Ch 2. The Global Economic Ch 2. The Global Economic EnvironmentEnvironment

The World Economy – An OverviewThe World Economy – An Overview Economic SystemsEconomic Systems Stages of Market DevelopmentStages of Market Development Balance of PaymentsBalance of Payments Trade PatternsTrade Patterns

The World Economy – An OverviewThe World Economy – An Overview

Capital movements replaces trade as driving Capital movements replaces trade as driving forceforce

Production uncoupled from employmentProduction uncoupled from employment The world economy dominates the sceneThe world economy dominates the scene The struggle between capitalism and The struggle between capitalism and

socialism is oversocialism is over The growth of e-commerce diminishes The growth of e-commerce diminishes

national barriersnational barriers

Economic SystemsEconomic Systems

Market Capitalism – North America and Market Capitalism – North America and Western EuropeWestern Europe

Centrally-Planned Socialism – China, the Centrally-Planned Socialism – China, the former Soviet Union, and Indiaformer Soviet Union, and India

Centrally-Planned Capitalism – Sweden, Centrally-Planned Capitalism – Sweden, and Japanand Japan

Market Socialism – Singapore and Sierra Market Socialism – Singapore and Sierra LeoneLeone

Stages of Market DevelopmentStages of Market Development

Big Emerging Markets (BEMs) – Mexico, Brazil, Big Emerging Markets (BEMs) – Mexico, Brazil, China, and IndiaChina, and India

Low-Income Countries – GNP per capita of $785 Low-Income Countries – GNP per capita of $785 or less - Bangladeshor less - Bangladesh

Lower Middle Income Countries – per capita $786-Lower Middle Income Countries – per capita $786-$3,125 – Poland, Turkey, and Indonesia$3,125 – Poland, Turkey, and Indonesia

Upper Middle Income Countries – per capita Upper Middle Income Countries – per capita $3,126-$9,655 –Malaysia, Brazil, Chile, and $3,126-$9,655 –Malaysia, Brazil, Chile, and HungaryHungary

Marketing Opportunities in LDCs and Marketing Opportunities in LDCs and DCsDCs

Look beyond per capita GNPLook beyond per capita GNP Consider LDC and DCs collectivelyConsider LDC and DCs collectively Weight the cost and benefits of the first to Weight the cost and benefits of the first to

enter their marketsenter their markets Set realistic goals and deadlines for entrySet realistic goals and deadlines for entry

High Income CountriesHigh Income Countries(with GNP higher than $9656)(with GNP higher than $9656)

Group of Seven (G-7): USA, Japan, Group of Seven (G-7): USA, Japan, Germany, France, U.K., Canada, and ItalyGermany, France, U.K., Canada, and Italy

OECD – 29 nationsOECD – 29 nations Triad – Japan, Western Europe, and USATriad – Japan, Western Europe, and USA

Marketing Implications of the Stages Marketing Implications of the Stages of Developmentof Development

Product Saturation LevelsProduct Saturation Levels

Balance of PaymentsBalance of Payments

Current Account and Capital AccountsCurrent Account and Capital Accounts Trade Deficit vs. Trade SurplusTrade Deficit vs. Trade Surplus

Trade PatternsTrade Patterns

World Trade Flows – Figure 2-3World Trade Flows – Figure 2-3 Merchandise Trade vs. Service TradeMerchandise Trade vs. Service Trade