1. 9- 0 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Chapter 9 Emerging Markets

2. 9- 1 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Stages of Economic Development 1.The Traditional Society 2.The Pre Conditions for Take-off 3. The Take-Off 4.The Drive to Maturity 5.The Age of High Mass Consumption SOURCES: Walt W. Rostow, The Stages of Economic Growth 2d ed. (London: Cambridge University Press, 1971), p.10.

3. 9- 2 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill United Nations Economic Development System More-Developed Countries (MDC) Less-Developed Countries (LDC) Least-Developed Countries (LLDC)

4. 9- 3 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Newly Industrialized Countries Growth 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

5. 9- 4 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Infrastructure of Selected Countries United States 6,243.2214.342,2983,268,200 Brazil 1,670.122.12,450222,195 Japan1,115.626.522,694857,273 Colombia 12.63.34,15436,000 Germany618.243.94,145440,400 Kenya 8.32.71103,000 Mexico242.326.53,679150,800 Spain318.015.32,959141,000 India1,10062.41,839380,100 South Africa55.421.41,597182,400 China17058.34,927983,700 Highways* Railways TrucksElectricity (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.

6. 9- 5 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill 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.

7. 9- 6 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Big Emerging Markets Asia ASEAN^413.7$ 508.4$ 12,192$ 464.6 CEA (Chinese Economic Area) ‡ 1,188.0435.6367135.9 India 870.0238.3 27442.2 South Korea43.7296.86,799150.6 Latin America Mexico89.5333.33,72285.9 Argentina33.1228.86,91221.2 Brazil 156.8409.22,60955.8 Africa South Africa39.8114.82,88217.1 Europe Poland38.483.62,17835.6 Turkey58.8156.02,74738.9 Possible Additions Colombia33.443.51,30312.3 Venezuela20.360.42,98425.2 PopulationGDPGDPTrade* (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.

8. 9- 7 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Americas

9. 9- 8 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Economic and Social Data for Selected Countries United States $ 741,34018.1%$221,8005.4%5.1560,30099.5%$45,579 Argentina 16,95238.8% 2,3325.3% 5.396,00093.9%2,336 Brazil 81,93431.2%12,7994.9%3.5169,48877.8%1,559 Colombia 9,26435.2%1,5976.1%1.529,35385.2% 410 Mexico57,90033.7%12,0667.0%0.7130,00087.6 %4,355 Venezuela 15,50143.2%3,67910.2%2.6*28,40084.7%36.5 Consumer SpendingHospitalNumberLiteracyTourism FoodPercentClothingPercentBeds perof(Percent)Receipts ($ million)of($ million)**of(000s)Doctors($ million)** CountryTotal*Total*Population * Percent of all consumer spending. ** In U.S. dollars, basis 1988.

10. 9- 9 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Eastern Europe and the Baltic States ESTONIA LATVIA LITHUANIA POLAND CZECH REPUBLIC SLOVAKIA HUNGARY ROMANIA BULGARIA ALBANIA YUGOSLAVIA MACEDONIA BOSNIA AND HERCEGOVINA CROATIA GREECE SLOVENIA TURKEY Baltic Sea Black Sea Adriatic Sea Tyrmenian Sea Gulf of Finland Aegean Sea

11. 9- 10 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Eastern European Markets Albania3.28$ 2.7$ 820$ 80$ 147 Bosnia/ Hercegovina (*)2.660.8300NANA Bulgaria 9.0011.31,3364,2735,596 Croatia (*)4.7826.35,6004,6337,582 Czech (**)10.3045.74,42117,33823,255 Hungary10.3035.43,43512,54015,073 Macedonia(*)2.054.82,4001,2441,420 Poland 38.4083.62,17822,89229,052 Romania22.8040.717947,5169,256 Slovakia(**)5.279.31,7638,5859,070 Slovenia(*)1.9621.010,7008,2689,452 PopulationGDPGDPExportsImports (millions)($ billions)(per capita)($ millions)($ millions) (*) Former republics of Yugoslavia. (**)Former republics of Czechoslovakia.

12. 9- 11 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Asia MONGOLIA CHINA INDIA PAKISTAN NEPAL BHUTAN BANGLADESH MYANMAR LAOS VIETNAM CAMBODIA THAILAND TAIWAN S. K0REA JAPAN N. K0REA PHILIPPINES Hong Kong MALAYSIA SINGAPORE SRI LANKA INDIAN OCEAN INDONESIA BRUNEI

13. 9- 12 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Average Monthly Expenditures for Chinese Households National and Urban Areas - 1994 Food (includes eating out)$22.10$38.00 Savings11.4017.00 Clothing5.609.00 Child's Education4.707.00 Home (includes Rent & Utilities)4.30 8.20 Daily Goods other than Food3.504.80 Medical Expenses & Drugs2.304.00 Entertainment1.303.20 NationalUrban Areas SOURCE: Gallup China.

14. 9- 13 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Asian Markets - Selected Countries Australia18.1$ 290.7$ 347.6$ 52,966$ 61,347 China 1,205697578148,755132,007 Hong Kong6.2140.222,613173,546192,764 India 935.4328.435130,53734,456 Indonesia193.8198.11,02243,28539,456 Japan 125.65110.540,689443,000335,871 South Korea 44.9455.510,144125,365135,153 Taiwan21.1260.212,274111,837103,652 PopulationGDPGDPExportsImports (millions)($ billions)(per capita)($ millions)($ millions) SOURCES: For additional information, see "Indicators of Market Size for 115 Countries," Crossborder Monitor, August 27, 1997 and International Marketing Data and Statistics, 1997 (London: Euromonitor Publications, 1997).

15. 9- 14 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill 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 Characters Jiang Zemin’s Reform Agenda

16. 9- 15 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Living Standards in Selected Countries Brazil 38,434 4.05 73%76% 69% Chile 3,2164.3570%59%88% China 357,0643.4090%NANA Colombia8,4824.1476%64%87% Ecuador2,6264.3652%33%62% Hong Kong1,7973.4498%80%93% India 185,0485.0010%5%16% Indonesia 43,0654.5012%15%30% Japan40,5483.0993%65%98% Peru5,0574.6549%43%48% Philippines 12,7505.37NANANA Singapore8153.6748%42%37% South Africa13,3003.3796%35%90% United States 100,3082.6299%99%99% Percent of Households HouseholdsPersons perPiped FlushElectric (000)HouseholdWaterToilersLighting SOURCES: For additional data, see Demographic Yearbook 1997 (New York: United Nations, 1997); and International Marketing Data Statistics, 18th ed. (London: Euromonitor Publications, 1997).

17. 9- 16 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Which of the Following have you Purchased in the Past Three Months? Soft drinks 969093839194 Fast-food 949491708685 Athletic footwear594054333049 Blue jeans 563962454244 Beer*465060465757 Cigarettes* 243330383940 ProductPercentPercentPercentPercentPercentPercent inininininin UnitedAustraliaBrazilGermanyJapanUnited StatesKingdom * Among adults 18+. Source: Yankelovich Clancy Shulman. SOURCE: Nancy Giges, "Global Spending Patterns Emerge," Advertising Age, November 11, 1991, p. 64.

18. 9- 17 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill 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 care14%13%7%5%6%6%3%5%3% Education8%6%12%5%7%5%10%5%4% Transport/ communications 14%13%13%12%8%6%8%13%7% Appliances/ other durables30%31%30%25%35%14%22%24%13% U.S.GermanySingaporeMexicoPolandIranKenyaThailandIndia SOURCE: For additional data, see Ricardo Sookdeo, "The New global consumer." Fortune, Autumn-Winter 1993, pp. 68_72.

19. 9- 18 © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Living Standards in Selected Countries Brazil 4.61.155%76%69% Chile 2.91.670%59%88% Costa Rica 4.11.488%60%73% El Salvador1.73.535%28%39% Ethiopia 2.02.683%NA62% Guatemala 2.42.730%18%40% Hong Kong3.10.598%80%93% Indonesia 3.31.212%15%30% Japan 4.60.793%46%98% Peru2.42.349%43%48% Saudi Arabia 3.11.946%26%61% Singapore 2.12.348%42%37% Sri Lanka 2.22.518%10%15% United States5.30.599%99%99% Percent of Households CountryRooms perPersonsPiped WaterFlushElectric Dwellingper RoomToiletsLighting SOURCE: International Marketing Data and Statistics, 15th ex. (London: Euromonitor Publications, 1991).