The Economic Environment

1
The Economic Environment

• Issues in Transitional Economies

2
Country Evaluation Classifying Countries

• Quality of life
• Life expectancy, purchasing power, education,
  happiness, sanitation, ethnic and gender equality
• Capability of poverty measure
• Widening gap between rich and poor relationship
  between top and bottom fifth of the incomes in a
  country
• Economic Objectives Equal distribution of income
  or overall rise in the standard of living?
• Structure of Production
• As per capita income rises, per capita income
• shifts from agriculture to industry to services

3
Country Evaluation Classifying Countries

• Gross domestic product (GDP)
• Per Capita Income Classifications
• High- Middle- Low- Income
• Developing Countries - middle and low income

• Economies in Transition (CEIT)
• Former non-market economies
• Other CEIT

• Purchasing Power Parity
• alternative way of measuring wealth
• what a sum of money actually can buy
• currency required to buy same amt of goods
• services in domestic market as 1.00 would buy in
  
• the U.S.

4
Issues in Transition Economies
Economic Inflation, Economic
Instability, Infrastructure Privatization,
Property rights, Currency convertibility Social
Lack of managerial knowledge, entrepreneurial
skills Finding reliable partners Law
and order Political Uncertainty
5
Issues in Transition Economies

• Motivation of CEITs
• Some want to become market economies
• Make reforms w/in a central planning system
• Status quo
• Geographic and Political Positioning in relation
  to central planning system
• Hyper
• Normal
• Marginal

6
Issues in Transition Economies

• Motivation of CEITs
• Some want to become market economies
• Make reforms within a central planning system
• Status quo

7
MC DONALDS IN RUSSIA

• Motivation
• Key Macroeconomic Issues

8
What other CEITs are there?

• How do they differ?