GLOBAL BUSINESS PROJECT

Project Report

SUBMITTED BY:

Chakilam Amarnath (20FMUCHH010103)

Goudicharla prashanth (20FMUCHH0174)

Bodla Ruthwik Sai (20FMUCHH010486)

Peddi Navya Sree (20FMUCHH010751)

Sampath Revani (20FMUCHH010848)

SUBMITTED TO:

Dr.Abhishek Sinha

Assistant Professor

Department of Finance

ICFAI BUSINESS SCHOOL

Hyderabad,Telangana

1
 PHASE-1: Economic analysis

Executive Summary:

The rationale of this project is to analyze the overall development scenario in all the countries and to
study their economies according to their relative performance. The objective is to identify the areas
of concern, and know which would be a better country in terms of doing business or investing.
This report includes information of emerging economies of India, Brazil and South Korea.

There has been a growing interest in recent years in the nature of the economic challenges facing
countries’ economies, and in the determinants of differences between them in their relative economic
performance. Research on economic indicators, government policies and GDP analysis is done to
create a comparison between these emerging economies. National as well as international level data
are analyzed to speculate on possible causes of economic performance variations within and between
these countries. Information about demand conditions, factor conditions, firm strategies and rivalry
present in these economies, which helps in understanding the competitive advantage that nations or
groups possess due to certain factors available to them and to explain how governments can act as
catalysts to improve a country’s position in a globally competitive environment.

Happiness index which is one of the best tools for evaluating global happiness by taking into consid-
eration characteristics such as GDP per capita, social support, Life expectancy etc. is also used as a
measure of comparison between these countries.

Hofstede’s cultural Index, is another tool used in this report to highlight the cultural differences be-
tween India, South Korea and Brazil.

Introduction:

Indian economy has been a mixed economy and now is also the fastest growing economy in world
expecting to be one of the top three economies by next 10-15 years. To become the one of top 3
economies government has taken some initiatives like increasing non- farming jobs by 1.5% per
year and to achieve growth to 8- 8.5% between 2023-2030, where farming jobs are primary re-
source for about 58% population in India adding gross value by 17.8% to economy in FY 2020. On
February 1st 2021, third decades first union budget was presented with combination of short, me-
dium and long terms. India is now becoming the fastest home to start ups focused on high growth
area such as mobility, E- commerce & other specific solutions- creating new markets and deriving
innovation. Our prime minister Narendra Modi ji has also started the make in India to encourage
local products and services and to boost our economy by increasing the employment rate. Govern-
ment has also taken initiatives so that foreign direct investment increases in India i.e., 75%.

 India has emerged as the fastest growing major economy in the world and is expected to be
one of the top three economic powers in the world over the next 10-15 years, backed by its
robust democracy and strong partnerships.

 India needs to increase its rate of employment growth and create 90 million non-farm jobs
between 2023 and 2030's, for productivity and economic. Net employment rate needs to grow
by 1.5% per year from 2023 to 2030 to achieve 8-8.5% GDP growth between 2023 and 2030.

2
  The first Union Budget of the third decade of 21st century was presented on February 1,
2020. The budget aimed at energizing the Indian economy through a combination of short-
term, medium-term and long-term measures.

 In November 2020, the Government of India announced Rs. 2.65 lakh crore (US$ 36 billion)
stimulus package to generate job opportunities andprovide liquidity support to various sectors
such as tourism, aviation, construction and housing. Also, India's cabinet approved the pro-
duction-linked incentives (PLI) scheme to provide ~Rs. 2 trillion (US$ 27 billion) over five
years to create jobs and boost production in the country.

 Numerous foreign companies are setting up their facilities in India on account of various Gov-
ernment initiatives like Make in India and Digital India. Make in India initiative is launched
with an aim to boost country’s manufacturing sector and increase purchasing power of an
average Indian consumer, which would further drive demand and spur development, thus ben-
efiting investors. The Government of India, under its Make in India initiative, is trying to
boost the contribution made by the manufacturing sector with an aim to take it to 25% of the
GDP from the current 17%.

Key drivers:

Technology: Artificial intelligence and machine learning are completely transforming businesses.
Owing to the Covid outbreak, pharmaceutical companies are increasing their investments in AI,
R&D, in their search for breakthrough molecules. According to a market share report by Grand View
Research, the global artificial intelligence market size was valued at $ 93.5 billion in 2021 and is
expected to grow at a CAGR of 38.1% between 2022 to 2030.

Service Sector: It is the fastest-growing sector in the Indian economy and is a key driver of India’s
economic growth. the sector contributed 55.39% to India’s Gross Value Added in 2020. Technology
is enabling the institutes to transition online and facilitate virtual assessments. According to an indus-
try report by Global Markets Insight, the E-Learning market size was over $ 315 billion in 2021 and
is expected to grow at a CAGR of 20% between 2022 to 2028.

Health & Nutrition Products: The Covid-19 pandemic has made the population more aware of health
and wellness. Many home-grown Ayurvedic and skincare brands like Patanjali and Upakarma Ayur-
veda have clocked more than 100 percent YOY growth in 2020. The rise in the aged population is
another major factor contributing to the growth. Many of these brands have undertaken a D2C ap-
proach in reaching out to customers. This has increased their profit margins. Post-lockdown a lot of
people are buying online.

Health care sector: India’s healthcare sector is expected to record a threefold rise, at a CAGR
of 22 per cent over 2016-2022, to reach US$372 billion by 2022 from around US$110 billion
in 2016. The India home healthcare market is expected to grow at a compound annual growth
rate of 19.2% from 2020 to 2027 to reach USD 21.3 billion by 2027.

Infrastructure: Infrastructure-related operations made about 13 per cent of the $ 81.72 billion total
FDI inflows in the financial year (FY) 2021. India's infrastructure is anticipated to expand at a
compound annual growth rate (CAGR) of almost 7 per cent during the forecast period.

3
Salient Features of Indian Economy:

o Mixed Economy
o Over-Population
o Low per capita Income
o Dominance of Agriculture and Heavy Population Pressure on Agriculture
o Unbalanced Economic Development
o Lack of Infrastructure Facility
o Poor Economic Organization
o Low rate of capital formation

BRICS:

We chose Brazil, South Korea to compare with India. Because all the mentioned countries are
developing countries, and every country’s economy has its highest contribution from industrial
sector.

• BRIC is an acronym for the economic bloc of countries consisting of Brazil, India, and
China.
• In 2010, South Africa joined the BRIC group.
• Economists believe these four nations will become dominant suppliers of manufactured goods,
services, and raw material by 2050 due to low labor and production costs.

Brazil:

Though it has several characteristics of a developed nation, including the largest economy in South
America or Central America, Brazil is still considered a developing country due to its lower GDP per
capita, higher infant mortality rate (11.830 per 1000), and other factors. Its high birth rate, at 13.313
births per 1,000 people in 2021, a 1.86 decline from 2020. Several factors contribute to all % decline
from 2020 is also of these metrics, including lack of clean water; limited access to adequate
healthcare, particularly in rural areas; abysmal housing conditions in many regions; and substandard
diets.

Brazil’s GDP growth rate was decent till 2015-16 peak of recession and then before its complete
recovery from this covid crisis had hit hard, its growth rate has been decreased by 5%. Brazil high-
est economic contribution is service sector and then includes industry, i.e., manufacturing and con-
struction, and least in agricultural. Brazil has weak fiscal policy space limited since the peak of
2015-16 recession. Government of Brazil put forward a large, timely, targeted and time bound fiscal
package focused on social assistance to protect the most vulnerable people.

India:

Although India is an exceptionally wealthy country (ranked fifth in terms of overall GDP), like China,
its high population results in a rather low GDP per capita. The Republic of India is considered both a

4
newly industrialized nation and one of the fastest developing countries on Earth. However, the coun-
try continues to struggle with issues like widespread poverty, poor water and sanitation, and over-
population. India hosts a diverse economy, ranging from traditional farming to contemporary agri-
culture, and handicrafts to a wide range of industrial products.

South Korea:

The country has a strong GDP compared to brazil and offers its citizens widespread access to
quality healthcare and higher education. Following several decades of rapid economic growth and
global integration, the Republic of Korea has become a high-technology and industrialized nation,
with its most important sectors being electronics, telecommunications, automobile production,
chemicals, shipbuilding, and steel. That said, the country is reliant on exports and is currently facing
other major challenges, such as an aging population and low worker productivity.

South Korea’s main contribution in GDP growth rate comes from the manufacturing sector and ex-
ports. It is an export-oriented economy. South Korea’s economy has been lagging since 2018 due to
flagging exports and investments. Government is focusing on job creation and welfare-expansion.
The youth unemployment rate is higher compared to general unemployment rate which is stable and
low at 3.7% (unemployment rate). Increasing number of local governments and public enterprises
are struggling due to insufficient revenues. R&D expenditures are very substantial. Tax rates are low,
redistributive effects are weak.

Indicators of economic growth:

Brazil 2021 India 2021 South Korea

2021
GDP
(US $) 3.173 trillion$
1.608 trillion$ 1.80 trillion$

GDP growth(an- 4.6 8.9 4.0

nual%)

Inflation GDP 11.1 9.6 2.3

deflator
(annual%)

Industry (% of 18.9 25.9 32.5

GDP) Value
added

Agri. fishing, for- 6.9 16.8 1.8

estry (%of GDP)
Value added

5
 GDP Per capita 3.9 7.9 4.2
growth (annual
%)

Gross fixed capi- 19.00 28.00 31.00

tal formation
(%of GDP)

Tax revenue
(%of GDP) 13.00 12.00 (2018) 14.90 (2020)
(2020)

Source: https://databank.worldbank.org/home.aspx

1. The base year chosen was 2021 when the entire world was growing from the shambles due to the
coronavirus outbreak. Hence, it’s understandable why all countries show positive growth. But if we
have a look at the 2020 growth rates, India stands at -8.0%, which was very well affected by the
pandemic. GDP had contracted 24.4% in the April to June 2020 quarter, followed by a 7.4% shrinkage in
the second quarter. It had returned to positive territory in the September to December quarter with a
marginal 0.5% growth.
2. The GDP/inflation deflator is a useful measure of inflation. According to the given data the impact
of inflation on the gross domestic product during a specified period, typically a year is the highest in
Brazil and lowest in South Korea. India’s high inflation rate can be attributed to rampant hoarding
which creates an artificial market, shrinkage in agriculture, high oil prices, higher input/raw material
prices etc. It can be fended off with imports to balance out the economy. Here it is also important to
note that Brazil has the strongest currency owning to its strong exports (2nd biggest export being
crude oil/petroleum) among other factors.

3. The industry value added is the contribution of a private industry or government sector to overall
GDP. India’s quick performance is because we are transitioning at a high pace. There are fair
enough jobs in the industry. Job creation is at a point of stable level (not too good, not too bad).
Government had pumped in large money for the industry’s development. Creation of SME’s are
vital. Creating job creating industries rather than automation industries as the former provides more
jobs than the latter. Tourism is a good example as it requires more manpower. Our FDI policies
should be suitable so that industries from abroad set up their companies here..

4. South Korea stands lowest in agriculture, fishing, and forestry value added whereas India is the
highest as the major occupation of people here belongs to the agriculture sector. The interesting thing
to note here is that, according to calculations, 55% people are employed in this sector. Yet, they
produce 20% revenue. This is because disguised unemployment is substantial in this sector. This
problem can be solved by shifting people to the urban areas. Forestry although disorganized produce
significant amounts. South Korea’s conundrum with regards to this index is its land size, which it
makes up in its industries. They are prominent producers of cars, semiconductors and white goods.

5. The GDP per capita growth indicates the standard of living of a country which also considers the
population. In the above-mentioned countries GDP per capita growth is positive which means the
GDP growth is increasing as population increases and people are spending more.

6. Gross fixed capital formation (GFCF), also called "investment", is defined as the acquisition of

6
produced assets (including purchases of second-hand assets), including the production of such assets
by producers for their own use, minus disposals. The relevant assets relate to assets that are intended
for use in the production of other goods and services for a period of more than a year. The term
"produced assets" means that only those assets that come into existence as a result of a production
process are included. It therefore does not include, for example, the purchase of land and natural
resources. India needs to invest more in capital and less on recurring expenses to improve its score.

Government policies and impacts:

The Government’s fiscal policy in FY 2021-22 combines focus on attaining the objectives of
growth and stability through prudent fiscal management. Despite a challenging situation on account
of recent surge in Omicron infections, pandemic-induced supply bottlenecks, global risks in terms
of low growth forecast, rising inflation and global oil prices, etc. the Government’s fiscal policy
strategy has several positives to its credit. As it is evident from First Advance Estimates (7th
January, 2022) of GDP growth released by the Central Statistical Office (CSO), this strategy has
also demonstrated inclusiveness through successful on-boarding of States and the private sector for
broad basing the country’s economic revival and consolidation. Tax policy is directed towards twin
objective of having broader tax base and higher tax collections. The Government policy is oriented
broadly in favour of minimizing exemptions and broadening the tax base to achieve a higher tax to
GDP ratio. In Budget 2022- 23, the gross tax revenue (GTR) has been estimated at 10.7 per cent of
GDP.

Happiness Index& Hofstede Cultural Index:

HAPPINESS INDEX (2022)

COUNTRY RANK

BRAZIL 38th

INDIA 136th

SOUTH KOREA 59th

• Reason for India being ranked the lowest even though with growing economic GDP is due to il-
literacy, corruption, unemployment, age composition. Brazilians believe in well-being of life.
South Korea is ranked 59th due to ecological footprint.

7
 HOFSTEDE BRAZIL INDIA SOUTH
CULTURAL KOREA
INDEX

POWER DISTANCE 69 77 60

INDIVIDUALISM
38 48 18
MASCULINITY 49 56 39
UNCERTAINTY 76 40 85
AVOIDANCE

LONG TERM ORIEN- 44 51 100

TATION
INDULGENCE 59 26 29

Power distance: the degree to which the less powerful members of a society accept and expect that
power is distributed unequally.
South Korea expects to have equality when compared to other mentioned countries Whereas India
is also mostly to be a hierarchical society, because of encapsulated Indian attitude i.e., one can use a
phrase dependent on the boss or the power holder for direction.

Individualism: preference for a loosely- knit social framework in which individuals are expected to
take care of only themselves and their immediate families.
India believes in collectivism due to its moderate score and believed that who wants individualism
are more dominating in nature. South Korea with lowest score manifest in a close long-term com-
mitment to the member group.

Masculinity: preference in society for achievement, heroism, assertiveness, and material rewards for
success. India is considered masculine by its nature and believes in interns of visual display of suc-
cess power, and is also highest in the mentioned countries where as South Korea is more tender in
nature which gives more preference to quality and caring, well-being, equality. “Working in order
to live”.

Uncertainty Avoidance: The degree to which the members of society feel uncomfortable with un-
certainty and ambiguity.
India ranks moderately low because, India is known as patient country where imperfection is ac-
cepted and the acceptance of uncertainty is high.

Long-term orientation: Every society has to maintain some links with its own past while dealing
with the challenges of the present and the future. Societies priorities thee two existential goals dif-
ferently.
South Korea scores the highest whereas India the lowest because India believes in karma for every
action and are bonded to long-run traditions and customs but South Korea has pragmatic approach,
i.e., they encourage thrift and efforts in modern era as to prepare for future.

Indulgence: society that allows relatively free gratification of basic and natural human drives related
to enjoying life and having fun.
India believes in culture of restraint, people with this orientation have the perception that their ac-
tions restrained by social norms & feel that indulging themselves is wrong. Brazil has high score
which says people there have the indulgence nature which allows them enjoy their life according to
one self, tends optimism.

8
Growth prospects:

With an improvement in the economic scenario, there have been investments across various sectors
of the economy.

• Merchandise exports stood at US$ 62.89 billion between April 2021 and May 2021, while imports
touched US$ 84.27 billion. The estimated value of service exports and imports between April 2021
and May 2021 stood at US$ 35.39 billion and US$ 19.86 billion, respectively.
• In May 2021, the Manufacturing Purchasing Managers' Index (PMI) in India stood at 50.8.
• Gross GST collections stood at Rs. 141,384 crores (US$ 19.41 billion) in April 2021.
• India’s Index of Industrial Production (IIP) for April 2021 stood at 126.6 against 143.4 for March
2021.
• Consumer Food Price Index (CFPI) – Combined inflation was 5.01 in May 2021 against 1.96 in
April 2021.
• Consumer Price Index (CPI) – Combined inflation was 6.30 in May 2021 against 4.23 in April
2021.

Future trend:
• The Government of India is going to increase public health spending to 2.5% of the GDP by 2025.
• For implementation of Agriculture Export Policy, Government approved an outlay Rs. 2.068 bil-
lion (US$ 29.59 million) for 2019, aimed at doubling farmers income by 2022.
• As per the Reserve Bank of India’s (RBI) estimates, India’s real GDP growth is projected at 9.5%
in FY22; this includes 18.5% increase in the first quarter of FY22; 7.9% growth in the second
quarter of FY22; 7.2% rise in the third quarter of FY22 and 6.6% growth in the fourth quarter of
FY22.
• India is focusing on renewable sources to generate energy. It is planning to achieve 40% of its
energy from non-fossil sources by 2030, which is currently 30% and have plans to increase its
9
 renewable energy capacity from to 175 gigawatt (GW) by 2022. In line with this, in May 2021,
India, along with the UK, jointly launched a ‘Roadmap 2030’ to collaborate and combat climate
change by 2030.
• India is expected to be the third largest consumer economy as its consumption may triple to US$
4 trillion by 2025, owing to shift in consumer behavior and expenditure pattern.

Conclusion:
So in order to describe that which country is better or best to invest we can see that the GDP of India is better
when compared to the other 2 countries i.e., Brazil and South Korea. The values here are the major keys
for the investment plan and we can see a Humorous difference between these 3 countries., However the
Real GDP also indicates that India is growing at a fast pace with a percentage of 6.7% when compared to
Brazil (1%) & South Korea (3.1%). As India was under the moderate level of inflation we can expect the
return in a fair manner and the score of 83 under the quality of living according to versus.com shows that
it has a great pace of environment and also having a cheap labor sources in comparison with Brazil and South
Korea. In addition the Youth unemployment rate which determines the bright and sharp future of the country
is low in India that shows the working youth are more in India. So the final statement which tells that India
will be a good option for the investors to invest in the country.

10