1. Assessment of a Country as a Market or Production Location
4.2 Global markets and business expansion

2. What you need to know
Assessment of a Country as a Market: factors to consider:
levels and growth of disposable income
ease of doing business
infrastructure
political stability
exchange rate
Assessment of a Country as a Production Location
costs of production
skills and availability of labour force
location in trade bloc
government incentives
natural resources
likely return on investment

3. Market Attractiveness – Disposable Income
Disposal income – income that consumers have left to spend after tax
Gross domestic income per capital is a good proxy for the relative levels of disposable income in different international markets
Businesses looking to expand internationally may identify countries with fast-growing income per capita as a key factor
Rising disposable incomes are often associated with the growth of a “middle class” with money to spend on products and services

4. Per Capita Incomes by Region in 2014
Gross domestic product per capita in selected global regions measured at current prices in 2014 (in U.S. dollars)

5. Forecast of the global middle class population from 2009 to 2030, by region (in millions)
Source: Brookings Institution 2016

6. Picking an International Market: World Economic Forum Competitiveness Indicators
Measured by…
Effectiveness of institutions
Protection of property rights, rule of law, corruption
Quality of infrastructure
Quality of transport, communications, energy etc.
Macroeconomic performance
Inflation, fiscal balance, government debt, growth
Health and primary education
Malaria incidence, prevalence of HIV, mortality rates
Higher education and training
Quality of teaching and attainment e.g. in Maths
Efficiency of goods & labour markets
Intensity of competition, tariffs, other barriers
Technological readiness
Internet use, availability of latest technologies
Sophistication of business
Supplier quality, business clusters,
Innovation
Patent applications, research & development spend

7. Countries Judged Most Competitive as a Location for International Business

8. Choosing a Production Location – the Importance of Labour Productivity
Labour productivity can be measured by GDP per hour worked and per worker, and growth in GDP per hour worked. This chart shows GDP per worker for G7 countries in 2015

9. Why is the UK’s Record of Productivity Worse than Other Key Location Options?
Low rate of new capital investment in the UK
Banking crisis affecting lending to businesses
Possible slowing rates of process innovation
Persistent and deep skills shortages in key industries
Relatively low levels of market competition
Low aggregate demand & high spare capacity – under-utilizing resources

10. The Skills and Supply of a Country’s Labour Force is a Key Competitiveness Issue
Returns to research and development and subsequent innovation depend critically on a country’s labour force, which determines their capacity to recognize, assimilate, and apply new technologies
Skills
Workplace training to increase people’s occupational mobility and increase the flexibility of the labour market
Enterprise
Programs for start-ups e.g. Start-Up Chile, Young Innovative Companies in France, Entrepreneurship First (UK)
Mobility
Housing market reforms to improve affordability and geographical mobility
STEM
Investment in improved access to and quality of teaching in STEM subjects (Science, Technology, Engineering and Maths)

11. Exchange Rates Can Significantly Influence the Attractiveness of a Country
Usually, a depreciation of the exchange rate helps to improve the price competitiveness of domestic producers facing competition from imports and also exporters trying to sell in world markets.
ERI exchange rate indices To measure the overall change in the exchange value of a currency, a weighted average of the movements in cross-exchange rates against a basket of other currencies can be used, with the weights reflecting the relative importance of the other currencies, as measured by trade flows between the relevant countries.

12. Ease of Doing Business – Country Rankings Top 10 Countries as a Place to Do Business
Source:

13. Ease of Doing Business – Country Rankings Worst Countries to Do Business
Source:

14. Most attractive regions to establish operations worldwide (2012) ranked by decision-makers in companies

15. Exploring the Attractiveness of the UK as a Manufacturing Location