Economics

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Economics

• Economic Development

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Economic Development

• How advanced is a country?
• More Developed - MDC
• Newly Industrialized NIC
• Less Developed LDC
• Human Development Index
• Developed by UN 1990, ranks countries by looking
  at economic development standards of living.
• Indices Data Human Development Reports (HDR)
  United Nations Development Programme (UNDP)

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Demographic Indicators

• Life Expectancy average number of years a
  person is expected to live.
• Birth Death Rates average number of children
  born and people who die in a year.
• Death rate is called Mortality Rate.
• Infant Mortality Rate number of infants who die
  before 1st birthday in year.

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Economic Indicators

• Gross Domestic Product GDP the total value of
  all goods services produced within a nation in
  a year.
• GDP per capita per person in a country

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Social Political Indicators

• Social
• Literacy Rate percentage of people who can read
  write.
• Number attending college, number of
  professionals, housing, water supply sanitation
• Political
• Freedoms people enjoy, type of government,
  tolerance of other viewpoints.

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• MDC higher life expectancy, lower birth rate
  infant morality, higher literacy rates, more in
  college, more doctors, better water supply
  sanitation
• LDC - lower life expectancy, higher birth rate
  infant morality, lower literacy rates, less in
  college, less doctors, poor water supply
  sanitation

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• Bangladesh LDC 129
• Syria NIC 111

• US MDC 4
• France MDC 14
• Zimbabwe LDC 169

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Economic Activities Primary

• Primary basic, food production extraction of
  raw materials
• Examples farms, ranches, fishing, logging,
  mining.
• LDC more people involved, MDC less people
• US only 3 of labor force

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Primary Economic Activities
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Secondary Activities

• Manufacturing Production taking raw materials
  adding value.
• Textiles, furniture making, processing food,
  making steel

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A Sawmill
Raw Material
Semi Finished Product
Finished Product
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Processes To change Raw Materials into
semi-finished orfinished products we must
process them.
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Processes
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Tertiary Activities

• Deals with services doctors, nurses, teachers,
  retailer (stores restaurants)
• In the US, 80 of labor force
• MDC have a higher percentage of their labor force
  in Tertiary activities.

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Quaternary Activities

• Information processing management
• Examples computer programmer, general manager,
  researchers, product development.
• Jobs require special training education.
• Only in the MDC

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US Economy

• Leader in agriculture, manufactured goods
  global trade.
• 3 Factors Economic success
• Abundant available natural resources
• Skilled labor force
• Stable political system

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US cont.

• Ag world leader fertile soil, favorable
  climate and early mechanization of farms
• Industry advanced technology, petroleum, steel,
  chemicals, electronics telecommunication,
  lumber mining.
• Postindustrial Economy manufacturing no longer
  plays a dominant role 80 of jobs are in the
  service industry

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US cont.

• Northeast New England Mid Atlantic
• Americas Gateway
• Fishing, farming, trade.
• Coal, iron ore, oil, lumber, manufacturing,
  electronics, communication, chemical, medical
  research, finance, tourism.
• Rust belt decline in the regions manufacturing
• States ME, NH, VT, MA, CT, RI, NY, NJ, PA

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US Cont.

• Midwest Americas Breadbasket
• Farming Fertile soil, adequate rainfall,
  favorable climate.
• Feed more people than any comparable area in the
  world.
• Corn, wheat, soybeans, meat, dairy
• Trade, transportation, distribution Great Lakes
  Mississippi Ohio Rivers
• Chicago transportation hub.
• Auto making steel industries
• States OH, MI, WI, MN, ND, SD, NE, KS, IA, MO,
  IL, IN

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US Cont.

• The South Sun Belt
• Farming cotton, tobacco, fruits, peanuts, rice
  livestock
• Air conditioning has allow area to grow. Many
  companies leaving cold north for the south.
• Tourism retirees also drawn to warm South
  West.
• States TX, LA, AR, TN, OK, KY, WV,
• VA, NC, SC, GA, FL, AL, MS

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US Cont.

• The West -
• ½ land of US, varied landscape, some
• favorable landforms climate, also deserts
• Air conditioning irrigation allowed growth
• Farming, ranching, fishing, logging, mining, oil
  refining, tourism, film making, computers
• States WA, OR, CA, NV, ID, MT, CO, WY, NM, AZ,
  HI, AK

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Economic Alliances

• NAFTA North American Free Trade Agreement
  began on January 1, 1994. This agreement removed
  most barriers to trade and investment among the
  United States, Canada, and Mexico with full
  implementation beginning January 1, 2008.

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Economic Alliances

• European Union
• Economic and political union of 27 independent
  member states which are located primarily in
  Europe.
• Purpose to create free trade zone
• Austria, Belgium, Bulgaria, Cyprus, Czech Rep,
  Denmark, Estonia, Finland, France, Germany,
  Greece, Hungary, Ireland, Italy, Latvia,
  Lithuania, Luxembourg, Malta, Netherlands,
  Poland, Portugal, Romania, Slovakia, Slovenia,
  Spain, Sweden, UK

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EU Policies

• The EU has developed a single market through a
  standardized system of laws which apply in all
  member states.
• Passport controls have been abolished within the
  EU.
• EU policies aim to ensure the free movement of
  people, goods, services, and capital.
• Enact equal laws, maintain common policies

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EU Policies

• The EU has established a single market across the
  territory of all its members.
• A monetary union, the eurozone, using a single
  currency Euro.
• In 2010 the EU generated an approx. 16.242
  billion international dollars of global gross
  domestic product (GDP) largest economy in the
  world.
• Largest exporter and importer of goods and
  services.
• Biggest trading partner to China, India, and the
  United States.

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EU Problems

• The Euro was to be a currency which would replace
  the U.S. dollar, but in 2009, a debt crisis
  arose.
• In 2010 the debt crisis was mostly centered on
  events in Greece cost of financing government
  debt.
• On 2 May 2010, the eurozone countries and the IMF
  agreed to a loan for Greece, it failed.
• It was followed by a 85 billion rescue package
  for Ireland in November.
• That was followed by a 78 billion bail-out for
  Portugal in May 2011.
• October 2011 Greece bailout still a problem.

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Global Implications of Crisis

• EU losses could extend to American banks, which
  have large exposures to debt in France and Italy.
  
• On top of this, American exports to the European
  Union could suffer if the crisis slows European
  growth and causes the euro to depreciate against
  the dollar.
• The EU crisis also affects the cost of oil and
  the U.S. stock market.

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Economic Alliances

• ASEAN Association of South East Asia Nations
• Alliance that promotes economic growth, peace,
  cooperation in SE Asia
• Members Brunei, Cambodia, Indonesia, Laos,
  Malaysia, Myanmar, Philippines, Singapore,
  Thailand, Vietnam

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OPEC

• Organization of Petroleum Exporting Countries
• Mission is to coordinate and unify the petroleum
  policies of its Member Countries and ensure the
  stabilization of oil markets in order to secure
  an efficient, economic and regular supply of
  petroleum to consumers, a steady income to
  producers and a fair return on capital for those
  investing in the petroleum industry.
• Members Algeria, Angola, Ecuador, Iran, Iraq,
  Kuwait, Libya, Nigeria, Qatar, Saudi Arabia,
  United Arab Emirates, Venezuela

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Outsourcing

• the act of one company contracting with another
  to provide services that could be performed by
  in-house employees. These jobs are handled by
  separate companies that specialize in each
  service, and are often located overseas.
• Advantages
• Saves money, cheap labor
• Allows companies to focus on product development
• Outsource companies have specialized technology
  that the company cant afford to buy.

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• Finance Accounting
• Recruitment Process
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• Human Resources Outsourcing
• Legal Processing Outsourcing
• Business Process Outsourcing
• Cloud Computing
• Marketing
• Telecom Expense Mgt
• Selling Outsourcing
• Outsourcing Relationship Mgt

• Contact Center/Call Center
• Advisor Support Center
• Nearshoring
• Travel Hospitality
• Tech Sourcing Directions
• Data Center Services
• Finance Accounting
• Document Management and BPO Improvement
• Telecom Expense Management
• Legal Corner
• Russia A Vast Offshoring Frontier
• China Trends Opportunities

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Outsourcing

• Disadvantages
• eliminates direct communication between company
  and its clients.
• prevent building solid relationships with
  customers
• leads to dissatisfaction on one or both sides
• not being able to control some aspects of the
  company
• may lead to delayed communications project
  implementation.
• sensitive information is more vulnerable
• dependent upon its outsource providers, if
  outsource provider backs out on their contract
  suddenly.

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Infrastructure

• The basic support systems needed to keep an
  economy going.
• Includes
• Transportation Most important
• Communications how linked to the world
• Internet Satellite communication
• Power
• Water Sanitation
• Education Systems

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What is Development?

• DEVELOPMENT
• Reaching an acceptable standard of living for
  all people by improving economic and social
  conditions.
• DEVELOPING COUNTRY
• Low- and middle-income countries in which most
  people have a lower standard of living with
  access to fewer goods and services than do most
  people in high-income countries.
• There are currently about 125 developing
  countries with populations over 1 million in
  1997, their total population was more than 4.89
  billion.

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Levels Of Development
Quaternary Stage 3/4 Populations

• Developed
• Newly Industrialized
• Developing

Modern cities Poor rural area Secondary Economic
Activities Tertiary Activities Stage 2 populations
Agricultural/Primary Activities Poverty Stage 1
population characteristics
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Less Developed Country

• low national income, GDP
• high rate of population growth
• High unemployment, dependence on commodity
  exports.
• Majority of nations in Asia, Africa, and Latin
  America,
• Low development of infrastructure

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LDC

• The Least Developed Countries represent the
  poorest and weakest segment of the international
  community.
• More than 880 million people (about 12 of world
  population), but account for lt 2 of world GDP
  about 1 of global trade in goods .

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Newly Industrialized Country

• A country whose level of economic
  development ranks it between the less
  developed and more developed classifications.
• Have moved from an agriculture-based economy to
  a more industrialized, urban economy,
  developing infrastructure.

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NIC

• NICs usually share some common features,
  including
• Increased social freedoms and civil rights.
• Strong political leaders.
• A switch from agricultural to industrial
  economies, especially in the manufacturing
  sector.
• An increasingly free enterprise economy, allowing
  free trade with other nations in the world.
• Large national corporations operating in several
  continents.
• Strong capital investment from foreign countries.
• Political leadership in their area of influence.
• Lowered poverty rates.

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More Developed Country

• A country with high levels of economic
  development infrastructure.
• Indicators of development
• low birth rate (lt 10) infant mortality rates (lt
  12 per thousand)
• less than 10 of the workforce in agriculture
• high levels of nutrition, secondary schooling,
  literacy, electricity consumption per person, and
  GDP per capitagenerally above US 20,?000 per
  capita.