Chapter 9 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

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

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

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

Infrastructure of Selected Countries United States 6, ,2983,268,200 Brazil 1, ,450222,195 Japan1, ,694857,273 Colombia ,15436,000 Germany ,145440,400 Kenya ,000 Mexico ,679150,800 Spain ,959141,000 India1, ,839380,100 South Africa ,597182,400 China ,927983,700 Highways* Railways TrucksElectricity (paved km)(km) and Buses Production Country(000)(000) in Use (000) (million kwh) *Includes unpaved and paved. SOURCES: "Big Emerging Markets," Business America, Special Issue 1994, pp 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.

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

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 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.

Big Emerging Markets Asia ASEAN^413.7$ 508.4$ 12,192$ CEA (Chinese Economic Area) ‡ 1, India South Korea , Latin America Mexico , Argentina , Brazil , Africa South Africa , Europe Poland , Turkey , Possible Additions Colombia , Venezuela , PopulationGDPGDPTrade* (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: "Big Emerging Markets," Business America, Special Issue 1994, pp For additional information, see "Indicators of Market Size for 115 Countries,” Crossborder Monitor, August 27, 1997, p.4.

The Americas

Economic and Social Data for Selected Countries United States $ 741, %$221,8005.4%5.1560, %$45,579 Argentina 16, % 2,3325.3% 5.396, %2,336 Brazil 81, %12,7994.9%3.5169, %1,559 Colombia 9, %1,5976.1%1.529, % 410 Mexico57, %12,0667.0%0.7130, %4,355 Venezuela 15, %3, %2.6*28, %36.5 Consumer SpendingHospitalNumberLiteracyTourism FoodPercentClothingPercentBeds perof(Percent)Receipts ($ million)of($ million)**of(000s)Doctors($ million)** CountryTotal*Total*Population * Percent of all consumer spending. ** In U.S. dollars, basis 1988.

Eastern Europe and the Baltic States ESTONIA LATVIA LITHUANIA POLAND CZECH REPUBLIC SLOVAKIA HUNGARY ROMANIA BULGARIA ALBANIA YUGOSLAVIA MACEDONIA BOSNIA AND HERCEGOVINA CROATIA GREECE SLOVENIA TURKEY Baltic Sea Black Sea Adriatic Sea Tyrmenian Sea Gulf of Finland Aegean Sea

Eastern European Markets PopulationGDPGDPExportsImports (millions)($ billions)($ per capita)($ millions)($ millions) Albania3.28$ 2.7$ 820$ 80$ 147 Bosnia/ Herzegovina (*) NANA Bulgaria ,2204,303 3,271 Croatia (*) ,6004,6337,582 Czech Republic(**) ,05014,57516,284 Hungary ,50519,10015,224 Macedonia(*) ,4001,2441,420 Poland ,50025,75142,307 Romania ,5448,38510,131 Slovakia(**) ,76312,06313, (*) 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).

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

Asian Markets - Selected Countries Australia18.5$ 411.0$ 22,000$ 52,966$ 61,347 China 1, ,755132,007 Hong Kong ,701173,546192,764 India ,53734,456 Indonesia ,07643,28539,456 Japan , ,277443,000335,871 South Korea ,361125,365135,153 Taiwan ,000111,837103,652 PopulationGDPGDPExportsImports (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 9-13

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 Characters Jiang Zemin’s Reform Agenda

Living Standards in Selected Countries Brazil 38, %76% 69% Chile 3, %59%88% China 357, %NANA Colombia8, %64%87% Ecuador2, %33%62% Hong Kong1, %80%93% India 185, %5%16% Indonesia 43, %15%30% Japan40, %65%98% Peru5, %43%48% Philippines 12, NANANA Singapore %42%37% South Africa13, %35%90% United States 100, %99%99% Percent of Households HouseholdsPersons perPiped FlushElectric (000)HouseholdWaterToilersLighting 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 9-16

Which of the Following have you Purchased in the Past Three Months? Soft drinks Fast-food Athletic footwear Blue jeans Beer* Cigarettes* ProductPercentPercentPercentPercentPercentPercent inininininin UnitedAustraliaBrazilGermanyJapanUnited StatesKingdom * Among adults 18+. Source: Yankelovich Clancy Shulman. SOURCE: Nancy Giges, "Global Spending Patterns Emerge," Advertising Age, November 11, 1991, p. 64.

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 care14%13%7%5%6%6%3%5%3% Education8%6%12%5%7%5%10%5%4% Transport/ communications 14%13%13%12%8%6%8%13%7% Appliances/ other durables30%31%30%25%35%14%22%24%13% U.S.GermanySingaporeMexicoPolandIranKenyaThailandIndia SOURCE: For additional data, see Ricardo Sookdeo, "The New global consumer." Fortune, Autumn-Winter 1993, pp

Living Standards in Selected Countries Brazil 38, %76%69% Chile 3, %59%88% China357, %N/AN/A Colombia 8, %64%87% Ecuador2, %33%62% Hong Kong1, %80%93% India185, %5%16% Indonesia43, %15%30% Japan 40, %65%98% Peru 5, %43%48% Philippines12, NAN/AN/A Singapore %42%37% South Korea 13, %35%90% United States100, %99%99% Percent of Households CountryHouseholdPersons perPiped FlushElectric (000)Household WaterToiletsLighting SOURCE: Demographic Yearbook 1997 (New York: United Nation, 1997); and International Marketing Data and Statistics, 1997 (London: Euromonitor Publication, 1997) Irwin/McGraw-Hill 9-19