Growing economies Flashcards
Define GLOBALISATION
Globalisation is the process through which an increasingly free flow of ideas, people, goods, services and capital leads to the integration of economies and societies.
What are the two types of economy?
Developed economies and emerging economies
Define a DEVELOPED ECONOMY
A developed economy refers to an industrialised country with a high level of per capita income, good general standard of living and effective infrastructure as well as high levels of literacy, education and health.
Define an EMERGING ECONOMY
An emerging economy refers to a country in the process of rapid growth and industrialisation. These economies are making a transition and have the potential to become developed economies in the future.
What are good examples of sets of emerging economies?
The BRICS - Brazil, Russia, India, China and South Africa
The MINT - Mexico, Indonesia, Nigeria and Turkey
What are the potential business opportunities in emerging markets?
- Growing number of middle class consumers who have increasing disposable income
- Demand is likely to be income elastic, and therefore increase as incomes do
- Cultural shifts result in higher demands for personal products, private education and private healthcare
- Increase demand for infrastructure
- Opportunities for high-skilled but low-cost labour
- Greater potential for joint ventures or acquisitions
- Greater access to raw materials
- Further investment opportunities
What are potential business threats from emerging markets?
- Increasing pool of high-skilled, low-cost labour
- Undervalued currencies make their exports cheaper
- Inadequate protection of the brand or other intellectual property
- State subsidies of industries to make them more globally competitive.
What are the key risks of investing in emerging markets?
- Political instability
- Cultural differences
- Variable approaches to legal and financial dealings
- Corruption and bureaucracy
- Emerging markets becoming major exporters in their own rights
What are the 5 main indicators of growth?
GDP, GDP per capita, literacy levels, health care availability and the country’s position on the HDI
Define GDP
Gross domestic product is the market value of all final goods and services produced within a country in a year. Usually used to measure the size of an economy and estimated by governments.
Define GDP PER CAPITA
GDP per capita is GDP per person. It is the most common method used to measure living standards, as when GDP per capita increases it is expected that living standards will too. Formula = GDP/total population
Define LITERACY
Literacy is the percentage of a country’s population who can read and write. Seen as a key indicator of growth.
Define HEALTH
Health is the absence of illness or injury, accompanied by physical, mental and social well being. A key indicator of growth.
Define the HDI
The human development index measures progress through the achievements of people rather than income and growth figures. It has three criteria: life expectancy at birth, years of schooling and GNI/person. These are averaged and the country is given a mark between 1 and 0, with 1 being the top and 0 the bottom.
Define ECONOMIC POWER
Economic power refers to the relative importance of a country based on its ability to buy, sell and produce on a global scale.
Larger economy = more power
