Chapter 9

Emerging Markets

Emerging MarketsEconomic 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 EconomicDevelopment System

More-Developed Countries (MDC)More-Developed Countries (MDC)

Less-Developed Countries (LDC)Less-Developed Countries (LDC)

Least-Developed Countries (LLDC)Least-Developed Countries (LLDC)

Newly Industrialized CountriesGrowth 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 6,243.2 214.3 42,298 3,268,200

Brazil 1,670.1 22.1 2,450 222,195

Japan 1,115.6 26.5 22,694 857,273

Colombia 12.6 3.3 4,154 36,000

Germany 618.2 43.9 4,145 440,400

Kenya 8.3 2.7 110 3,000

Mexico 242.3 26.5 3,679 150,800

Spain 318.0 15.3 2,959 141,000

India 1,100 62.4 1,839 380,100

South Africa 55.4 21.4 1,597 182,400

China 170 58.3 4,927 983,700

Highways* Railways Trucks Electricity(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. 59-65. 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 MarketsIV. Marketing in a Developing Country

1) Level of Marketing Development2) 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

AsiaASEAN^ 413.7 $ 508.4 $ 12,192 $ 464.6CEA (Chinese Economic Area)‡ 1,188.0 435.6 367 135.9India 870.0 238.3 274 42.2South Korea 43.7 296.8 6,799 150.6

Latin AmericaMexico 89.5 333.3 3,722 85.9Argentina 33.1 228.8 6,912 21.2Brazil 156.8 409.2 2,609 55.8

AfricaSouth Africa 39.8 114.8 2,882 17.1

EuropePoland 38.4 83.6 2,178 35.6Turkey 58.8 156.0 2,747 38.9

Possible AdditionsColombia 33.4 43.5 1,303 12.3Venezuela 20.3 60.4 2,984 25.2

Population GDP GDP Trade*(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. 59-65. For additional information, see "Indicators of Market Size for 115 Countries,” Crossborder Monitor, August 27, 1997, p.4.

The Americas

CUBA

CANADA

UNITED STATES

MEXICO

Alaska(United States)

Hawaii(United States)

BRAZIL

BOLIVIA

PARAGUAY

URUGUAY

AR

GE

NTI

NA

PERUECUADOR

VENEZUELA

Montreal

PACIFIC OCEAN

GUYANA SURINAME FRENCH GUIANA

GUATEMALA

ST. SALVADOR

COSTA RICA

PANAMA

GREENLAND (DENMARK)

CH

ILE

Toronto

DetroitChicago

Los Angeles

San Francisco

Dallas

COLOMBIA

HONDURAS

NICABAGUA

Miami

JAMAICA

HAITI

Buenos Aires

Belo Horizonte

Rio de Janeiro

Sao Paulo

Economic and Social Data for Selected Countries

United States $ 741,340 18.1% $221,800 5.4% 5.1 560,300 99.5%$45,579

Argentina 16,952 38.8% 2,332 5.3% 5.3 96,000 93.9%2,336

Brazil 81,934 31.2% 12,799 4.9% 3.5 169,488 77.8%1,559

Colombia 9,264 35.2% 1,597 6.1% 1.5 29,353 85.2% 410

Mexico 57,900 33.7% 12,066 7.0% 0.7 130,000 87.6 %4,355

Venezuela 15,501 43.2% 3,679 10.2% 2.6 *28,400 84.7%36.5

Consumer Spending Hospital Number Literacy Tourism

Food Percent Clothing Percent Beds per of (Percent) Receipts

($ million) of ($ million)** of (000s) Doctors ($ million)**

Country Total* Total* Population

* Percent of all consumer spending.

** In U.S. dollars, basis 1988.

Eastern Europe and the Baltic States

ESTONIA

LATVIA

LITHUANIA

POLAND

CZECHREPUBLIC SLOVAKIA

HUNGARYROMANIA

BULGARIA

ALBANIA

YUGOSLAVIA

MACEDONIA

BOSNIA ANDHERCEGOVINA

CR

OA

TIA

GREECE

SLOVENIA

TURKEY

BalticSea

BlackSeaAdriatic Sea

TyrmenianSea

Gulf of Finland

AegeanSea

Eastern European Markets

Population GDP GDP Exports Imports(millions) ($ billions) ($ per capita) ($ millions) ($ millions)

Albania 3.28 $ 2.7 $ 820 $ 80$ 147

Bosnia/Herzegovina (*) 2.66 0.8 300 NA

NA

Bulgaria 9.00 10.1 1,220 4,303 3,271

Croatia (*) 4.78 26.3 5,600 4,6337,582

Czech Republic(**) 10.30 52.0 5,050 14,57516,284

Hungary 10.30 45.7 4,505 19,10015,224

Macedonia(*) 2.05 4.8 2,400 1,2441,420

Poland 38.40 135.3 3,500 25,75142,307

Romania 22.80 34.8 1,544 8,38510,131

Slovakia(**) 5.27 20.7 1,763 12,06313,003

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(*) 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

INDIAPAKISTAN

NEPALBHUTAN

BANGLADESH

MYANMAR

LAOS

VIETNAM

CAMBODIA

THAILAND

TAIWAN

S. K0REA

JAPANN. K0REA

PHILIPPINES

Hong Kong

MALAYSIA

SINGAPORESRI LANKA

INDIAN OCEAN

INDONESIA

BRUNEI

Asian Markets - Selected Countries

Australia 18.5 $ 411.0 $ 22,000 $ 52,966$ 61,347

China 1,230.1 917.7 746 148,755132,007

Hong Kong 6.5 173.6 26,701 173,546192,764

India 955.2 437.2 458 30,53734,456

Indonesia 199.9 215.0 1,076 43,28539,456

Japan 126.2 4,199.5 33,277 443,000335,871

South Korea 46.0 476.0 10,361 125,365135,153

Taiwan 21.5 283.3 13,000 111,837103,652

Population GDP GDP Exports Imports(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

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• 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 CharactersJiang Zemin’s Reform Agenda

Living Standards in Selected Countries

Brazil 38,434 4.05 73% 76% 69%Chile 3,216 4.35 70% 59% 88%China 357,064 3.40 90% NA NAColombia 8,482 4.14 76% 64% 87%Ecuador 2,626 4.36 52% 33% 62%Hong Kong 1,797 3.44 98% 80% 93%India 185,048 5.00 10% 5% 16%Indonesia 43,065 4.50 12% 15% 30%Japan 40,548 3.09 93% 65% 98%Peru 5,057 4.65 49% 43% 48%Philippines 12,750 5.37 NA NA NASingapore 815 3.67 48% 42% 37%South Africa 13,300 3.37 96% 35% 90%United States 100,308 2.62 99% 99% 99%

Percent of HouseholdsHouseholds Persons per Piped Flush Electric

(000) Household Water Toilers Lighting

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

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Which of the Following have you Purchased in the Past Three Months?

Soft drinks 96 90 93 83 91 94

Fast-food 94 94 91 70 86 85

Athletic footwear 59 40 54 33 30 49

Blue jeans 56 39 62 45 42 44

Beer* 46 50 60 46 57 57

Cigarettes* 24 33 30 38 39 40

Product Percent Percent Percent Percent Percent Percentin in in in in in

United Australia Brazil Germany Japan UnitedStates Kingdom

* 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 care 14% 13% 7% 5% 6% 6% 3% 5%3%

Education 8% 6% 12% 5% 7% 5% 10% 5%4%

Transport/communications 14% 13% 13% 12% 8% 6% 8% 13%

7%

Appliances/other durables 30% 31% 30% 25% 35% 14% 22% 24%

13%

U.S. Germany Singapore Mexico Poland Iran Kenya Thailand India

SOURCE: For additional data, see Ricardo Sookdeo, "The New global consumer."Fortune, Autumn-Winter 1993, pp. 68-72.

Living Standards in Selected Countries

Brazil 38,434 4.05 73% 76%69%

Chile 3,216 4.35 70% 59%88%

China 357,064 3.40 90% N/AN/A

Colombia 8,482 4.14 76% 64%87%

Ecuador 2,626 4.36 52% 33%62%

Hong Kong 1,797 3.44 98% 80%93%

India 185,048 5.00 10% 5%16%

Indonesia 43,065 4.50 12% 15%30%

Japan 40,548 3.09 93% 65%98%

Peru 5,057 4.65 49% 43%48%

Philippines 12,750 5.37 NA N/AN/A

Singapore 815 3.67 48% 42%37%

South Korea 13,300 3.37 96% 35%90%

United States 100,308 2.62 99% 99%99%

Percent of HouseholdsCountry Household Persons per Piped Flush Electric

(000) Household Water Toilets Lighting

SOURCE: Demographic Yearbook 1997 (New York: United Nation, 1997); and International Marketing Data and Statistics, 1997 (London: Euromonitor Publication, 1997)Irwin/McGraw-Hill

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