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1.Increased volume of capital movement2.Relationship between productivity and employment3.Emergency of the world economy as the dominant economic unit.4.End of Cold War5.The personal computer revolution and Internet era has diminished the importance of national boundaries. Economic SystemsTraditionally, economists identified 4 main types of economic systems: market capitalism, centrally planned socialism, centrally planned capitalism, market socialism (based on dominant method of resource allocation and resource ownership). (p.45 middle 2 questions)Heritage Foundation classified economies with a number of key economic variables: trade policy, taxation policy, gov. consumption of economic output, monetary policy, capital flows and foreign investment, banking policy, wage and price controls, property rights, regulations, and the black market. oHong Kong and Singapore are ranked first and second in terms of economic freedomVS Zimbabwe, Cuba, and North Korea are ranked lowest—Cuba and North Korea are the only 2 countries where Coca-Cola is not available.A high correlation exists between the degree of economic freedom and the extent to which a nation’s mixed economy is market oriented. However, with some exceptions –Singapore: authoritarian state capitalist. (Nation’s citizen is deprived of free speech, free press and free assembly. Some aspects of “free economies” bear more than a passing resemblance to command-style economic systems.
(p.48 table)STAGES OF MARKET DEVELOPMENT—The World Bank has developed a 4 category classification system that uses per capita gross national income (GNI) as a base. At any point in time, individual country markets are at different stages of economic development.oThe stages provide a useful basis for global market segmentation and target marketing. Categories are shown in table 2-4. A decade ago = China, India, Indonesia, South Korea, Brazil, Mexico, Argentina, South Africa, Poland and Turkey. Today = BRICS (Brazil, Russia, India, China, South Africa). oExperts predict that the BRICS nations will be key players in a global trade. oBRICS gov. will come under pressure as their developing market economies create greater income disparity. *For each of the stages of economic development, special attention is given to the BRICS countries. LOW INCOME COUNTRIES—have a GNI per capita less than $1025. General characteristics are:1.High % of population engaged in agriculture/farming; limited industrialization 2.High birth rates, short life expectancy3.Low literacy rates4.Heavy reliance on foreign aid5.Political instability/unrest6.Concentration in Africa south of the Sahara*13% of world’s population is included in this economic category. Some countries have serious problems that they represent limited opportunities for investment and operations.