1. The Global Economic Environment The Coming Boom Wealthy Industrial Countries2.92.7 Developing Countries3.04.8 East Asia7.57.6 South Asia4.85.3 Latin America2.63.4 Eastern Europe*1.02.7 Sub-Saharan Africa2.03.9 Middle East & North Africa1.23.8 *Includes former Soviet Union 1974- 1993 1994- 2003 Real GDP growth, annual average % Source: World Bank, The Economist

2. Economic Systems Capitalist Socialist Mixed

3. Economic Freedom An economic index with consideration of:

4. Country Income Segmentation High Income (Advanced Countries) - Triad - Others Upper Middle Income (NIC's) Lower Middle Income (DC's) Low Income (LDC's) + $9,385 + $3,036 + $765 < $765

5. National Production GrossNational Product (GNP) GrossDomestic Product (GDP)

6. Drawbacks of GNP and GDP Problem of Averages UncountedTransactions Pitfalls of Comparison Question of Growth

7. Estimate of GNP Per Capita at PPP (Selected Countries) Selected Country GNP Per Capita PPP Estimate of GNP Per Capita (U.S. = 100) United States Switzerland Japan Canada Russia Mexico Nigeria India 26,980 40,630 39,640 19,380 2,240 3,320 260 340 26,980 25,860 22,110 21,130 4,480 6,400 1,220 1,400 Purchasing Power Parity

8. The Expanding Triad European Economic Area N. American Free Trade Area Japan and the Tigers Population (million) GNP (billion) GNP Per Capita 393$ 8,354$ 21,248 284 $ 19,831 374 $ 8,293$ 22,134 U.S., Canada, Mexico Hong Kong, Japan, Malaysia, Singapore, South Korea, Taiwan, Thailand 1997 figures % of World: 7%30% % of World: 5%21% % of World: 7%30% EU: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, U.K. EFTA: Iceland, Switzerland $ 5,638

9. Big Emerging Markets: 1997 BEM (Total)$4,248$1,388152952 CEA (Total)1,3181,04651222 China89072331121 Taiwan26812,26311<1 Hong Kong16025,2251<1<1 Brazil5903,591233 Korea, Rep.51211,218221 India3523651417 Mexico3183,323122 Russian Federation3012,018123 Argentina2978,336111 Turkey1842,896111 South Africa1343,096111 Indonesia133667123 Poland1082,770<111 GNP (billion) GNP Per Capita % of World GNP % of World PPP % of World Population Market

10. Big Emerging Markets: 2010 BEM (Total)$7,673$2,082193551 CEA (Total)2,7241,85371721 China1,9521,35751520 Taiwan51221,11511<1 Hong Kong25934,8371<1<1 Korea92518,212221 Brazil8774,384233 India6655441517 Mexico5454,389122 Argentina50112,023121 Russian Federation4662,976122 Turkey3304,117111 Indonesia230948133 South Africa2083,679111 Poland2014,864111 GNP (billion) GNP Per Capita % of World GNP % of World PPP % of World Population Market

11. BOP (Balance of Payments) 1. Definition 2. Double entry system + (inflow) –(outflow)

12. BOP (cont’) 3. Current Account vs. Capital Account 4. Trade Balance

13. Ex: U.S. BOP, 1994-1997 (US$B) 1994199519961997 A. Current Account-123.21-115.22-135.44-155.38 1. Goods: Export FOB 504.45 577.69 613.89 681.27 2. Goods: Imports FOB-668.59-749.57-803.32-877.28 3. Balance on Goods-164.14-171.88-189.43-196.01 4. Services: Credit 199.25 217.80 236.71 256.06 5. Services: Debit-132.45-141.98-152.00-166.09 6. Balance on Goods and Services -97.34-96.06-104.72-106.04 B. Capital Account -.60.10.52.16 Total A + B-123.81-115.12-134.91-155.22 Trade Deficit Reserve