Chapter 9 9 0 Emerging Markets IrwinMc GrawHill

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

Stages of Economic Development 9 -1 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 2 d ed. (London: Cambridge University Press, 1971), p. 10. Irwin/Mc. Graw-Hill ©The Mc. Graw-Hill Companies, Inc. , 1999

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

Newly Industrialized Countries Growth Factors 9 -3 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 Irwin/Mc. Graw-Hill ©The Mc. Graw-Hill Companies, Inc. , 1999

Infrastructure of Selected Countries 9 -4 Highways* (paved km) (000) Railways (km) (000) Trucks and Buses in Use (000) Electricity Production (million kwh) United States 6, 243. 2 214. 3 42, 298 3, 268, 200 Brazil 1, 670. 1 22. 1 2, 450 222, 195 Japan 1, 115. 6 26. 5 22, 694 857, 273 Colombia 12. 6 3. 3 4, 154 36, 000 Germany 618. 2 43. 9 4, 145 440, 400 8. 3 2. 7 110 3, 000 Mexico 242. 3 26. 5 3, 679 150, 800 Spain 318. 0 15. 3 2, 959 141, 000 India 1, 100 62. 4 1, 839 380, 100 South Africa 55. 4 21. 4 1, 597 182, 400 China 170 58. 3 4, 927 983, 700 Country Kenya *Includes unpaved and paved. Irwin/Mc. Graw-Hill 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 ©The. Crossborder Mc. Graw-Hill Companies, Inc. , 1999 "Indicators of Market Size for 115 Countries, ” Monitor August 27, 1997, p. 4.

Common Traits of Big Emerging Markets 9 -5 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. Irwin/Mc. Graw-Hill ©The Mc. Graw-Hill Companies, Inc. , 1999

Big Emerging Markets 9 -6 Population (millions) Asia ASEAN^ 413. 7 CEA (Chinese Economic Area)‡ 1, 188. 0 India 870. 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) $ 508. 4 435. 6 238. 3 296. 8 $ 12, 192 367 274 6, 799 $ 464. 6 135. 9 42. 2 150. 6 89. 5 33. 1 156. 8 333. 3 228. 8 409. 2 3, 722 6, 912 2, 609 85. 9 21. 2 55. 8 39. 8 114. 8 2, 882 17. 1 38. 4 58. 8 83. 6 156. 0 2, 178 2, 747 35. 6 38. 9 33. 4 20. 3 43. 5 60. 4 1, 303 2, 984 12. 3 25. 2 * 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. Irwin/Mc. Graw-Hill ©The Mc. Graw-Hill Companies, Inc. , 1999

The Americas 9 -7 GREENLAND (DENMARK) Alaska (United States) CANADA Montreal Toronto San Francisco Los Angeles Hawaii (United States) UNITED STATES M EX IC O Chicago Dallas GUATEMALA HONDURAS ST. SALVADOR NICABAGUA COSTA RICA PANAMA ECUADOR Detroit Miami CUBA HAITI JAMAICA VENEZUELA COLOMBIA BRAZIL PERU BOLIVIA INA NT GE Belo Horizonte Rio de Janeiro Sao Paulo URUGUAY Buenos Aires AR CHILE PARAGUAY PACIFIC OCEAN GUYANA SURINAME FRENCH GUIANA Irwin/Mc. Graw-Hill ©The Mc. Graw-Hill Companies, Inc. , 1999

Economic and Social Data for Selected Countries 9 -8 Country Consumer Spending Hospital Number Food Percent Clothing Percent Beds per of ($ million)** of (000 s) Doctors 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/Mc. Graw-Hill ©The Mc. Graw-Hill Companies, Inc. , 1999

Eastern Europe and the Baltic States 9 -9 Gulf inlan of F d ESTONIA LATVIA Baltic Sea LITHUANIA POLAND CZECH REPUBLIC SLOVAKIA SLOVENIA HUNGARY ROMANIA Tyrmenian Sea Irwin/Mc. Graw-Hill A ria TI OA CR Ad Black Sea BOSNIA AND HERCEGOVINA tic YUGOSLAVIA Se a BULGARIA MACEDONIA ALBANIA GREECE Aegean Sea TURKEY ©The Mc. Graw-Hill Companies, Inc. , 1999

Eastern European Markets 9 -10 Population GDP (millions) ($ billions) Albania Bosnia/ Hercegovina (*) Bulgaria Croatia (*) Czech (**) Hungary Macedonia(*) Poland Romania Slovakia(**) Slovenia(*) GDP Exports Imports (per capita) ($ millions) 3. 28 $ 2. 7 $ 820 $ 80 $ 147 2. 66 9. 00 4. 78 10. 30 2. 05 38. 40 22. 80 5. 27 1. 96 0. 8 11. 3 26. 3 45. 7 35. 4 4. 8 83. 6 40. 7 9. 3 21. 0 300 1, 336 5, 600 4, 421 3, 435 2, 400 2, 178 1794 1, 763 10, 700 NA 4, 273 4, 633 17, 338 12, 540 1, 244 22, 892 7, 516 8, 585 8, 268 NA 5, 596 7, 582 23, 255 15, 073 1, 420 29, 052 9, 256 9, 070 9, 452 (*) Former republics of Yugoslavia. (**) Former republics of Czechoslovakia. Irwin/Mc. Graw-Hill ©The Mc. Graw-Hill Companies, Inc. , 1999

Asia 9 -11 N. K 0 REA JAPAN A OLI NG MO S. K 0 REA CHINA NEPAL PAKISTAN TAIWAN BHUTAN Hong Kong MYANMAR INDIA LAOS BANGLADESH VIETNAM CAMBODIA THAILAND PHILIPPINES BRUNEI MALAYSIA SRI LANKA SINGAPORE INDONESIA INDIAN OCEAN Irwin/Mc. Graw-Hill ©The Mc. Graw-Hill Companies, Inc. , 1999

Average Monthly Expenditures for Chinese Households National and Urban Areas - 1994 9 -12 National Urban Areas $22. 10 $38. 00 Savings 11. 40 17. 00 Clothing 5. 60 9. 00 Child's Education 4. 70 7. 00 Home (includes Rent & Utilities) 4. 30 8. 20 Daily Goods other than Food 3. 50 4. 80 Medical Expenses & Drugs 2. 30 4. 00 Entertainment 1. 30 3. 20 Food (includes eating out) SOURCE: Gallup China. Irwin/Mc. Graw-Hill ©The Mc. Graw-Hill Companies, Inc. , 1999

Asian Markets - Selected Countries 9 -13 Population GDP (millions) ($ billions) Australia GDP Exports Imports (per capita) ($ millions) 18. 1 $ 290. 7 $ 347. 6 $ 52, 966 $ 61, 347 1, 205 697 578 148, 755 132, 007 6. 2 140. 2 22, 613 173, 546 192, 764 India 935. 4 328. 4 351 30, 537 34, 456 Indonesia 193. 8 198. 1 1, 022 43, 285 39, 456 Japan 125. 6 5110. 5 40, 689 443, 000 335, 871 South Korea 44. 9 455. 5 10, 144 125, 365 135, 153 Taiwan 21. 1 260. 2 12, 274 111, 837 103, 652 China Hong Kong 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). Irwin/Mc. Graw-Hill ©The Mc. Graw-Hill Companies, Inc. , 1999

Capitalism with Chinese Characters Jiang Zemin’s Reform Agenda 9 -14 Restructure state enterprises. SOEs account for about two -fifths of the industrial output but soak up four-fifths of investment. Strengthen financial markets. Expand 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. Irwin/Mc. Graw-Hill ©The Mc. Graw-Hill Companies, Inc. , 1999

Living Standards in Selected Countries 9 -15 Brazil Chile China Colombia Ecuador Hong Kong India Indonesia Japan Peru Philippines Singapore South Africa United States 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, 18 th ed. (London: Euromonitor Publications, 1997). Irwin/Mc. Graw-Hill ©The Mc. Graw-Hill Companies, Inc. , 1999

Which of the Following have you Purchased in the Past Three Months? 9 -16 Product 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. SOURCE: Nancy Giges, "Global Spending Patterns Emerge, " Advertising Age, November 11, 1991, p. 64. Irwin/Mc. Graw-Hill ©The Mc. Graw-Hill Companies, Inc. , 1999

Consumption Patterns in Selected Countries (percent of household expenditures) 9 -17 U. S. Food 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% 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% 12% 8% 6% 8% 13% 7% Appliances/ other durables 31% 30% 25% 35% 14% 22% 24% 13% Clothing Education 30% SOURCE: For additional data, see Ricardo Sookdeo, "The New global consumer. " Fortune, Autumn-Winter 1993, pp. 68_72. Irwin/Mc. Graw-Hill ©The Mc. Graw-Hill Companies, Inc. , 1999

Living Standards in Selected Countries 9 -18 Country Brazil Chile Costa Rica El Salvador Ethiopia Guatemala Hong Kong Indonesia Japan Peru Saudi Arabia Singapore Sri Lanka United States Rooms per Dwelling 4. 6 2. 9 4. 1 1. 7 2. 0 2. 4 3. 1 3. 3 4. 6 2. 4 3. 1 2. 2 5. 3 Persons per Room 1. 1 1. 6 1. 4 3. 5 2. 6 2. 7 0. 5 1. 2 0. 7 2. 3 1. 9 2. 3 2. 5 0. 5 Percent of Households Piped Water Flush Electric Toilets Lighting 55% 70% 88% 35% 83% 30% 98% 12% 93% 49% 46% 48% 18% 99% 76% 59% 60% 28% NA 18% 80% 15% 46% 43% 26% 42% 10% 99% 69% 88% 73% 39% 62% 40% 93% 30% 98% 48% 61% 37% 15% 99% SOURCE: International Marketing Data and Statistics, 15 th ex. (London: Euromonitor Publications, 1991). Irwin/Mc. Graw-Hill ©The Mc. Graw-Hill Companies, Inc. , 1999