Course Code: IBM 3211

Course unit: CONTEMPORARY ISSUES IN INTERNATIONAL BUSINESS

TOPIC 1: INTRODUCTION TO INTERNATIONAL BUSINESS:

Definition of International Business

Source: Hill, J.S. (2009). International Business: Managing Globalization. Sage. (Free copy
available at www.pdfdrive.com )

The term international business refers to commercial activities performed to promote the transfer
of technologies, goods, services, resources, people, and ideas across national boundaries.
International business occurs under many different formats, from the movement of goods from
one country to another (exporting and trade); to contractual agreements giving firms in foreign
nations legal permission to use products, services, and processes from other nations (franchising,
licensing, subcontracting production); to companies setting up sales, manufacturing, research and
development, and distribution facilities in foreign markets.

The flows of goods, services, technologies, resources, people, and ideas among markets have
major effects on countries and their governments, companies, and individuals. At the nation-state
level, participation in international business activities helps countries take advantage of national
expertise in commerce to deliver goods and services into the international marketplace. It also
increases the varieties of goods and services available in national markets and exposes
consumers to new lifestyles and ideas. Over time, these exposures affect national cultures
including their political and economic institutions, and impact a society’s behaviors, attitudes,
and lifestyles. Governments have major effects on international business activities in determining
how open (or closed) national economies are to external influences such as trade and investment.

For companies, international business increases competition in domestic markets and opens up
new opportunities abroad. Global competition forces firms to be more innovative and efficient in
their use of resources. For consumers, international business brings increased varieties of goods
and services into the world marketplace and enhances living standards. Just as important, open
borders means increased exposure to new ideas, technologies, and ways of doing things.
Source: Griffin, R.W. & Pustay, M. W. (2015). International Business: A Managerial
Perspective (8th ed.). Pearson.

International business consists of business transactions between parties from more than one
country. Examples of international business transactions include buying materials in one country
and shipping them to another for processing or assembly, shipping finished products from one
country to another for retail sale, building a plant in a foreign country to capitalize on lower labor
costs, or borrowing money from a bank in one country to finance operations in another.
The parties involved in such transactions may include private individuals, individual companies,
groups of companies, or governmental agencies. How does international business differ from
domestic business? Simply put, domestic business involves transactions occurring within the
boundaries of a single country, whereas international business transactions cross national
boundaries. International business can differ from domestic business for a number of other
reasons, including the following:

● The countries involved may use different currencies, forcing at least one party to convert its
currency into another.

● The legal systems of the countries may differ, forcing one or more parties to adjust their
practices to comply with local law. Occasionally, the mandates of the legal systems may be
incompatible, creating major headaches for international managers.

● The cultures of the countries may differ, forcing each party to adjust its behavior to meet the
expectations of the other.

● The availability of resources differs by country. One country may be rich in natural resources
but poor in skilled labor, whereas another may enjoy a productive, well-trained workforce but
lack natural resources. Thus, the way products are produced and the types of products that are
produced vary among countries. (“Bringing the World into Focus” provides additional insights
into these issues.)

In most cases, the basic skills and knowledge needed to be successful are conceptually similar
whether one is conducting business domestically or internationally. For example, the need for
marketing managers to analyze the wants and desires of target audiences is the same regardless
of whether the managers are engaged in international business or domestic business. However,
although the concepts may be the same, there is little doubt that the complexity of skills and
knowledge needed for success is far greater for international business than for domestic business.

International businesspeople must be knowledgeable about cultural, legal, political, and social
differences among countries. They must choose the countries in which to sell their goods and
from which to buy inputs. International businesses also must coordinate the activities of their
foreign subsidiaries, while dealing with the taxing and regulatory authorities of their home
country and all the other countries in which they do business.

Characteristic features of International Business

(Source: Rao, P.S. (2008). International Business Environment (2nd ed.). Himalaya.

Conducting and managing international business operations is a crucial venture due to variations
in political, social, cultural and economic factors, from one country to another country. For
example, most of the African consumers prefer less costly products due to their poor economic
conditions, whereas the German consumers prefer high quality and high priced products due to
their higher ability to buy.

Therefore, the international businessman should produce and export less costly products to most
of the African countries and vice versa to most of the European and North American countries.
High priced and high quality Palmolive soaps are marketed in European countries and the
economy priced Palmolive soaps are exported and marketed in developing countries like
Ethiopia, Pakistan, Kenya, India, Cambodia etc. Characteristic features of international business
include:

a) Accurate Information: International business houses need accurate information to make

an appropriate decision. Europe was the most opportunistic market for leather goods and
particularly for shoes. Bata based on the accurate data could make appropriate decision to
enter various European countries.
b) Timely Information: International business houses need not only accurate but timely
information. Coca-Cola could enter the European market based on the timely
information, whereas Pepsi entered later. Another example is the timely entrance of
 Indian software companies into the US market compared to those of other countries.
Indian software companies also made timely decision in the case of Europe.
c) Size of the Business: The size of the international business should be large in order to
have impact on the foreign economies. Most of the multinational companies are
significantly large in size. In fact, the capital of some of the MNCs is greater than our
annual budget and GDPs of the some of the African countries.
d) Market Segmentation: Most of the international business houses segment their markets
based on the geographic market segmentation. Daewoo segmented its market as North
America, Europe, Africa, Indian subcontinent and Pacific markets.

Elements of the International Business- Micro and Macro Environment (Here is the
source):

Organizations operate businesses in a business environment that consists of different factors. The
business environment is categorized as Micro-environment and Macro-environment. Business
activities are directly affected by micro-environment while macro-environment leaves an indirect
impact on all businesses on a large-scale

The difference between Micro and Macro business environment can be understood by looking at
various factors of both that affects business activities.

1. Micro-environment and its factors

Micro-environment has a direct impact on routine business activities and associated with
business at a small-scale. It consists of different forces that are specific to a particular business
and are capable to influence daily operations and performance of the business for a shorter
period. These forces or factors include suppliers, shareholders, customers, employees,
competitors, media, etc.

 Suppliers: These provide resources to businesses like raw material, machinery or

equipment, etc. Their actions can create an impact on the organization’s strategy as they
provide necessary inputs for production. In the absence of timely and adequate services,
the production process may delay that result in more production time and fewer sales.

For example, the marketing strategy of business gets affected in case of increased raw material
prices by suppliers. It will further increase the final product prices. So it is very much required to
maintain a healthy liaison with suppliers to gain a competitive advantage over competitors.

 Customers: Customers being the king of any business are the final receivers of products
or services. They are central to any organization as they contribute to generating revenue
by attracting more customers. So the marketing strategy of an organization is required to
be focused on existing customer retention and attracting potential customers by satisfying
their needs and preferences. After-sales service and more value-added services also play
a key role in increasing the customer base.

For example, In today’s digital era most of the customers share their positive or negative reviews
about the product or services of a brand on different social media channels. This influences the
buying decision of other customers as well because a lot of people are using social media for
different purposes. So satisfied and happy customer always increases the brand value of a
business and contributes to increasing customer base and more loyal customers of the
organization.

 Competitors: Competitors or rivals of businesses can directly affect business strategies.

So, it is very much required to conduct a competitive analysis of competitors to a
competitive advantage that includes the knowledge of their USP (Unique selling point) of
product and service offered. Also, a business can remain in a competitive position by
offering products or services better than competitors.
For example, Wow! Momos brand’s USP lies in its diverse range of momos of different flavors
that give it a competitive advantage over its competitors.

 Employees: Organizations can achieve objectives through skilled employees who are also
experts in their areas. By hiring the right employees and providing adequate training and
development opportunities to them, organizations can ensure success.

For example, Different departments of an organization like finance, production, purchase, HR,
etc. can be more productive if these have competent staff having adequate skills and knowledge
in their respective domains. In case of incorporating new technology in an organization to
increase the efficiency of staff; training on how to use that technology is required to be given to
employees so that they can use the new technology in a better and productive way.

 Shareholders: Shareholders are those who invest their money in a company and also own
shares of it. By doing so, they attain ownership in the company. Ultimately, they are
eligible for return on investment on their share. This makes organizations liable to
forward benefits to them from profits. Organizations also pay dividends to keep the
interest of shareholders. So, to make the right balance between the stakes of shareholders
and own interest is an essential aspect for the organization.

For example, shareholders may expect an increase in their share in the organization’s profit that
can affect an organization in the future. So, better and strong relationships with shareholders are
required for success in the long-run.

 Media: Media channels also play an important role in the way organizations market
themselves. Media has become the necessity of any business for promotional activities of
its products and services. So, organizations are required to maintain a healthy relation and
status with the media people. The company’s negative image in the media may result in
heavy losses. That’s why organizations now have separate PR (Public relations)
department to handle media related activities smoothly and positively. Also,
organizations need to find alternative ways to reach their audience or customers to create
a positive brand image among them.
For example, Different media channels are being used for this, i.e. newspaper advertisements,
television mediums, social media platforms like Youtube, Facebook, Twitter, Instagram,
Linkedin, etc.

2. Macro Environment and its factors

The macro-environment of an organization is related to its general and external environment that
impacts the working style, decision-making process, strategy, and performance of the business.
The macro-environment is a dynamic environment that has a changing tendency. It has external
factors that an organization can’t control.

The macro-environment study is termed as PESTLE analysis that includes different external
environment factors or forces like:

 Political forces

 Economic forces

 Socio-cultural and demographic forces

 Technology forces

 Legal forces

 Ecology and physical forces

So, by the above definitions of Micro and Macro environment following differences in both can
be seen in the below comparison chart:
 

Major or key differences that differentiate Micro and Macro environment are mentioned
as below:
  The micro-environment is a specific environment that is in close contact with the
organization. Wherein, the macro-environment is general to the organization that can
make an impact on all business functions.

 The micro-environment factors can affect a specific business, whereas factors of the
macro-environment influence whole business groups.

 Factors of the micro-environment are under control of the organization but controlling the
macro-environment factors is next to impossible for organizations.

 Micro-environment factors include internal factors i.e. customers, suppliers, competitors,

etc. whereas macro-environment has external factors like political, social, economic, etc.

 Micro-environment factors functioning revolve around the strengths and weaknesses of

an organization which is internal to it. However, macro-environment factors are
concerned about opportunities and threats in the external market of an organization.

3. Summary

Both micro and macro-environment play an important role in the organization’s growth, success,
and existence. Despite being different from each other, both are complementary. By studying
these environmental factors, an organization can prepare a marketing strategy by doing SWOT
(strength, weakness, opportunity, threat) analysis of its business.

The International Business Challenge

TOPIC 2: GLOBALIZATION:

Introduction

Source: Griffin, R.W. & Pustay, M. W. (2015). International Business: A Managerial

Perspective (8th ed.). Pearson.
International business has grown so rapidly in the past decade that many experts believe we are
living in the era of globalization. Globalization can be defined as “the inexorable integration of
markets, nation-states, and technologies . . . in a way that is enabling individuals, corporations
and nation-states to reach around the world farther, faster, deeper, and cheaper than ever before.
There is little doubt that international trade and international direct investment—the two primary
vehicles for conducting international business—are becoming increasingly important in the
world’s economy. Globalization has led to an intensification of the role of international trade in
the economies of the world. Another manifestation of globalization is the growing importance of
Foreign Direct Investments (FDI) - investments made by citizens of one country to operate and
control assets in another.

The Characteristics, Indicators and Debates of Globalization: Is globalization in retreat:

Strategic Imperatives

Several basic motives have compelled firms to become more global in both their orientation and
actions. These strategic imperatives include leveraging a firm’s core competencies, acquiring
resources at low cost, expanding into new markets, and competing with industry rivals.

 To Leverage Core Competencies: One major motive for globalization is the opportunity
to leverage a core competency that a firm has developed in its home market. A core
competency is a distinctive strength or advantage that is central to a firm’s operations. By
using its core competency in new markets, the firm is able to increase its revenues and
profits. Samsung, for example, developed cutting-edge cellular phone technology that
was eagerly adopted by domestic consumers in South Korea. Samsung’s managers
quickly recognized that the firm could increase its revenues and profits by expanding its
operations and sales in other countries. Similarly, since its birth in 1972, Singapore
Airlines has worked hard to develop award-winning standards of customer satisfaction
and reliability that have drawn millions of Asian passengers to its flights. Believing that
travelers in other markets would welcome the tender loving care for which the carrier is
renowned, Singapore Airlines has deftly expanded its services to more than 60 cities in
30 countries throughout the world.
 To Acquire Resources and Supplies: Another important reason for going international
is to acquire resources such as materials, labor, capital, or technology. In some cases
organizations must go to foreign sources because certain products or services are either
scarce or unavailable locally. For example, North American grocery wholesalers buy
coffee and bananas from South America; Japanese firms buy forest products from
 Canada; and firms worldwide buy oil from the Middle East and Africa. In other cases
firms simply find it easier or more economical to buy from other countries. For instance,
many U.S. advertising agencies shoot commercials overseas. Cape Town, South Africa,
has become a popular site, for example, because production crews and equipment can be
hired there for less than 40 percent of their cost in Los Angeles.7 As the chapter’s closing
case, “Demography Is Destiny,” indicates, demographic changes will play a major role in
the future resource acquisition strategies of MNCs.
 To Seek New Markets: Seeking new markets is also a common motive for international
expansion. When a firm’s domestic market matures, it becomes increasingly difficult to
generate high revenue and profit growth. For example, the market for toothpaste in
Canada, the United States, and the EU can be classified as mature—most people there
have had the financial resources for decades to regularly purchase toothpaste. Thus, firms
like Procter & Gamble, Unilever, and Colgate-Palmolive cannot expect to achieve
significant growth in sales from their toothpaste products in these markets and have
aggressively moved into emerging markets like China, India, and Indonesia to seek
greener pastures. Expansion into new markets carries with it two other benefits. First, a
firm may be able to achieve economies of scale, lowering its average costs as its
production increases. Second, such expansion diversifies a firm’s revenue stream. As it
serves more countries, the firm becomes less dependent on its sales in any one country,
thereby protecting itself should that country’s economy turn sour.
 To Better Compete with Rivals: Finally, businesses sometimes enter foreign markets to
better compete with industry rivals. For example, as Coca-Cola expands aggressively
around the world, rival Pepsi-Cola has little choice but to follow and try to keep up.
Should Pepsi allow Coca-Cola to dominate important markets, Coca-Cola could use
profits from those markets to finance attacks on Pepsi in still other markets. Such
thinking permeates industries such as earthmoving equipment, smartphones, and aircraft
manufacturing, where the leading firms continually attack and counterattack each other in
every region of the world to prevent their rivals from getting a stranglehold in any
country.

Debates on Globalization and its discontents

The globalization of the world economy will most likely continue to tie societies and economies
more closely together. Liberal economists and others see in this process of integration the hope
for greater cooperation and prosperity for all nations involved. They welcome the opportunities
that globalization offers for extending markets, deepening the division of labour and raising
productivity in production. Even if globalization brings with it economic dislocation in the short
run, it will contribute to alleviating poverty in the longer run. However, all observers do not
share this optimistic view of globalization. The late 1990s saw the emergence of a transnational
movement of protest against globalization, which gave expression to widespread fears about the
ever-deeper integration of the world economy. For the anti-globalization movement and other
critical observers, globalization holds the threat of economic marginalization and global
inequality, cultural homogenization and the erosion of national sovereignty. Globalization is seen
as a process that benefits the rich rather than the poor, multinational corporations rather than
local communities, and the West and the United States in particular rather than the developing
world. Furthermore, the global financial crisis and economic recession that started in 2008 have
highlighted the profound dangers of ever greater global integration of financial markets amidst
weak regulatory oversight of the banking sector by governments. The growing unease about the
consequences of globalization has manifested itself in a number of high-profile protests against
international conferences and organisations. In 1999, protesters fought street battles with the
police of Seattle (USA) outside the meeting of the Ministerial Conference of the World Trade
Organization (WTO). Other high-profile meetings of the International Monetary Fund (IMF), the
World Bank and G8 have since provoked similar public demonstrations. These protests are but
the most visible manifestation of an anti-globalization sentiment that has spread throughout the
world. It is worth considering the main objections that are being raised against the process of
globalization:

i. Distribution of wealth and inequality: One of the most contested questions in the debate
on globalization is whether it will lead to a more equal or unequal distribution of wealth
worldwide. Proponents of greater economic integration argue that it will stimulate economic
growth in all countries that are opening up their economies, and particularly in those that are
starting out from a lower level of prosperity. The recent economic success of economic
liberalization in countries such as China and India, which has seen annual growth rates of
between eight and 10 per cent for more than a decade, is seen as an example of what
globalization and economic reform can achieve. Critics of globalization point to the serious
economic dislocations that countries experience when they open their economies to international
trade and capital flows. In their view, globalization allows for a greater concentration of
economic wealth and power in the hands of global corporations and the most industrialized
economies of the North. Cases of economic growth in developing countries in fact result in
greater inequality within those countries, leaving many local communities exposed to the
destructive forces of market competition. To some extent, the different perspectives of
proponents and critics of globalization reflect their different time horizons. The former point to
the long-term growth prospects for all sections of society, while the latter focus on the short-term
dislocations that economic change brings with it. But beyond this, real differences in opinion
persist with regard to the question of what opportunities and threats the spread of global
capitalism produces for workers, local communities and developing countries.

ii. Loss of national autonomy: A central argument of critics of globalization is the eroding
effect global integration has on national autonomy that is the ability of states to set and pursue
independent policy objectives. No country in the world is, of course, entirely autonomous. But
globalization is seen to enmesh countries in a growing web of transnational links that leaves
them increasingly exposed to global market forces. Critics argue that the resulting power shift
from states to global firms puts pressure on governments to provide an attractive investment
climate for multinationals. Governments are locked into a ‘race to the bottom’ in which they
compete with each other for foreign investment by deregulating the economy and dismantling
welfare states. Proponents of globalization counter this argument by highlighting the contrary
empirical evidence. The role of the state in industrialized economies has changed little over the
last 40 years. Despite sustained periods of deregulation in the 1980s and 1990s, state spending as
a proportion of GDP has actually increased during that period. The recent financial crisis has
forced governments to reduce public spending again in an effort to cut fiscal deficits but
spending levels will likely remain high, at levels last seen shortly before the financial crisis.
Furthermore, there has been little convergence between the different models of capitalism in the
industrialized world, with central European and Scandinavian countries continuing to rely on a
significantly larger role for the state in the economy than Anglo-Saxon countries.
iii. Environmental costs: Trade liberalization and global market integration have been linked
to environmental degradation around the world. Ecologists argue that international trade
promotes an energy-intensive exchange of goods between distant communities that contributes to
global warming through higher fossil fuel consumption, and erodes local and regional forms of
sustainable production and exchange. In that trade fuels higher economic growth and the spread
of unsustainable patterns of production, it acts as a major force behind the exploitation of natural
resources. Advocates of free trade respond by pointing to the efficiency-raising effects of
international trade that help reduce resource inputs in production. By extending competition and
forcing inefficient companies out of business, trade can be a force for higher resource-efficiency
in the economy. An important condition for reducing the environmental side-effects of trade
liberalization is, however, that all costs of moving goods around the world are fully integrated
into their prices. An important step in that direction would be to raise energy prices in transport,
be it by air, sea or land, to reflect the so-called ‘environmental externalities’ especially of fossil
fuels (e.g. their contribution to global warming).

As this brief review of concerns over globalization has shown, global economic integration poses
serious dilemmas for states and societies around the world. Globalization has changed, and will
continue to change, the nature of international relations. But it is unlikely to lead to the demise of
the nation state. States continue to play a key role in determining how much societies benefit
from globalization and how well they are protected from its negative consequences. The
interaction between states and global markets thus remains a key focus in the study of
international political economy.

Impact of the Global Financial Crisis (2007-9) on International Business Activity (Source:
UNCTAD):

The world economy faced a severe global crisis that spilled from the financial sector to the real
economy, including international trade in manufactures, commodities and services. The onset of
the crisis can be traced back to July 2007 with the liquidity crisis due to the loss of confidence in
the mortgage credit markets in the United States. At first, there was uncertainty about the
possible spillovers to the rest of the economy, and there was also discussion about the risks of
contagion and decoupling, that is to say, the capacity of other countries – especially developing
countries – to isolate themselves from the problems originating in the United States (which is the
largest market for many countries). The hope was that the crisis would be restricted to financial
markets, with few repercussions on the real economy and the rest of the world. This hope was
shattered in September 2008 as the crisis entered an acute phase, with strong downward
fluctuations in the stock markets, substantially reduced rates of economic growth, volatile
exchange rates, and squeezes in demand and consumption, leading to falls in industrial
production and decreasing flows of international trade and FDI, and causing impacts on related
areas such as transfer of technology. The crisis has also been accompanied by increases in
unemployment, with concomitant declining incomes and demand. Unemployment could rise by
50 million during 2009, taking the global unemployment rate to above 7 per cent.1 2. By virtue
of globalization, the moment the financial crisis hit the real economy and became a global
economic crisis, it was rapidly transmitted to many developing countries through a contraction in
trade finance and a slowdown in demand affecting bilateral trade flows. These transmission
channels were particularly visible in sectors composed of global production and supply chains.
As most developing countries are heavily dependent on developed country markets, the slump in
demand from latter due to the crisis has had an adverse impact on the former. 3. Most developing
countries are now closely linked to the global economy by trade and FDI flows. As a
consequence of the crisis, the significant reduction of these flows is starting to restrain their
development perspectives. Developing countries are currently seriously hurt through falling
commodity prices, demanddriven drops in exports exacerbated by the deficit of credit and trade
finance, capital outflows, declining remittances, and contracting investment. The prospects are
more dire for export-oriented developing countries, especially those with a small domestic
economy, where the reduction in international demand is more likely to curtail their exports and
raise unemployment. As observed in some developing countries, workers are increasingly
shifting out of dynamic exportoriented sectors into lower-productivity activities (and moving out
of urban areas back into rural areas). 4. These impacts are being combined with the effects of the
ongoing food crisis, volatile energy prices, and the climate change challenge. Many developing
countries are also dependent on ODA, which may shrink during the crisis. Potentially, the
aggregate of all these effects could bring millions of people back into poverty and worsen the
conditions of those presently living in extreme poverty. This threatens to stall and reverse many
years of efforts to achieve internationally agreed development goals, including the SDGs (sic).
The global crisis and its lessons will be subject to extensive in-depth analyses as it progresses.
There are many challenges to be addressed, but there are also policy areas which countries can
develop – nationally and globally – to sustain trade and development. One challenge is to analyse
specific development implications of the crisis, and suggest policy proposals to cope with its
detrimental impacts in the short term and rethink development policy for the medium-to-long
term. Significantly, signs are emerging of fundamental shifts in the way market economies
operate and in the role of governments in economic activities. The crisis affecting development
may require rethinking of the whole economic and social paradigm that has prevailed over the
last decades and has nurtured the process of liberalization and globalization. It may involve the
articulation of ideas on trade and trade-related policies and sectors that have shown some
resilience to the crises and can serve as a bulwark on which to restore confidence, build recovery
and foster inclusive development. For the moment, however, it is still too early to assess the real
depth of the crisis and its likely duration, and also the effectiveness of the mitigating measures
being undertaken by various governments.

Countries are responding to the global crisis. At the national level, some countries, both
developed and developing, have undertaken national stimulus packages to mitigate the
detrimental impact, especially by providing credit, supporting affected domestic industries, and
promoting jobs. At the level of the G20, leaders of the G20 countries met in London in April
2009 and pledged to undertake and promote measures to restore credit, growth and jobs in the
world economy. At the global level, the United Nations General Assembly has agreed to convene
“a United Nations conference at the highest level on the world financial and economic crisis and
its impact on development” from 1 to 3 June 2009. This provides an opportunity for the United
Nations as a whole to reflect on the causes of the crisis, assess the impacts on all countries, and
suggest adequate responses to avoid a recurrence of the crisis and to restore global economic
stability. The preparatory process and the conference will draw upon the report of the
Commission of Experts of the President of the General Assembly on Reforms of the
International Monetary and Financial System. These, and other initiatives, are indicative of the
commitment of countries and the international community to comprehensively addressing the
crisis and preventing it from ushering in a sustained period of global recession.
The effects of this crisis reverberated on world trade in goods and services, commodities and
investment, particularly from a development perspective. There was a decline in goods traded as
a consequence of the crisis, booms-to-busts trends in commodity prices and the impact on the
development prospects of commodity-dependent developing countries, impacts on trade in
services and services sectors, on FDI, including FDI inflows into, and outflows from, developing
countries. Further reading on these as well as some policy responses, especially at the
multilateral level, to cope with the impact of the crisis, including eschewing protectionist
tendencies and restoring favourable conditions for trade expansion and sustainable development
can be accessed on the link at the beginning of this section.

Rising Consumption in Emerging Markets and its Implications for the Industrialized
Countries

Source: https://knowledge4policy.ec.europa.eu/foresight/topic/growing-
consumerism/developing-countries-emerging-markets_en

Developing countries have both a growing economy and a growing consuming population, while
developed countries are mostly replacement economies.

Developing economies and emerging markets are expected to continue growing relatively fast,
given their increasing labour force and expanding markets potential, versus the advanced
economies, which are mostly replacement markets. 

 Of today's global middle class, 25% lives in advanced economy countries, some 40%
lives in Brazil, Russia, India, and China, while the rest lives in other developing nations.
Related megatrends:Geopower; Urbanisation
 The middle class of the BRIC countries grew from half of that of the G-7 in 2000 to
double of that of the G-7 today, and continues to expand rapidly.
Related megatrends: Geopower; Inequalities
 By 2030, Asia might represent 66% of the world middle class population.
 China is already the second largest middle class in absolute terms, at 157 million
consumers (the top largest is the USA) and is expected to grow further. Related
Megatrends: Geopower; Demography
 By 2030, over 70% of China’s population could be middle class, consuming nearly $10
trillion in goods and services and India could be the world’s largest middle class
consumer market, surpassing both China and the USA.