Trades Economic Environment

1
Trades Economic Environment

• Chapter 2

2
Assessing Market Potential

• Population and Demographics
• Income Income Distributions
• Consumption Patterns
• Infrastructure
• QOL
• Local acceptance of investment

3
Aging developed countries
4
World Population Trends

• http//www.unfpa.org/pds/trends.htm

5
Income Income Distributions

• Very low family incomes
• Ex Cameroon
• Very low, very high family incomes
• Ex India, Mexico
• Low, medium, high family incomes
• Ex Portugal
• Mostly medium family incomes
• Ex Denmark

6
Purchasing Power Parity

• The Big Mac Index
• http//www.economist.com/markets/bigmac/displaySto
  ry.cfm?story_id4065603

7
Human Development Index

• http//en.wikipedia.org/wiki/UN_Human_Development_
  Index

life expectancy, literacy, education, and
standard of living
8
G-8 Countries

• Leaders from these high income countries work to
  establish prosperity and ensure monetary
  stability
• United States
• Japan
• Germany
• France
• Britain
• Canada
• Italy
• (Russia)

9
The Triad

• Dominant economic centers of the world
• Far East
• Europe
• North America

10

• 2002 Martin Hofstede

11
Changes in the World Economy

• Emergence of global markets
• Integration of world economy
• Increased volume of capital movements
• End of the Cold War
• Diminishing importance of national boundaries due
  to technological advancements

12
Regional Integration
13
North America

• Canada, United States, Mexico
• NAFTA established free trade area
• all three nations pledge to promote economic
  growth through tariff reductions and expanded
  trade and investment
• no common external tariffs
• restrictions on labor and other movements remain

14
Common Market of the South (MERCOSUR)

• Argentina, Brazil, Paraguay, Uruguay
• Customs union, seeks to become common market
• internal tariffs eliminated
• common external tariffs up to 20 established
• in time, factors of production will move freely
  through member countries
• Chile and Bolivia -
• associate members
• participation in free trade area but not customs
  union

15
Association of Southeast Asian Nations (ASEAN)

• Brunei, Indonesia, Malaysia, Philippines,
  Singapore, Thailand, Vietnam, Cambodia, Laos,
  Burma
• Began implementing a free trade area in 2003
  2008.
• Tariffs of 20 will be reduced to 0 - 5
• Singapore represents great success among ASEAN
  nations

16
European Union

• Initially began with the 1958 Treaty of Rome
• Objective to harmonize national laws and
  regulations so that goods, services, people and
  money could flow freely across national
  boundaries
• 1991 Maastricht Treaty set stage for transition
  to an economic union with a central bank and
  single currency (the Euro)

17
Current EU Members

• Austria
• Belgium
• Denmark
• Finland
• France
• Germany
• Greece
• Ireland

• Entered in 2004
• Czech Republic
• Hungary
• Poland
• Estonia
• Latvia
• Lithuania
• Slovakia
• Slovenia
• Cyprus
• Malta

• Italy
• Luxembourg
• Netherlands
• Portugal
• Spain
• Sweden
• United Kingdom

Countries have chosen not to adopt the Euro