Developing Nations in the

Global Economy

IB Class # 5 (18/01/10)
 Economic Development
Refers to the development of economic wealth of
countries or regions for the well being of their
population. The economic well being of a nation is
reflected in the level of economic development.
 Levels & areas of economic Development
Levels of economic development

Developed countries Newly industrialized Emerging countries Least developed

(DC) countries (NIC) (EC) countries (LDC)
 Level of Economic Development : country categories
Economic development indicator Based
up on Gr
oss D
omes
Huma tic Pr
n Dev & oduct
High elopm (GDP
ent In )
dex (H
DI )

Moderate

Low

Developed Newly Emerging Developing Least

countries Industrialized Countries Countries Developed
countries Countries
Economic development covers:
Government policies to meet common economic
objectives of the country.
Policies and programs to provide infrastructure
and services such as highways, parks, affordable
housing and crime prevention.
Policies and programs to create and retain
employment through detailed efforts in finance,
marketing, neighborhood development, small
business development, technology transfer and
real estate development.
Developed economies in the Global Economy

Australia France Italy Portugal Switzerland

Austria Germany Japan San Marino Taiwan
Belgium Greece Luxembourg Singapore United
Kingdom
Canada Hong Kong Malta Slovenia United States
Cyprus Iceland Netherlands South Korea
Denmark Ireland New Zealand Spain
Finland Israel Norway Sweden

International Monetary fund (IMF)

East Asia – Newly Industrialized Countries (NICs)
 Japan, South Korea, Hong Kong, Taiwan & Singapore

Asia’s four tigers

 Japan is world’s second largest economy, with a GDP of US$ 4.3 trillion & exports of US$ 518
Billion in 2007
 2nd highest purchasing power and consumption level, only after US
 Govt. policy to heavy exports while restricting imports for the last 50 years
 High personal savings ratio encouraged the economic growth rate in Mid 60s and 70s
 Sustainable competitive advantage in LOW COSTS & HIGH EFFICIENCY
 Japan’s major long term problems are massive government debt of 182% and the aging
population
 Japan’s rapid economic advance to become 2nd most technologically powerful economy and
2nd largest economy in the world is aided by Govt industry cooperation, strong work ethic,
competence in high technology and small defense allocation.
 One prominent characteristics of the economy was “Keiretsu” (series or subsidiaries). It
integrates large group of companies and major Japanese banks in a strong business
relationship. Exporting in Japan is conducted by Keiretsu members are supported by “SOGO
SOSHA”, which acts as a trading company in Japan.
 Another major reason for Japanese success has been the guarantee of life time employment
for a substantial portion of the urban labor force.
 Case: Recession fears engulfing Europe
(Duncan Bartlett of BBC news’ 17th July’ 2008)
 A mood of fear and pessimism for recession.
 Following a collapse of the property market Spannish economy minister Pedro
Solbes said that the country was facing its most complex crisis ever. A leading
Spannish property group “Martinsa-Fadesa” filed for bankruptcy.
 Ireland suffered a housing market collapse and many people run up huge personal
debts. Earlier Irish economy shrank and economists predicted if the trend
continued then by the end of 2008 it would fall into recession
 Dannish Government stepped in to rescue a failing bank Rosklide in early July’ 08.
Another audio and video company “Bang & Olufsen” was also in trouble - it issued
three profits warning over the last six months.
 Biggest problem Europe facing was a sharp rise in inflation. In Eurozone it rise at
4%- double the 2% rate set by the European Central Bank (ECB).
 Economists said that the rising food and oil prices will negatively affect the
emerging market countries which used to import a large number of European
products. They also predicted that Europe had a 30% chance to fall into recession.
 The whole situation was somehow different for Germany. Because of the huge
export of specialized German equipment and machineries. Those goods were not
easily substituted by similar products from other countries.
When we complete International
Business course we want to be
professionals in Globalization…
right???

Are we ready…..