Ch 2. The Global Economic
Environment
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The World Economy – An Overview
Economic Systems
Stages of Market Development
Balance of Payments
Trade Patterns
The World Economy – An Overview
 Capital movements replaces trade as driving
force
 Production uncoupled from employment
 The world economy dominates the scene
 The struggle between capitalism and
socialism is over
 The growth of e-commerce diminishes
national barriers
Economic Systems
 Market Capitalism – North America and
Western Europe
 Centrally-Planned Socialism – China, the
former Soviet Union, and India
 Centrally-Planned Capitalism – Sweden,
and Japan
 Market Socialism – Singapore and Sierra
Leone
Stages of Market Development
 Big Emerging Markets (BEMs) – Mexico, Brazil,
China, and India
 Low-Income Countries – GNP per capita of $785
or less - Bangladesh
 Lower Middle Income Countries – per capita $786$3,125 – Poland, Turkey, and Indonesia
 Upper Middle Income Countries – per capita
$3,126-$9,655 –Malaysia, Brazil, Chile, and
Hungary
Marketing Opportunities in LDCs
and DCs
 Look beyond per capita GNP
 Consider LDC and DCs collectively
 Weight the cost and benefits of the first to
enter their markets
 Set realistic goals and deadlines for entry
High Income Countries
(with GNP higher than $9656)
 Group of Seven (G-7): USA, Japan,
Germany, France, U.K., Canada, and Italy
 OECD – 29 nations
 Triad – Japan, Western Europe, and USA
Marketing Implications of the Stages
of Development
 Product Saturation Levels
Balance of Payments
 Current Account and Capital Accounts
 Trade Deficit vs. Trade Surplus
Trade Patterns
 World Trade Flows – Figure 2-3
 Merchandise Trade vs. Service Trade