3 define purchasing power parity ppp in per capital

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3) Define Purchasing Power Parity (PPP) In per capital income, to estimate market potential accurately economists estimate real buying power by calculating GDP statistics based on purchasing power parity (PPP). Purchasing Power Parity suggest that an adjustment for prices that reflects the number of goods that consumers can buy in their home country, using their own currency and consistent with their own standard of living. Additionally, in the long run exchange rates should move towards levels that would equalize the prices of an identical group of goods and services in any two countries. 4) Briefly describe risks and challenges of emerging markets. Risks and challenges of emerging markets include political instability, weak intellectual property protection, bureaucracy, red tape, and lack of transparency, poor physical infrastructure, partner availability and resistance. The absence of reliable or consistent governance from recognized government agencies adds to business costs, increases risks and reduces ability to forecast business conditions. Political instability is associated with corruption and weak legal frameworks that discourage inward investment and the development of reliability business environment. Strong laws that protect intellectual property do not exist in many countries or if they do they may not be enforced. Enforcing copyright or shipping pirated merchandise are examples. Administrative rules and excessive requirements for licenses, approvals and paperwork delay business activities. They are typically associated with a lack of transparency, and that the legal and political systems may not be open and accountable to the public. Things like bribery, kickbacks and extortion and be an issue. In emerging markets infrastructure is still in development and many business find they must build their own systems and find solutions to support value chain activities – building roads, installing localized energy sources and developing other systems to conduct business. Many emerging market economies are dominated by 2
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HOMEWORK ASSIGNMENT 1: CHAPTER 1-7, 15 large family owned rather than publicly owned businesses. These are large diversified companies that are privately owned. Family conglomerates operate in industries that include banking, construction and manufacturing where they hold the largest market share in each over several industries in its home country. 5) How is Africa evolving? Several African countries are experiencing economic success despite being stagnant in trade, investment and per capita income. Some regions have become hubs for financial and technological services, mining and agriculture, diamond trading, oil and banking. Africa has become more attractive to businesses and investors for production and operations because of its improving conditions. African governments are doing a better job of managing their national economies, and policy reform has an emphasis on economic and political freedom which is helping drive economic success.
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