Ch 2. The Global Economic Environment  The World Economy – An Overview  Economic Systems  Stages of Market Development  Balance of Payments  Trade Patterns

The World Economy – An Overview  Capital movements replaces trade as driving force  Production uncoupled from employment  The world economy dominates the scene  The struggle between capitalism and socialism is over  The growth of e-commerce diminishes national barriers

Economic Systems  Market Capitalism – North America and Western Europe  Centrally-Planned Socialism – China, the former Soviet Union, and India  Centrally-Planned Capitalism – Sweden, and Japan  Market Socialism – Singapore and Sierra Leone

Stages of Market Development  Big Emerging Markets (BEMs) – Mexico, Brazil, China, and India  Low-Income Countries – GNP per capita of $785 or less - Bangladesh  Lower Middle Income Countries – per capita $786- $3,125 – Poland, Turkey, and Indonesia  Upper Middle Income Countries – per capita $3,126-$9,655 –Malaysia, Brazil, Chile, and Hungary

Marketing Opportunities in LDCs and DCs  Look beyond per capita GNP  Consider LDC and DCs collectively  Weight the cost and benefits of the first to enter their markets  Set realistic goals and deadlines for entry

High Income Countries (with GNP higher than $9656)  Group of Seven (G-7): USA, Japan, Germany, France, U.K., Canada, and Italy  OECD – 29 nations  Triad – Japan, Western Europe, and USA

Marketing Implications of the Stages of Development  Product Saturation Levels

Balance of Payments  Current Account and Capital Accounts  Trade Deficit vs. Trade Surplus

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