Emerging Markets

Chapter

Stages of Economic Development

1. The Traditional Society
9-2

2. The Pre Conditions for Take-off

3. The Take-Off
4. The Drive to Maturity
5. The Age of High Mass Consumption

Irwin/McGraw-Hill

SOURCES: Walt W. Rostow, The Stages of Economic Growth 2d ed.

(London: Cambridge University Press, 1971), p.10.

United Nations Economic

Development System

9-3

More-Developed
More-Developed Countries
Countries (MDC)
(MDC)
Less-Developed
Less-Developed Countries
Countries (LDC)
(LDC)
Least-Developed
Least-Developed Countries
Countries (LLDC)
(LLDC)

Irwin/McGraw-Hill

Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Newly Industrialized Countries

Growth Factors

9-4

Political Stability

Economic 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

Irwin/McGraw-Hill

Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Infrastructure of Selected Countries

Country

9-5

Highways*
(paved km)
(000)

Railways
Trucks
(km)
and Buses
(000)
in Use (000)

Electricity
Production
(kwh per head)

United States

6,243.2

214.3

49,259

13,696

Brazil

1,670.1

22.1

2,540

1,925

Japan

1,115.6

26.5

21,392

8,182

Colombia

12.6

3.3

4,154

1,147

Germany

618.2

43.9

3,174

6,680

8.3

2.7

110

105

Mexico

242.3

26.5

3,773

1,898

Spain

318.0

15.3

3,360

4,728

1,100.0

62.4

2,567

485

55.4

21.4

1,853

5,020

170.0

58.3

3,591

946

Kenya

India
South Africa
China
*Includes unpaved and paved.

Irwin/McGraw-Hill

SOURCES: For additional information, see International Marketing Data and Statistics, 19997
(London: Euromonitor Pulications, 1997); and Indicators of Market Size for 115 countries,
Country Monitor, December 25, 2000.

Common Traits of
Big Emerging Markets

9-6

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 of economic

reform.

Are of major political importance within their regions.

Are "Regional Economic Drivers".

Will engender further expansion in neighboring markets

as they grow.

Irwin/McGraw-Hill

Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Big Emerging Markets

Population
(millions)

Asia

9-7

ASEAN^
434.8
CEA (Chinese Economic Area) 1,205.0
India
10,028.0
South Korea
43.7

Latin America
Mexico
Argentina
Brazil

Africa

South Africa

Europe

Poland
Turkey

Possible Additions
Colombia
Venezuela

GDP
($ billions)

GDP
(per capita)

Trade*
($ billions)

$666.0
1,374.6
437.2
476.0

$ 15,317
1,141
458
10,063

$ 1,294.8
1,109.0
63.3
280.5

97.4
35.7
158.6

486.1
283.1
551.8

4,992
7,740
3,305

328.4
53.6
108.6

41.4

147.8

3,570

59.4

38.7
58.6

135.3
189.2

3,500
3,027

26.4
63.4

41.6
23.7

91.5
102.1

2,201
4,307

24.9
40.9

* 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: For additional information, see indicators of Market Size for 115 countries,
Country Monitor. December 25, 2000. Direction of Trade Statistics Yearbook, 1999.
Irwin/McGraw-Hill International Monetary Fund, 2000, and visit www.stat-usa.gov/bems/bemschi/bemschi.html/.

The Americas
GREENLAND
(DENMARK)

Alaska

(United States)

CANADA

9-8

Montreal
Toronto
San Francisco
Los Angeles

Hawaii

(United States)

UNITED
STATES
M
EX
IC
O

Chicago
Dallas

GUATEMALA
HONDURAS
ST. SALVADOR
NICARAGUA
COSTA RICA
PANAMA
ECUADOR

Detroit
Miami

CUBA

HAITI

JAMAICA
GUYANA
SURINAME
FRENCH GUIANA

VENEZUELA
COLOMBIA
BRAZIL

PERU

BOLIVIA

Irwin/McGraw-Hill

CHILE

PACIFIC OCEAN

AR
GE
NT
INA

PARAGUAY

Belo Horizonte
Rio de Janeiro
Sao Paulo

URUGUAY
Buenos Aires

Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Economic and Social Data for

Selected Countries

9-9

Country

Consumer Spending
Hospital Number
Food
Percent
Clothing Percent Beds per
of
($ million)
of
($ million)**
of
(000s)
Doctors
Total*
Total* Population

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

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

Colombia

Literacy Tourism
(Percent) Receipts
($ million)**

* Percent of all consumer spending.

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

Irwin/McGraw-Hill

Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Eastern Europe and the Baltic States

nd
Finla

of
Gulf

ESTONIA
LATVIA

Baltic
Sea

9-10

LITHUANIA

POLAND

CZECH
REPUBLIC SLOVAKIA

SLOVENIA

HUNGARY
ROMANIA

A
TI
OA
CR

Black
Sea

Ad
r ia
t ic

Tyrmenian
Sea

Irwin/McGraw-Hill

BOSNIA AND
HERCEGOVINA

YUGOSLAVIA

Se
a

BULGARIA

MACEDONIA

ALBANIA

GREECE

Aegean
Sea

TURKEY

Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Eastern European Markets

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

9-11

Albania
Bosnia/
Herzegovina (*)
Bulgaria
Croatia (*)
Czech Republic(**)
Hungary
Macedonia(*)
Poland
Romania
Slovakia(**)

3.28

$ 2.7

$ 820

$ 80

$ 147

2.66
9.00
4.78
10.30
10.30
2.05
38.40
22.80
5.27

0.8
10.1
26.3
52.0
45.7
4.8
135.3
34.8
20.7

300
1,220
5,600
5,050
4,505
2,400
3,500
1,544
1,763

NA
4,303
4,633
14,575
19,100
1,244
25,751
8,385
12,063

NA
3,271
7,582
16,284
15,224
1,420
42,307
10,131
13,003

(*) 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:

Asia
N. K0REA

G
ON

A
OLI

JAPAN

S. K0REA

9-12

CHINA
NEPAL

PAKISTAN

TAIWAN

BHUTAN

Hong Kong

MYANMAR

INDIA

LAOS
BANGLADESH

VIETNAM
CAMBODIA

THAILAND

PHILIPPINES

BRUNEI

MALAYSIA

SRI LANKA
SINGAPORE
INDONESIA

INDIAN OCEAN
Irwin/McGraw-Hill

Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Asian Markets - Selected Countries

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

9-13

18.5

$ 411.0

$ 22,000

$ 52,966

$ 61,347

1,230.1

917.7

746

148,755

132,007

6.5

173.6

26,701

173,546

192,764

India

955.2

437.2

458

30,537

34,456

Indonesia

199.9

215.0

1,076

43,285

39,456

Japan

126.2

4,199.5

33,277

443,000

335,871

South Korea

46.0

476.0

10,361

125,365

135,153

Taiwan

21.5

283.3

13,000

111,837

103,652

China
Hong Kong

Irwin/McGraw-Hill

SOURCES: Indicators of Market Size for 115 Countries,

Country Monitor. December 25, 2000; and S.T.E.T.

Capitalism with Chinese Characters

Jiang Zemins Reform Agenda

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 Chinas 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 Chinas bid to join the
World Trade Organization.

9-14

Irwin/McGraw-Hill

Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Indias Five-Point Agenda

1. The improvement of the investment climate.
9-15

2. The development of a comprehensive WTO strategy.

3. The reformation of the agriculture, the food processing,
and the small-scale industry.
4. The elimination of red tape
5. The institution of better corporate governance.

Irwin/McGraw-Hill

Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Living Standards in Selected Countries

9-16

Brazil
Chile
China
Colombia
Ecuador
Hong Kong
India
Indonesia
Japan
Peru
Philippines
Singapore
South Africa
United States

Irwin/McGraw-Hill

Households
(000)

Persons per
Household

38,434
3,216
357,064
8,482
2,626
1,797
185,048
43,065
40,548
5,057
12,750
815
13,300
100,308

4.05
4.35
3.40
4.14
4.36
3.44
5.00
4.50
3.09
4.65
5.37
3.67
3.37
2.62

Percent of Households
Piped
Flush
Electric
Water
Toilers
Lighting
73%
70%
90%
76%
52%
98%
10%
12%
93%
49%
NA
48%
96%
99%

76%
59%
NA
64%
33%
80%
5%
15%
65%
43%
NA
42%
35%
99%

69%
88%
NA
87%
62%
93%
16%
30%
98%
48%
NA
37%
90%
99%

SOURCES: For additional data, see Demographic Yearbook 1997

(New York: United Nations, 1997); and
International Marketing Data
Statistics, 18th ed.

Which of the Following have you

Purchased in the Past Three Months?
Product

9-17

Percent
in
United
States

Percent
in
Australia

Percent
in
Brazil

Percent
in
Germany

Percent
in
Japan

Percent
in
United
Kingdom

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

* Among adults 18+. Source: Yankelovich Clancy Shulman.

Irwin/McGraw-Hill

SOURCE: Nancy Giges, "Global Spending Patterns Emerge,"

Advertising Age, November 11, 1991, p. 64.

Consumption Patterns in Selected Countries

(percent of household expenditures)
U.S.

Food

9-18

Germany Singapore

Mexico

Poland

Iran

Kenya Thailand India

10%

12%

19%

35%

29%

37%

38%

30%

52%

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%

8%

6%

12%

5%

7%

5%

10%

5%

4%

Transport/
communications 14%

13%

13%

12%

8%

6%

8%

13%

7%

Appliances/
other durables

31%

30%

25%

35%

14%

22%

24%

13%

Clothing

Education

Irwin/McGraw-Hill

30%

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

Living Standards in Selected Countries

9-19

Country

Household
(000)

Brazil
Chile
China
Colombia
Ecuador
Hong Kong
India
Indonesia
Japan
Peru
Philippines
Singapore
South Korea
United States

38,434
3,216
357,064
8,482
2,626
1,797
185,048
43,065
40,548
5,057
12,750
815
13,300
100,308

Irwin/McGraw-Hill

Persons per
Household
4.05
4.35
3.40
4.14
4.36
3.44
5.00
4.50
3.09
4.65
5.37
3.67
3.37
2.62

Percent of Households
Piped
Flush
Electric
Water
Toilets
Lighting
73%
70%
90%
76%
52%
98%
10%
12%
93%
49%
NA
48%
96%
99%

76%
59%
N/A
64%
33%
80%
5%
15%
65%
43%
N/A
42%
35%
99%

69%
88%
N/A
87%
62%
93%
16%
30%
98%
48%
N/A
37%
90%
99%

SOURCE: Demographic Yearbook 1997 (New York: United

Nation, 1997); and International Marketing Data and Statistics,
1997 (London: Euromonitor Publication, 1997)