exam 3 cheat sheet - The distinction between advanced...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
The distinction between advanced economies, developing economies, and emerging markets Advanced economies - post-industrial countries characterized by high per-capita income, highly competit ive industrie s, and well- develop ed commer cial infrastru cture largely transfor med from manufac turing into service- based economi es half of world GDP, half of product trade, 3/4 of trade in services democra tic multipar ty systems capitalis m large purchasi ng power, few restrictio ns, largest MNEs Develo ping econom ies- Low- income countrie s characte rized by limited industria lization and stagnant economi es low discretio nary incomes , high birthrate s, high infant mortalit y, malnutri tion, short life expecta ncy, illiteracy , and poor educatio n systems, lack of adequat e health care - severely indebted governm ents, bureaucr acy and red tape Emergi ng market s- subset of former developi ng economi es that have achieve d substant ial industria lization, moderni zation, and rapid economi c growth since the 1980s - middle class demandi ng consum er products , business demand for technolo gy and equipme nt, home to niche markets, platform s for manufac turing by MNEs, large reserves of raw material s and natural resource s - enjoying rapidly improvin g living standard s and a growing middle class with rising economi c aspiratio ns attractiv e destinati on for exports, FDI, and sourcing usually two sets of economi es- those in urban areas and those in rural ares transiti on econom ies- subset of emergin g markets that have transfor med from centrally planned economi es into liberaliz ed markets low-cost labor, knowled ge workers, governm ent support, low-cost capital, powerful and highly network ed conglom erates privatiz ation- transfer of state- owned industrie s to private concern s provides opportu nities for foreign firms to enter these markets by purchasi ng former state enterpris es - new global challen gers- top firms from rapidly developi ng emergin g markets that are fast becomin g key contend ers in world markets Estimat ing the true potenti al of emergi ng market s Per capita income as an indicat or of market potenti al PPP- in the long run exchang e rates should move toward levels that would equalize the prices of an identical basket of goods and services in any two countrie s adjusted per capital GDP represen ts the amount of products that consum ers can buy in a given country, using their own currency and consiste nt with their own standard of living Big Mac Index: compare s the prices on actual exchang e rates to those based on the PPP price of big macs 4 reasons to be cautious : manager s must adjust the numbers for the existenc e of an informal econom y (transac tions not yet recorded / left out of the nations GDP) great majority of the populati on is on the low end of the income scale in emergin g markets and developi ng economi es househo ld income is several times larger tan per- capita income because of multiple wage earners governm ents in
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/04/2008 for the course MSC 310 taught by Professor Holt during the Spring '08 term at Michigan State University.

Page1 / 4

exam 3 cheat sheet - The distinction between advanced...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online