ECONOMIC ENVIRONMENT IN GLOBALCONTEXT

TC/IS/2011/MS/144International Trade

Department of Business & Management StudiesTrincomalee Campus

Eastern University of Sri Lanka

International Trade

Culture

Political

Economic

Legal

Discussion Areas Important of Economic

Environment

Classification of Economies

Developed Economics

Developing Economics

Developed economies effects

Emerging Market

Important of Economic Environment

Statistics Used In Classifications Gross Domestic Product (GDP)Purchasing Power Parity (PPP)Human Development Index (HDI)

Classification of Economies

GoodsServicesValue

Gross Domestic Product

Year

Gross Domestic Product-(2015) GDP1 United States 17,947,0002 China 10,982,829

3 Japan 4,123,258

4 Germany 3,357,614

5 United Kingdom 2,849,345

6 France 2,421,560

7 India 2,185,706

8 Italy 1,815,757

9 Brazil 1,772,589

10 Canada 1,552,386

30 Austria 374,124

33 South Africa 312,957

38 Singapore 292,734

65 Sri Lanka 82,095

183 Federated States of Micronesia 318

185 Palau 287

186 Marshall Islands 183

187 Kiribati 162

188 Tuvalu 33IMF Data

(Millions of US$) (Millions of US$)

Purchasing Power Parity

Purchasing Power Parity adjusts the exchange rate

between countries to ensure that a good is purchased for the same price in the same currency.

The Big Mac Index

Purchasing Power Parity

India -59

South Africa -54

Hong Kong -50

Ukraine -47

Egypt -45

Russia -45

Taiwan -42

Mainland China -41

Malaysia -41

Sri Lanka -37

Belgium 18

Denmark 19

Italy 20

Canada 24

Uruguay 25

Brazil 29

Switzerland 63

Sweden 75

Norway 80

Venezuela 108

Israel -8

Portugal -8

United Kingdom -3

New Zealand -1

Chile 0

United States 0

Costa Rica 1

Greece 3

Austria 5

Netherlands 7

Purchasing Power Parity

Human Development Index (HDI)

which measures people’s satisfaction in three key

areas

• Long and healthy life expectancy

• Quality education equally• Standard of living

VERY HIGH HUMAN

DEVELOPMENT

1 Norway 0.944 2 Australia 0.935

3 Switzerland 0.930

4 Denmark 0.923

5 Netherlands 0.922

6 Germany 0.916

6 Ireland 0.916

8 United States 0.915

9 Canada 0.913

9 New Zealand 0.913

11 Singapore 0.912

HIGH HUMAN

DEVELOPMENT

50 Belarus 0.798

50 Russian Federation 0.798

52 Oman 0.793

52 Romania 0.793

52 Uruguay 0.793

55 Bahamas 0.790

56 Kazakhstan 0.788

57 Barbados 0.785

58 Antigua and Barbuda 0.783

59 Bulgaria 0.782

MEDIUM HUMAN

DEVELOPMENT

106 Botswana 0.698

107 Moldova (Republic of) 0.693

108 Egypt 0.690

109 Turkmenistan 0.688

110 Gabon 0.684

110 Indonesia 0.684

112 Paraguay 0.679

113 Palestine, State of 0.677

114 Uzbekistan 0.675

115 Philippines 0.668

LOW HUMAN

DEVELOPMENT

179 Mali 0.419

180 Mozambique

181 Sierra Leone 0.413

182 Guinea 0.411

183 Burkina Faso 0.402

184 Burundi 0.400

185 Chad 0.392

186 Eritrea 0.391

187Central African Republic 0.350

188 Niger 0.348

Human Development Report-2014High human development

-73 Sri Lanka 0.757

01,Life expectation

02,Literacy rate

Stages of developed countriesMDCs-More developed countries

LDCs-Less developed countries

MDCs-Least developed countries

US Canada England

Asian and Lathin America

Central Africa

Developed Countries

In essence, developed economies, also known as advanced economies, are characterized as postindustrial countries—typically with

A high per capita incomeCompetitive industries

Transparent legal and regulatory environments

Well-developed commercial infrastructure.

Developed countries also tend to have high human development index (HDI) rankings—

Long life expectanciesHigh-quality health careEqual access to educationHigh incomes

Developed economies

Identify the major developed economies

The United States European Union Spotlight on Germany Japan AustraliaNew ZealandSouth Korea

Developing Countries

Developing economies

Objectives of Developing Countries

Better educationFundamental objective -------------------- Industrialization

Improvements in moral and ethical responsibilities

Elimination of many social inequities

Better and more effective government

Privatization

Privatization

Entrepreneurship

Advance Technology Labour incentive

Capital incentive

TO or

Major Developing Economies and Regions

• Asian• The Middle East • Spotlight on the UAE• Africa • Spotlight on Nigeria

Developing Economies Facing Problems

Developed country

Developing country

Emerging Markets An emerging market is a country that has some characteristics of a developed market, but does not meet standards to be a developed market.

Features of Emerging market geographically large

Have significant populations

Represent sizable markets for a wide range of products

Have strong rates of growth or the potential for significant growth

Key Emerging Markets Asia

Spotlight on China ------04 Spotlight on India --------03

Europe Spotlight on Russia -----02Spotlight on South Africa-----05

Latin America Spotlight on Brazil -----01

According to anticipated GDP, in terms of PPP, in 2020, the top economies will be China, the U.S., India, Japan, Russia, Germany, Brazil, the U.K., France and Mexico

• Gross Domestic Product (GDP)

• Purchasing Power Parity (PPP)

• Human Development Index (HDI)

Important of Economic

EnvironmentClassification of

Economies

Developing

Countries

Emerging

Market

Objectives of Developing Countries• Better Education• Improve moral

• Eliminating Social inequity

• Government support

• Privatization• Entrepreneurship

• Technology

Developed

Countries

Summary

Vs.