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Chapter 9

Emerging Markets

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Stages of Economic Development

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 2d ed. (London: Cambridge University Press, 1971), p.10.

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United Nations EconomicDevelopment System

More-Developed Countries (MDC)More-Developed Countries (MDC)

Less-Developed Countries (LDC)Less-Developed Countries (LDC)

Least-Developed Countries (LLDC)Least-Developed Countries (LLDC)

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Newly Industrialized CountriesGrowth Factors

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

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Infrastructure of Selected Countries

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

Kenya 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

Highways* Railways Trucks Electricity(paved km) (km) and Buses Production

Country (000) (000) in Use (000) (million kwh)

*Includes unpaved and paved.

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

"Indicators of Market Size for 115 Countries,” Crossborder Monitor August 27, 1997, p.4.

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Common Traits of Big Emerging Markets

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.

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Big Emerging Markets

AsiaASEAN^ 413.7 $ 508.4 $ 12,192 $ 464.6CEA (Chinese Economic Area)‡ 1,188.0 435.6 367 135.9India 870.0 238.3 274 42.2South Korea 43.7 296.8 6,799 150.6

Latin AmericaMexico 89.5 333.3 3,722 85.9Argentina 33.1 228.8 6,912 21.2Brazil 156.8 409.2 2,609 55.8

AfricaSouth Africa 39.8 114.8 2,882 17.1

EuropePoland 38.4 83.6 2,178 35.6Turkey 58.8 156.0 2,747 38.9

Possible AdditionsColombia 33.4 43.5 1,303 12.3Venezuela 20.3 60.4 2,984 25.2

Population GDP GDP Trade*(millions) ($ billions) (per capita) ($ billions)

* 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.

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The Americas

CUBA

CANADA

UNITED STATES

MEXICO

Alaska(United States)

Hawaii(United States)

BRAZIL

BOLIVIA

PARAGUAY

URUGUAY

AR

GE

NTI

NA

PERUECUADOR

VENEZUELA

Montreal

PACIFIC OCEAN

GUYANA SURINAME FRENCH GUIANA

GUATEMALA

ST. SALVADOR

COSTA RICA

PANAMA

GREENLAND (DENMARK)

CH

ILE

Toronto

DetroitChicago

Los Angeles

San Francisco

Dallas

COLOMBIA

HONDURAS

NICABAGUA

Miami

JAMAICA

HAITI

Buenos Aires

Belo Horizonte

Rio de Janeiro

Sao Paulo

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Economic and Social Data for Selected Countries

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

Colombia 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

Consumer Spending Hospital Number Literacy Tourism

Food Percent Clothing Percent Beds per of (Percent) Receipts

($ million) of ($ million)** of (000s) Doctors ($ million)**

Country Total* Total* Population

* Percent of all consumer spending.

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

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Eastern Europe and the Baltic States

ESTONIA

LATVIA

LITHUANIA

POLAND

CZECHREPUBLIC SLOVAKIA

HUNGARYROMANIA

BULGARIA

ALBANIA

YUGOSLAVIA

MACEDONIA

BOSNIA ANDHERCEGOVINA

CR

OA

TIA

GREECE

SLOVENIA

TURKEY

BalticSea

BlackSeaAdriatic Sea

TyrmenianSea

Gulf of Finland

AegeanSea

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Eastern European Markets

Albania 3.28 $ 2.7 $ 820 $ 80$ 147

Bosnia/Hercegovina (*) 2.66 0.8 300 NA

NA

Bulgaria 9.00 11.3 1,336 4,2735,596

Croatia (*) 4.78 26.3 5,600 4,6337,582

Czech (**) 10.30 45.7 4,421 17,33823,255

Hungary 10.30 35.4 3,435 12,54015,073

Macedonia(*) 2.05 4.8 2,400 1,2441,420

Poland 38.40 83.6 2,178 22,89229,052

Romania 22.80 40.7 1794 7,5169,256

Slovakia(**) 5.27 9.3 1,763 8,5859,070

Slovenia(*) 1.96 21.0 10,700 8,2689,452

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

(*) Former republics of Yugoslavia.(**) Former republics of Czechoslovakia.

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Asia

MONGOLIA

CHINA

INDIAPAKISTAN

NEPALBHUTAN

BANGLADESH

MYANMAR

LAOS

VIETNAM

CAMBODIA

THAILAND

TAIWAN

S. K0REA

JAPANN. K0REA

PHILIPPINES

Hong Kong

MALAYSIA

SINGAPORESRI LANKA

INDIAN OCEAN

INDONESIA

BRUNEI

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Average Monthly Expenditures for Chinese Households National and Urban Areas - 1994

Food (includes eating out) $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

National Urban Areas

SOURCE: Gallup China.

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Asian Markets - Selected Countries

Australia 18.1 $ 290.7 $ 347.6 $ 52,966$ 61,347

China 1,205 697 578 148,755132,007

Hong Kong 6.2 140.2 22,613 173,546192,764

India 935.4 328.4 351 30,53734,456

Indonesia 193.8 198.1 1,022 43,28539,456

Japan 125.6 5110.5 40,689 443,000335,871

South Korea 44.9 455.5 10,144 125,365135,153

Taiwan 21.1 260.2 12,274 111,837103,652

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

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).

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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 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.

Capitalism with Chinese CharactersJiang Zemin’s Reform Agenda

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Living Standards in Selected Countries

Brazil 38,434 4.05 73% 76% 69%Chile 3,216 4.35 70% 59% 88%China 357,064 3.40 90% NA NAColombia 8,482 4.14 76% 64% 87%Ecuador 2,626 4.36 52% 33% 62%Hong Kong 1,797 3.44 98% 80% 93%India 185,048 5.00 10% 5% 16%Indonesia 43,065 4.50 12% 15% 30%Japan 40,548 3.09 93% 65% 98%Peru 5,057 4.65 49% 43% 48%Philippines 12,750 5.37 NA NA NASingapore 815 3.67 48% 42% 37%South Africa 13,300 3.37 96% 35% 90%United States 100,308 2.62 99% 99% 99%

Percent of HouseholdsHouseholds Persons per Piped Flush Electric

(000) Household Water Toilers Lighting

SOURCES: For additional data, see Demographic Yearbook 1997 (New York: United Nations, 1997); and International Marketing Data Statistics, 18th ed. (London: Euromonitor Publications, 1997).

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Which of the Following have you Purchased in the Past Three Months?

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

Product Percent Percent Percent Percent Percent Percentin in in in in in

United Australia Brazil Germany Japan UnitedStates Kingdom

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

SOURCE: Nancy Giges, "Global Spending Patterns Emerge," Advertising Age, November 11, 1991, p. 64.

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Consumption Patterns in Selected Countries (percent of household expenditures)

Food 10% 12% 19% 35% 29% 37% 38% 30% 52%

Clothing 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%

Education 8% 6% 12% 5% 7% 5% 10% 5%4%

Transport/communications 14% 13% 13% 12% 8% 6% 8% 13%

7%

Appliances/other durables 30% 31% 30% 25% 35% 14% 22% 24%

13%

U.S. Germany Singapore Mexico Poland Iran Kenya Thailand India

SOURCE: For additional data, see Ricardo Sookdeo, "The New global consumer."Fortune, Autumn-Winter 1993, pp. 68_72.

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Living Standards in Selected Countries

Brazil 4.6 1.1 55% 76%69%

Chile 2.9 1.6 70% 59%88%

Costa Rica 4.1 1.4 88% 60%73%

El Salvador 1.7 3.5 35% 28%39%

Ethiopia 2.0 2.6 83% NA62%

Guatemala 2.4 2.7 30% 18%40%

Hong Kong 3.1 0.5 98% 80%93%

Indonesia 3.3 1.2 12% 15%30%

Japan 4.6 0.7 93% 46%98%

Peru 2.4 2.3 49% 43%48%

Saudi Arabia 3.1 1.9 46% 26%61%

Singapore 2.1 2.3 48% 42%37%

Sri Lanka 2.2 2.5 18% 10%15%

United States 5.3 0.5 99% 99%99%

Percent of HouseholdsCountry Rooms per Persons Piped Water Flush Electric

Dwelling per Room Toilets Lighting

SOURCE: International Marketing Data and Statistics, 15th ex. (London: Euromonitor Publications, 1991).