerging Markets," Business America, Special Issue 1994, pp. 59-65. For additional information, see "Indicators of Market Size for 115 Countries,” Crossborder Monitor, August 27, 1997, p.4.

  10. The Americas GREENLAND (DENMARK) Alaska (United States) CANADA Montreal Toronto UNITED STATES Detroit San Francisco Chicago Los Angeles Dallas Miami MEXICO CUBA HAITI GUATEMALA JAMAICA Hawaii (United States) HONDURAS GUYANA SURINAME FRENCH GUIANA VENEZUELA ST. SALVADOR COLOMBIA NICABAGUA COSTA RICA BRAZIL PANAMA PERU ECUADOR Belo Horizonte BOLIVIA Rio de Janeiro PARAGUAY Sao Paulo URUGUAY PACIFIC OCEAN CHILE ARGENTINA Buenos Aires

  11. Economic and Social Data for Selected Countries Consumer Spending Hospital Number Literacy Tourism Food Percent Clothing Percent Beds per of (Percent) Receipts ($ million) of ($ million)** of (000s) Doctors ($ million)** Country Total* Total* Population United States $ 741,340 18.1% $221,800 5.4% 5.1 560,300 99.5% $45,579 Argentina 16,952 38.8% 2,332 5.3% 5.3 96,000 93.9% 2,336 Brazil 81,934 31.2% 12,799 4.9% 3.5 169,488 77.8% 1,559 Colombia 9,264 35.2% 1,597 6.1% 1.5 29,353 85.2% 410 Mexico 57,900 33.7% 12,066 7.0% 0.7 130,000 87.6 % 4,355 Venezuela 15,501 43.2% 3,679 10.2% 2.6 *28,400 84.7% 36.5 * Percent of all consumer spending. ** In U.S. dollars, basis 1988.

  12. ESTONIA LATVIA LITHUANIA POLAND CZECHREPUBLIC SLOVAKIA SLOVENIA HUNGARY ROMANIA BOSNIA ANDHERCEGOVINA CROATIA BULGARIA YUGOSLAVIA MACEDONIA ALBANIA GREECE TURKEY Eastern Europe and the Baltic States Gulf of Finland BalticSea BlackSea Adriatic Sea TyrmenianSea AegeanSea

  13. Eastern European Markets Population GDP GDP Exports Imports (millions) ($ billions) ($ per capita) ($ millions) ($ millions) Albania 3.28 $ 2.7 $ 820 $ 80 $ 147 Bosnia/Herzegovina (*) 2.66 0.8 300 NA NA Bulgaria 9.00 10.1 1,220 4,303 3,271 Croatia (*) 4.78 26.3 5,600 4,633 7,582 Czech Republic(**) 10.30 52.0 5,050 14,575 16,284 Hungary 10.30 45.7 4,505 19,100 15,224 Macedonia(*) 2.05 4.8 2,400 1,244 1,420 Poland 38.40 135.3 3,500 25,751 42,307 Romania 22.80 34.8 1,544 8,385 10,131 Slovakia(**) 5.27 20.7 1,763 12,063 13,003 9-11 (*) Former republics of Yugoslavia. (**) Former republics of Czechoslovakia. Sources: “Indicators of Market Size for 115 Countries,” Country Monitor, December 25, 2000; and International Trade Statistics yearbook (New York: United Nationa, 2999). Irwin/McGraw-Hill

  14. N. K0REA JAPAN MONGOLIA S. K0REA CHINA TAIWAN BHUTAN NEPAL Hong Kong MYANMAR INDIA LAOS PHILIPPINES PAKISTAN VIETNAM BANGLADESH CAMBODIA BRUNEI MALAYSIA THAILAND SRI LANKA SINGAPORE INDONESIA INDIAN OCEAN Asia

  15. Asian Markets - Selected Countries Population GDP GDP Exports Imports (millions) ($ billions) ($ per capita) ($ millions) ($ millions) Australia 18.5 $ 411.0 $ 22,000 $ 52,966 $ 61,347 China 1,230.1 917.7 746 148,755 132,007 Hong Kong 6.5 173.6 26,701 173,546 192,764 India 955.2 437.2 458 30,537 34,456 Indonesia 199.9 215.0 1,076 43,285 39,456 Japan 126.2 4,199.5 33,277 443,000 335,871 South Korea 46.0 476.0 10,361 125,365 135,153 Taiwan 21.5 283.3 13,000 111,837 103,652 9-13 SOURCES: “Indicators of Market Size for 115 Countries,” Country Monitor. December 25, 2000; and S.T.E.T. Irwin/McGraw-Hill

  16. Capitalism with Chinese Characters Jiang Zemin’s Reform Agenda • Restructure state enterprises. SOEs account for about two-fifths of the industrial output but soak up four-fifths of investment. • Strengthen financial markets. Expand and ensure the integrity of capital markets. • Sell state assets. Sell off all but 1,000 of China’s 305,000 state enterprises and allow some to go bankrupt. • Build social services. Create housing, pension programs, and other services to relieve burdens on SOEs and to care for millions who may lose jobs. • Slash tariffs. Reduce average tariffs to 17 percent in 1997 and to 15 percent by 2000 as part of China’s bid to join the World Trade Organization.

  17. Living Standards in Selected Countries Percent of Households Households Persons per Piped Flush Electric (000) Household Water Toilers Lighting Brazil 38,434 4.05 73% 76% 69% Chile 3,216 4.35 70% 59% 88% China 357,064 3.40 90% NA NA Colombia 8,482 4.14 76% 64% 87% Ecuador 2,626 4.36 52% 33% 62% Hong Kong 1,797 3.44 98% 80% 93% India 185,048 5.00 10% 5% 16% Indonesia 43,065 4.50 12% 15% 30% Japan 40,548 3.09 93% 65% 98% Peru 5,057 4.65 49% 43% 48% Philippines 12,750 5.37 NA NA NA Singapore 815 3.67 48% 42% 37% South Africa 13,300 3.37 96% 35% 90% United States 100,308 2.62 99% 99% 99% 9-16 SOURCES: For additional data, see Demographic Yearbook 1997 (New York: United Nations, 1997); and International Marketing Data Statistics, 18th ed. (London: Euromonitor Publications, 1997). Irwin/McGraw-Hill

  18. Which of the Following have you Purchased in the Past Three Months? Product Percent Percent Percent Percent Percent Percent in in in in in in United Australia Brazil Germany Japan United States Kingdom Soft drinks 96 90 93 83 91 94 Fast-food 94 94 91 70 86 85 Athletic footwear 59 40 54 33 30 49 Blue jeans 56 39 62 45 42 44 Beer* 46 50 60 46 57 57 Cigarettes* 24 33 30 38 39 40 * Among adults 18+. Source: Yankelovich Clancy Shulman. SOURCE: Nancy Giges, "Global Spending Patterns Emerge," Advertising Age, November 11, 1991, p. 64.

  19. Consumption Patterns in Selected Countries (percent of household expenditures) U.S. Germany Singapore Mexico Poland Iran Kenya Thailand India Food 10% 12% 19% 35% 29% 37% 38% 30% 52% Clothing 6% 7% 8% 10% 9% 9% 7% 16% 11% Gross rent 18% 18% 11% 8% 6% 23% 12% 7% 10% Medical care 14% 13% 7% 5% 6% 6% 3% 5% 3% Education 8% 6% 12% 5% 7% 5% 10% 5% 4% Transport/communications 14% 13% 13% 12% 8% 6% 8% 13% 7% Appliances/other durables 30% 31% 30% 25% 35% 14% 22% 24% 13% SOURCE: For additional data, see Ricardo Sookdeo, "The New global consumer."Fortune, Autumn-Winter 1993, pp. 68-72.

  20. Living Standards in Selected Countries Percent of Households Country Household Persons per Piped Flush Electric (000) Household Water Toilets Lighting Brazil 38,434 4.05 73% 76% 69% Chile 3,216 4.35 70% 59% 88% China 357,064 3.40 90% N/A N/A Colombia 8,482 4.14 76% 64% 87% Ecuador 2,626 4.36 52% 33% 62% Hong Kong 1,797 3.44 98% 80% 93% India 185,048 5.00 10% 5% 16% Indonesia 43,065 4.50 12% 15% 30% Japan 40,548 3.09 93% 65% 98% Peru 5,057 4.65 49% 43% 48% Philippines 12,750 5.37 NA N/A N/A Singapore 815 3.67 48% 42% 37% South Korea 13,300 3.37 96% 35% 90% United States 100,308 2.62 99% 99% 99% 9-19 SOURCE: Demographic Yearbook 1997 (New York: United Nation, 1997); and International Marketing Data and Statistics, 1997 (London: Euromonitor Publication, 1997) Irwin/McGraw-Hill

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