Emerging MarketsChapter

9

Stages of Economic Development

1. The Traditional Society

2. The Pre Conditions for Take-off

3. The Take-Off

4. The Drive to Maturity

5. The Age of High Mass Consumption

SOURCES: Walt W. Rostow, The Stages of Economic Growth 2d ed. (London: Cambridge University Press, 1971), p.10.Irwin/McGraw-Hill

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United Nations EconomicDevelopment System

More-Developed Countries (MDC)More-Developed Countries (MDC)

Less-Developed Countries (LDC)Less-Developed Countries (LDC)

Least-Developed Countries (LLDC)Least-Developed Countries (LLDC)

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Newly Industrialized CountriesGrowth Factors

Political Stability

Economic 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

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Infrastructure of Selected Countries

United States 6,243.2 214.3 49,259 13,696

Brazil 1,670.1 22.1 2,540 1,925

Japan 1,115.6 26.5 21,392 8,182

Colombia 12.6 3.3 4,154 1,147

Germany 618.2 43.9 3,174 6,680

Kenya 8.3 2.7 110 105

Mexico 242.3 26.5 3,773 1,898

Spain 318.0 15.3 3,360 4,728

India 1,100.0 62.4 2,567 485

South Africa 55.4 21.4 1,853 5,020

China 170.0 58.3 3,591 946

Highways* Railways Trucks Electricity(paved km) (km) and Buses Production

Country (000) (000) in Use (000) (kwh per head)

*Includes unpaved and paved.SOURCES: For additional information, see International Marketing Data and Statistics, 19997 (London: Euromonitor Pulications, 1997); and “Indicators of Market Size for 115 countries, “

Country Monitor, December 25, 2000.Irwin/McGraw-Hill

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Common Traits of 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 of economic reform.

Are of major political importance within their regions.

Are "Regional Economic Drivers".

Will engender further expansion in neighboring markets as they grow.

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Big Emerging Markets

AsiaASEAN^ 434.8 $666.0 $ 15,317 $ 1,294.8CEA (Chinese Economic Area)‡ 1,205.0 1,374.6 1,141 1,109.0India 10,028.0 437.2 458 63.3South Korea 43.7 476.0 10,063 280.5

Latin AmericaMexico 97.4 486.1 4,992 328.4Argentina 35.7 283.1 7,740 53.6Brazil 158.6 551.8 3,305 108.6

AfricaSouth Africa 41.4 147.8 3,570 59.4

EuropePoland 38.7 135.3 3,500 26.4Turkey 58.6 189.2 3,027 63.4

Possible AdditionsColombia 41.6 91.5 2,201 24.9Venezuela 23.7 102.1 4,307 40.9

Population GDP GDP Trade*(millions) ($ billions) (per capita) ($ billions)

* 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: For additional information, see “indicators of Market Size for 115 countries, ” Country Monitor. December 25, 2000. “Direction of Trade Statistics Yearbook, 1999. International Monetary Fund, 2000, and visit www.stat-usa.gov/bems/bemschi/bemschi.html/.Irwin/McGraw-Hill

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The Americas

CUBA

CANADA

UNITED STATES

MEXICO

Alaska(United States)

Hawaii(United States)

BRAZIL

BOLIVIA

PARAGUAY

URUGUAY

AR

GE

NTI

NA

PERUECUADOR

VENEZUELA

Montreal

PACIFIC OCEAN

GUYANA SURINAME FRENCH GUIANA

GUATEMALA

ST. SALVADOR

COSTA RICA

PANAMA

GREENLAND (DENMARK)

CH

ILE

Toronto

DetroitChicago

Los Angeles

San Francisco

Dallas

COLOMBIA

HONDURAS

NICARAGUA

Miami

JAMAICA

HAITI

Buenos Aires

Belo Horizonte

Rio de Janeiro

Sao Paulo

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Economic and Social Data for Selected Countries

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

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

* Percent of all consumer spending.

** In U.S. dollars, basis 1988.

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Eastern Europe and the Baltic States

ESTONIA

LATVIA

LITHUANIA

POLAND

CZECHREPUBLIC SLOVAKIA

HUNGARYROMANIA

BULGARIA

ALBANIA

YUGOSLAVIA

MACEDONIA

BOSNIA ANDHERCEGOVINA

CR

OA

TIA

GREECE

SLOVENIA

TURKEY

BalticSea

BlackSeaAdriatic Sea

TyrmenianSea

Gulf of Finland

AegeanSea

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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 4,6337,582

Czech Republic(**) 10.30 52.0 5,050 14,57516,284

Hungary 10.30 45.7 4,505 19,10015,224

Macedonia(*) 2.05 4.8 2,400 1,2441,420

Poland 38.40 135.3 3,500 25,75142,307

Romania 22.80 34.8 1,544 8,38510,131

Slovakia(**) 5.27 20.7 1,763 12,06313,003

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(*) Former republics of Yugoslavia.(**) Former republics of Czechoslovakia.

Irwin/McGraw-Hill

Sources: “Indicators of Market Size for 115 Countries,” Country Monitor,December 25, 2000; and International Trade Statistics yearbook (New York:United Nationa, 2999).

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Asia

MONGOLIA

CHINA

INDIAPAKISTAN

NEPALBHUTAN

BANGLADESH

MYANMAR

LAOS

VIETNAM

CAMBODIA

THAILAND

TAIWAN

S. K0REA

JAPANN. K0REA

PHILIPPINES

Hong Kong

MALAYSIA

SINGAPORESRI LANKA

INDIAN OCEAN

INDONESIA

BRUNEI

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Asian Markets - Selected Countries

Australia 18.5 $ 411.0 $ 22,000 $ 52,966$ 61,347

China 1,230.1 917.7 746 148,755132,007

Hong Kong 6.5 173.6 26,701 173,546192,764

India 955.2 437.2 458 30,53734,456

Indonesia 199.9 215.0 1,076 43,28539,456

Japan 126.2 4,199.5 33,277 443,000335,871

South Korea 46.0 476.0 10,361 125,365135,153

Taiwan 21.5 283.3 13,000 111,837103,652

Population GDP GDP Exports Imports(millions) ($ billions) ($ per capita) ($ millions) ($ millions)

SOURCES: “Indicators of Market Size for 115 Countries,” Country Monitor. December 25, 2000; and S.T.E.T.Irwin/McGraw-Hill

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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.

Capitalism with Chinese CharactersJiang Zemin’s Reform Agenda

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Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

India’s Five-Point Agenda

1. The improvement of the investment climate.

2. The development of a comprehensive WTO strategy.

3. The reformation of the agriculture, the food processing, and the small-scale industry.

4. The elimination of red tape

5. The institution of better corporate governance.

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Living Standards in Selected Countries

Brazil 38,434 4.05 73% 76% 69%Chile 3,216 4.35 70% 59% 88%China 357,064 3.40 90% NA NAColombia 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 NASingapore 815 3.67 48% 42% 37%South Africa 13,300 3.37 96% 35% 90%United States 100,308 2.62 99% 99% 99%

Percent of HouseholdsHouseholds Persons per Piped Flush Electric

(000) Household Water Toilers Lighting

SOURCES: For additional data, see Demographic Yearbook 1997 (New York: United Nations, 1997); and International Marketing Data Statistics, 18th ed. (London: Euromonitor Publications, 1997).

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Which of the Following have you Purchased in the Past Three Months?

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

Product Percent Percent Percent Percent Percent Percentin in in in in in

United Australia Brazil Germany Japan UnitedStates Kingdom

* Among adults 18+. Source: Yankelovich Clancy Shulman.

SOURCE: Nancy Giges, "Global Spending Patterns Emerge," Advertising Age, November 11, 1991, p. 64.

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Consumption Patterns in Selected Countries (percent of household expenditures)

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%

U.S. Germany Singapore Mexico Poland Iran Kenya Thailand India

SOURCE: For additional data, see Ricardo Sookdeo, "The New global consumer."Fortune, Autumn-Winter 1993, pp. 68-72.Irwin/McGraw-Hill

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Living Standards in Selected Countries

Brazil 38,434 4.05 73% 76%69%

Chile 3,216 4.35 70% 59%88%

China 357,064 3.40 90% N/AN/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/AN/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%

Percent of HouseholdsCountry Household Persons per Piped Flush Electric

(000) Household Water Toilets Lighting

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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