CHAPTER 1: INTRODUCTION TO INTERNATIONAL BUSINESS

WHAT IS INTERNATIONAL BUSINESS?

Any commercial activity or transaction that takes place between businesses, organizations, people, or governments and
crosses boundaries into other nations and areas is referred to as international business. These international transactions
are not constrained to a particular asset, interest rate, or currency.
IMPORTANCE OF INTERNATIONAL BUSINESS
Why is trading between nations so crucial? International trade is critical for growing a company's revenue, expanding its
clientele, and guaranteeing a longer product lifecycle. Currency exchange rate changes can also help businesses by
giving them access to a larger pool of prospective personnel.
What Forms Do International Businesses Take
International business refers to any business activities conducted across national boundaries. There are several ways to
internationalize the business. Businesses can choose among these five basic activities to start.
1. IMPORTING & EXPORTING
- Import-export is the most fundamental and the largest international business activity, and it is often the first
choice when businesses decide to expand abroad as it is the easiest way to enter the market with a small outlay
of capital.
2. LICENSING
- Licensing is one of the other ways to expand the business internationally. Licensing is the arrangement between
a firm, called a licensor, allowing another one to use its intellectual property such as brand name, copyright,
patent, technology, trademark, and so on for a specific period. The licensor gets benefits in terms of royalty.
3. FRANCHISING
- Franchising is closely related to licensing. Franchising is a parent company (franchiser) that gives another
company (franchisee) the right to do business using the franchiser’s name and products in a prescribed manner.
4. STRATEGIC PARTNERSHIPS & JOINT VENTURE
- A strategic partnership or alliance is a positive aspect of the cooperation of two or more companies in different
countries that are joined together for mutual gain. A joint venture is a special type of strategic alliance, where
partners across the globe collectively found a company to produce goods and services. The cooperation
between the companies allows them to share the production cost, technologies, development, and sales
networks.
5. Foreign Direct Investment(FDI)
- Foreign direct investment is a company’s physical investment such as into the building and facilities in a foreign
country and acts as a domestic business with a full scale of activity. Companies practice FDI to get benefits from
cheaper labor costs, tax exemptions, and other privileges in that foreign country. The host country will benefit
from introducing new products services, technologies, and managerial skills.
WHAT IS GLOBALIZATION?
Globalization is defined as a process that moves businesses, organizations, workers, technology, products, ideas and
information beyond national borders and cultures. Supporters say that this is making countries more interdependent on
free trade. But critics maintain that it is also concentrating wealth in the corporate elite, disrupting industries and
making local economies more vulnerable.

ADVANTAGE OF GLABALIZATION
Provides some economic benefits that financially benefit people that otherwise wouldn’t have enough opportunity
where they live. Here are the four largest advantages to globalization:

1. Globalization Broadens Access to Goods and Services

- It’s hard to argue with the point that globalization makes more goods and services available to more people,
often at lower prices.
2. Globalization Can Lift People Out of Poverty
- The argument that globalization has lifted people in developing countries out of poverty is somewhat
controversial because opinions differ as to the quantity – and quality – of the jobs created by globalization.
3. Globalization Increases Cultural Awareness
- Globalization’s defenders say it has increased cross-cultural understanding and sharing. A globalized society
boosts the rate at which people are exposed to the culture, attitudes and values of people in other countries.
That exposure can inspire artists, strengthen ties between nations and dampen xenophobia.
4. Information and Technology Spread More Easily With Globalization
- Art and culture aren’t the only things that spread more easily in a globalized society. The same goes for
information and technology.
DRAWBACKSOF GLOBALIZATION
1. WORKERS CAN LOSE JOBS TO COUNTRIES WITH LOW-COST LABOR
2. GLOBALIZATION HASN’T PROTECTED LABOR, ENVIRONMENTAL OR HUMAN RIGHTS
3. GLOBALIZATION CAN CONTRIBUTE TO CULTURAL HOMOGENEITY
4. GLOBALIZATION EMPOWERS MULTINATIONAL CORPORATIONS
Globalization: Arguments For and Against Globalization
ARGUMENTS AGAINST GLOBALIZATION:
1. GAINS OF GLOBALISATION FOR RICH AT THE COST OF POOR
2. SOURCE OF REPEATED ECONOMIC CRISES
3. UNEQUAL DISTRIBUTION OF BENEFITS
ARGUMENTS IN SUPPORT OF GLOBALIZATION:
1. THE PROBLEMS BEING FACED TODAY ARE DUE TO INFANT STAGE OF GLOBALISATION:
2. INEVITABILITY OF GLOBALISATION
3. GLOBALISATION ESSENTIAL UNDER WTO
Ethics in International Business
- Ethics: Moral principles that govern a person’s behavior or the conduct of anactivity.
- International Business: comprise all commercial transactions (private and governmental, sales, investments,
logistics, and transportation) that take place between two or more regions, countries, and nations beyond their
political boundaries.
Importance of ethics in international business
To function effectively, a business organization needs a common system of moral and ethical beliefs to drive and direct
the day-to-day decisions made by individuals throughout the operation.
Examples of ethical business practices include mandating truthful advertising, instituting internal quality control
checks, and never profiting from insider information:
A cereal manufacturer’s ethical standards prevent it from making unsubstantiated health claims about its products, even
if its competitors make such unproven assertions in their marketing.
What Ethical Issues Are Common in International Business?
Some of the most common ethical issues in international business include outsourcing, working standards and
conditions, workplace diversity and equal opportunity, child labor and human rights.
 INTERNATIONAL
CHAPTER 2

TRADE & FOREIGN

DIRECT INVESTMENT
INTERNATIONAL TRADE
& FOREIGN DIRECT
INVESTMENT
INTERNATIONAL TRADE
& FOREIGN DIRECT
INVESTMENT
INTERNATIONAL TRADE
& FOREIGN DIRECT
INVESTMENT
INTERNATIONAL TRADE
& FOREIGN DIRECT
INVESTMENT
INTERNATIONAL TRADE
& FOREIGN DIRECT
INVESTMENT
INTERNATIONAL TRADE
& FOREIGN DIRECT
INVESTMENT
INTERNATIONAL TRADE
& FOREIGN DIRECT
INVESTMEN
CHAPTER 2 INTERNATIONAL TRADE AND FOREIGN DIRECT INVESTMENT
THE MAIN HISTORICAL THEORIES
- Classical or Country-Based Trade Theories
- Modern or Firm-Based Trade Theories

CLASSICAL OR COUNTRY-BASED TRADE THEORIES

 Mercantilism
- Mid-16th Century
 - A nation’s wealth depends on accumulated treasure
- Maximize exports and minimize imports
 Absolute Advantage
- Adam Smith: Wealth of Nation [1776]
- Smith offered a new trade theory called absolute advantage, which focused on the ability of a country to
produce a good more efficiently than another nation.
 Comparative Advantage
- David Ricardo, an English economist, introduced the theory of comparative advantage
- Efficiency or resource utilization leads to more productivity.
 Heckscher-Ohlin Theory (Factor Proportions Theory)
- Two Swedish economists, Eli Heckscher and Bertil Ohlin
- This theory assumes that there are only two factors of production and labor, and that is fixed in every
country, varying only across national borders.
-
Modern or Firm-Based Trade Theories
 Country Similarity Theory
- Swedish economist Steffan Linder developed the country similarity theory in 1961, as he tried to explain the
concept of intraindustry trade. Linder’s theory proposed that consumers in countries that are in the same or
similar stage of development would have similar preferences.
 Product Life Cycle Theory
 Raymond Vernon, a Harvard Business School professor, developed the product life cycle theory in the 1960s.
The theory, originating in the field of marketing, stated that a product life cycle has three distinct stages:
1. new product,
2. maturing product, and
3. standardized product.
 Global Strategic Rivalry Theory
- Global strategic rivalry theory emerged in the 1980s and was based on the work of economists Paul Krugman
and Kelvin Lancaster. Their theory focused on MNCs and their efforts to gain a competitive advantage against
other global firms in their industry.
- The barriers to entry that corporations may seek to optimize include:
 research and development,
 the ownership of intellectual property rights,
 economies of scale,
 unique business processes or methods as well as extensive experience in the industry, and
 the control of resources or favorable access to raw materials.
 Porter’s National Competitive Advantage Theory
- In the continuing evolution of international trade theories, Michael Porter of Harvard Business School developed
a new model to explain national competitive advantage in 1990. Porter’s theory stated that a nation’s
competitiveness in an industry depends on the capacity of the industry to innovate and upgrade. His theory
focused on explaining why some nations are more competitive in certain industries.

To explain his theory, Porter identified four determinants that he linked together. The four determinants are:
1. Local market resources and capabilities (factor conditions).
Porter recognized the value of the factor proportions theory, which considers a nation’s resources (e.g., natural
resources and available labor) as key factors in determining what products a country will import or export.

0. Local market demand conditions.

Porter believed that a sophisticated home market is critical to ensuring ongoing innovation, thereby creating a
sustainable competitive advantage.
0. Local suppliers and complementary industries.
To remain competitive, large global firms benefit from having strong, efficient supporting and related industries to
provide the inputs required by the industry.
0. Local firm characteristics.
Local firm characteristics include firm strategy, industry structure, and industry rivalry.
POLITICAL AND LEGAL FACTORS THAT IMPACT INTERNATIONAL TRADE
- A POLITICAL SYSTEM is basically the system of politics and government in a country. It governs a complete set of
rules, regulations, institutions, and attitudes.
ANARCHISM - contends that individuals should control political activities and public government is both unnecessary
and unwanted.
TOTALITARIANISM - which contends that every aspect of an individual’s life should be controlled and dictated by a
strong central government.
PLURALISM - which asserts that both public and private groups are important in a well-functioning political system.
A company may ask several questions regarding a prospective country’s government to assess possible risks:
1. How stable is the government?
2. Is it a democracy or a dictatorship?
3. If a new party comes into power, will the rules of business change dramatically?
4. Is power concentrated in the hands of a few, or is it clearly outlined in a constitution or similar national legal
document?
5. How involved is the government in the private sector?
6. Is there a well-established legal environment both to enforce policies and rules as well as to challenge them?
7. How transparent is the government’s political, legal, and economic decision-making process?

POLITICAL FORCES : AFFECTING INTERNATIONAL BUSINESS

1. IDEOLOGICAL FORCES - set of beliefs and ideas characterized by a particular culture. Such as:
 Communism - a political theory derived from Karl Marx, advocating class war and leading to a society in which all
property is publicly owned and each person works and is paid according to their abilities and needs.
 Capitalism - Capitalism is an economic system in which private individuals or businesses own capital goods.
 Socialism - Socialism is a social and economic doctrine that calls for public rather than private ownership or control
of property and natural resources.
0. GOVERNMENT OWNERSHIP OF BUSINESS - Governments have the capacity to make broad changes to monetary
and fiscal policy, including raising or lowering interest rates, which has a huge impact on business.
1. PRIVATIZATION - The transfer of public sector assets to the private sector, the transfer of management of state
activities through contracts and leases, and the contraction out of activities previously conducted by the state.
2. GOVERNMENT STABILITY - Characteristic of a government that maintains itself in power and fiscal, monetary
and political policies are whose predictable and not suddenly change.
3. COUNTRY RISK ASSESSMENT - Country risk assessment is a study of business environment of different countries
and the purpose of this study is to predict the various from of risk that MNC's face in those countries.

What Are the Different Legal Systems?

Civil law is based on a detailed set of laws that constitute a code and focus on how the law is applied to the facts. It’s the
most widespread legal system in the world.
Common law is based on traditions and precedence. In common law systems, judges interpret the law and judicial
rulings can set precedent.
Religious law is also known as theocratic law and is based on religious guidelines. The most commonly known example
of religious law is Islamic law, also known as Sharia. Islamic law governs a number of Islamic nations and communities
around the world and is the most widely accepted religious law system. Two additional religious law systems are the
Jewish Halacha and the Christian Canon system, neither of which is practiced at the national level in a country. The
Christian Canon system is observed in the Vatican City.

Why Do Governments Intervene in Trade?

Governments intervene in trade for a combination of political, economic, social, and cultural reasons.

Some of the reasons that governments around the world intervene in international trade include:
 Protecting infant industries
 National defence
 Employment rates
 Environmental concerns
 Aggressive trade
  Emotional argument
 Consumer safety
 Medical drugs

How Do Governments Intervene in Trade?

Tariffs. Tariffs are taxes imposed on imports. Two kinds of tariffs exist—specific tariffs, which are levied as a fixed charge,
and ad valorem tariffs, which are calculated as a percentage of the value. Many governments still charge ad valorem
tariffs as a way to regulate imports and raise revenues for their coffers.
Subsidies. A subsidy is a form of government payment to a producer. Types of subsidies include tax breaks or low-
interest loans; both of which are common. Subsidies can also be cash grants and government-equity participation, which
are less common because they require a direct use of government resources.
Import quotas and VER. Import quotas and voluntary export restraints (VER) are two strategies to limit the amount of
imports into a country. The importing government directs import quotas, while VER are imposed at the discretion of the
exporting nation in conjunction with the importing one.
Currency controls. Governments may limit the convertibility of one currency (usually its own) into others, usually in an
effort to limit imports. Additionally, some governments will manage the exchange rate at a high level to create an import
disincentive.
Export financing. Governments provide financing to domestic companies to promote exports.
Free-trade zone. Many countries designate certain geographic areas as free-trade zones. These areas enjoy reduced
tariffs, taxes, customs, procedures, or restrictions in an effort to promote trade with other countries.
Administrative policies. These are the bureaucratic policies and procedures governments may use to deter imports by
making entry or operations more difficult and time consuming.

FOREIGN DIRECT INVESTMENT

- Foreign direct investment (FDI) is a category of cross-border investment in which an investor resident in one
economy establishes a lasting interest in and a significant degree of influence over an enterprise resident in
another economy.
FDI has two different forms: Greenfield or mergers and acquisitions
 Greenfield Investment involves the creation of a new company or establishment of facilities abroad. A greenfield
investment is a form of market entry commonly used when a company wants to achieve the highest degree of
control over foreign activities
 Mergers and Acquisitions amounts to transferring the ownership of existing assets to an owner abroad. In a
merger, two companies are merged to form one, while in an acquisition one company is taken over by another.
Types of Foreign Direct Investment
Foreign direct investments are commonly categorized as horizontal, vertical, or conglomerate.
 With a horizontal FDI, a company establishes the same type of business operation in a foreign country as it operates
in its home country. A U.S.-based cellphone provider buying a chain of phone stores in China is an example.
 In a vertical FDI, a business acquires a complementary business in another country. For example, a U.S.
manufacturer might acquire an interest in a foreign company that supplies it with the raw materials it needs.
 In a conglomerate FDI, a company invests in a foreign business that is unrelated to its core business. Because the
investing company has no prior experience in the foreign company’s area of expertise, this often takes the form of a
joint venture.

Factors Influencing FDI

 Wage Rates
 Labor Skills
 Tax Rates
 Size of Economy / Potential for Growth
 Political Stability / Property Rights
Costs and Benefits Associated with FDI
Benefits to the Host Country
 1. Resource-transfer Effects
2. Employment Effects
3. Balance-of-Payments Effect
4. Effect on Competition and Economic Growth
Costs of FDI to Host Countries
1. Possible Adverse Effects on Competition within the Host Nation
2. Adverse Effects on the Balance of Payments
3. Perceive Loss of National Sovereignty and Autonomy

CHAPTER 3 CULTURE AND INTERNATIONAL BUSINESS

CULTURE called "the way of life for an entire society” It includes codes of manners, dress, language, religion,
rituals, and norms of behavior such as law and morality, and systems of belief.
EXAMPLE OF DIFFERENT KINDS CULTURE
ORGANIZATIONAL CULTURE Defines simple aspects such as how people dress (casual or formal), how they
perceive and value employees, or how they make decisions (as a group or by the manager alone).
REGIONAL CULTURE The whole of the environment and the cultural activities carried out therein that is
created and fostered by the residents of the region and which reflects the ethnic, linguistic, historical and
cultural regional identity and traditions.
VALUES Comprise of ideas about what in life is important.
NORMS Consist of expectations of how people will behave in different situations.
CUSTOMS Also known as tradition. It is an activity, a way of behaving, or an event which is usual or traditional
in a particular society or in particular circumstances.
LANGUAGE “Language is the expression of ideas by means of speech-sounds combined into words. Words are
combined into sentences, this combination answering to that of ideas into thoughts.” – Henry Sweet, English
phonetician and language scholar.
WHAT ARE THE KEY METHODS USED TO DESCRIBE CULTURES?
HOFSTEDE'S DEFINITION OF CULTURE
- Definition of Culture by Hofstede. “Culture is the collective programming of the human mind that
distinguishes the members of one human group from those of another. Culture in this sense is a
system of collectively held values.”-. Geert Hofstede (Hofstede, 1991)
WHAT ARE THE KEY METHODS USED TO DESCRIBE CULTURES?
HOFSTEDE'S IDENTIFIED SIX CATEGORIES THAT DEFINE CULTURE:
 Power Distance Index
 Collectivism vs. Individualism
 Uncertainty Avoidance Index

 Femininity vs. Masculinity

 Short-Term vs. Long-Term Orientation
 Restraint vs. Indulgence
POWER DISTANCE INDEX The power distance index considers the extent to which inequality and power are
tolerated. In this dimension, inequality and power are viewed from the viewpoint of the followers – the lower
level.
INDIVIDUALISM VS. COLLECTIVISM The individualism vs. Collectivism dimension considers the degree to
which societies are integrated into groups and their perceived obligations and dependence on groups.
UNCERTAINTY AVOIDANCE INDEX The uncertainty avoidance index considers the extent to which uncertainty and
ambiguity are tolerated. This dimension considers how unknown situations and unexpected events are dealt with.
MUSCULINITY VS. FEMINITY The masculinity vs. Femininity dimension is also referred to as “tough vs. Tender” and
considers the preference of society for achievement, attitude toward sexuality, equality, behavior, etc.
LONG- TERM ORIENTATION VS. SHORT- TERM ORIENTATION The long-term orientation vs. Short-term orientation
dimension considers the extent to which society views its time horizon
INDULGENCE VS. RESTRAINT The indulgence vs. Restraint dimension considers the extent and tendency for a society to
fulfill its desires. In other words, this dimension revolves around how societies can control their impulses and desires.
HALL’S CATEGORIES FOR CULTURAL IDENTIFICATION The indulgence vs. Restraint dimension considers the extent and
tendency for a society to fulfill its desires. In other words, this dimension revolves around how societies can control their
impulses and desires.
CONTEXT: HIGH-CONTEXT VS. LOW-CONTEXT CULTURES In high-context cultures, such as those found in Latin America,
Asia, and Africa, the physical context of the message carries a great deal of importance. In contrast, in low-context
cultures such as the United States and most Northern European countries, people tend to be explicit and direct in their
communications.
SPACE Space refers to the study of physical space and people. Hall called this the study of proxemics, which focuses on
space and distance between people as they interact.
ATTITUDE TOWARDS TIME: POLYCHRONIC VS. MONOCHRONIC CULTURE
Hall identified that time is another important concept greatly influenced by culture. In polychronic cultures—polychronic
literally means “many times”—people can do several things at the same time. In monochronic cultures, or “one-time”
cultures, people tend to do one task at a time.
UNDERSTANDING HOW CULTURE IMPACTS LOCAL BUSINESS PRACTICES
- Culture has a major impact on local business practices. Different cultures have different values, beliefs, and
norms that shape the way businesses operate. For example, in some cultures, customer service is highly valued,
while in others, it is not as important.
VALUES Different cultures have different values and beliefs which can impact business decisions.
NORMS Different cultures have different norms which can affect the way business is conducted.
LANGUAGE Different cultures have different languages and customs which can affect how business is conducted.
CUSTOMS Custom in culture can have a big impact on how we do business. Depending on the culture, certain customs
may dictate the way a business is run or the way it interacts with customers.

GLOBAL BUSINESS ETHICS IMPACT OF ETHICS ON GLOBAL BUSINESS

- IMPACT OF ETHICS ON GLOBAL BUSINESS
- The concept of business ethics and—in the context of this book—global business ethics is much broader. It
impacts human resources, social responsibility, and the environment. The areas of business impacted by global
perceptions of ethical, moral, and socially responsible behavior include the following:
 Ethics and management
 Ethics and corruption
 Corporate social responsibility
ETHICS AND MANAGEMENT PRACTICES The role of ethics in management practices, particularly those practices
involving human resources and employment, differs from culture to culture. Local culture impacts the way people view
the employee-employer relationship. In many cultures, there are no clear social rules preventing discrimination against
people based on age, race, gender, sexual preference, handicap, and etc.
ETHICS AND CORRUPTION Corruption is “giving or obtaining an advantage through means which are illegitimate,
immoral, and/or inconsistent with one’s duty or the rights of others.
CORPORATE SOCIAL RESPONSIBILITY (CSR) CSR emerged more than three decades ago, and it has gained increasing
strength over time as companies seek to generate goodwill with their employees, customers, and stakeholders.
“Corporate social responsibility encompasses not only what companies do with their profits, but also how they make
them.
HOW COMPANY DEVELOP AND IMPLEMENT Employers are often confronted with employee relations issues in the
workplace and faced with deciding the best approach in handling these issues.
THE 5 STEPS NEEDED TO DEVELOP AND IMPLEMENT A NEW EMPLOYER POLICY ARE OUTLINE BELOW:
Step 1: Identify the Need for a Policy
- Employers do not need to create policies for every unforeseen event as this will limit management’s ability to
address individual employee needs or unique situations.
Step 2: Determine Policy Content
- Policies are written guidelines that explain generally what the employer’s requirements are and how employees
will be treated.
Step 3: Obtain Stakeholder Support
All too often those who are expected to carry out the policies and ensure adherence to the policies are not consulted
prior to the implementation of the policy.
Step 4: Communicate with Employees
Organizations should give employees background information (when possible) as to why the policy is being
implemented.
Step 5: Update and Revise the Policy
Clear, well-written policies that are regularly reviewed can be effective employee relations tools and communications
devices.
ENFORCE OF ETHICAL GUIDELINES AND STANDARDS
The concept of culture impacting the perception of ethics is one that many businesspeople debate. While culture does
impact business ethics, international companies operate in multiple countries and need a standard set of global
operating guidelines.

6 TIPS ON HOW TO IMPLEMENT STRONG ETHICS PROGRAM

1. Identify and Renew Company Values
- Company without a clear set of values may find themselves at a disadvantage when developing ethics program.
2. Secure Visible Commitment from Senior Manager
- Most ethics professionals agree that it is crucial to enlist senior management support for an ethics program to be
successful.
3. Engage the board of directors
- Engage directors in the ethics process by instituting a board ethics on the board agenda as a regular item for
discussion.
4. Develop an ethics Code or code of business conduct
- Comprehensive codes are aligned with company values and all applicable laws.
5. Build ethics into Mission and vision statements
- Many companies build ethical values and goals into their mission and / of vision statements.
6. Integrate ethics into all aspects of company communications
- Leverage existing company infrastructure to demonstrate to employees that ethics is an integral part of all operation
and decision making

CHAPTER 4 WORLD ECONOMICS

What is world economy?
 The term world economy refers to all of the economic activity within each country and between countries
around the world which are conducted both within and between nations, including production, consumption,
economic management, work in general, exchange of financial values and trade of goods and services.

OPEN CASE: China versus India: Who will win?

 India and China are among the world's fastest-growing economies, contributing nearly 30 percent to global
economic growth. Both China and India are not emerging economies, they're actually "re-emerging”.
 Both India and China are in fierce competition with each other as well as in their quest to catch up with the
major economies in the developed world. Each have particular strengths and competitive advantages that have
allowed each of them to weather the recent global financial crisis better than most countries.
 Both India and China have several strengths and weaknesses that contribute to the competitive battleground
between them.
CHINA
 36% GDP
 success in lifting more than 400 million people out of poverty.
 By 2011, China is the world's second largest economy in the world behind the United States.
 Since 1978, China's economic growth and reform have dramatically improved the lives of hundreds of millions of
Chinese, increased social mobility.
 China used to be the third- largest economy in the world in August 2010.
 China has developed a set of internally consistent practices across every element of the urbanization operating
model: funding, governance, planning, sectorial policies, and shape.
 China has invested ahead of demand and given its cities the freedom to raise substantial investment resources
By monetizing land assets and retaining a 25 percent share of value-added taxes

 China spends $116.

 China's major cities enjoy the same status as provinces and have powerful and empowered political appointees
as mayors.
 China has a mature urban planning regime that emphasizes the systematic development of run-down areas
consistent with long-range plans for land use, housing, and transportation.
INDIA
 20% GDP
 where 456 million people still live below the poverty line.
  India has emerged as the fourth-largest market in the world when its GDP is measured on the scale of
purchasing power parity.
 As recently as the early 1990s, India was as rich, in terms of national income per head.
 India's long-term prospects now look stronger. India is enjoying the sort of bulge in manpower which brought
sustained booms elsewhere in Asia.
 India has barely paid attention to its urban transformation
 India has underinvested in its cities
 India spends $17 per capita in capital investments in urban infrastructure annually
 Indian cities have devolved little real power and accountability to its cities.
 India's urban planning system has failed to address competing demands for space

CHINA’S STRENGTHS
1.Strong government control
2.WTO and FDI
3.Cheap, abundant labor
4.Infrastructure
5.Effectiveness of two- pronged financial system

INDIA’S STRENGTHS
1.Quality manpower
2.Open democracy
3.Entrepreneurship
4.Reverse brain drain
5.Indian domestic

CONCLUSIONS:
1.India is likely to benefit in the future from its younger demographics: "By 2025, nearly 28 percent of China's population
will be aged 55 or older compared with only 16 percent in India."

2. trend toward urbanization is evident in both countries. By 2025, 64 percent of China’s population will be living in
urban areas, and 37 percent of India's people will be living in cities.

3.India, by 2025, the largest markets will be transportation and communication, food, and health care followed by
housing and utilities, recreation, and education. Even India's slower-growing spending categories will represent
significant opportunities for businesses because these markets will still be growing rapidly in comparison with their
counterparts in other parts of the world and China's cities today, the fastest-growing categories are likely to be
transportation and communication, housing and utilities, personal products, health care, and recreation and education.

Kristine Lucena
The World Economy, the term world economy refers to all of the economic activity within each country and between
countries around the world. It makes sense that as the population of the world has increased, and as technologies such
a air travel and the Internet have made communication between people throughout the world easier, that the world
economy has grown.

Classification of Economies
 Experts debate exactly how to define the level of economic development of a country—which criteria to use
and, therefore, which countries are truly developed. This debate crosses political, economic, and social
arguments. When evaluating a country, a manager is assessing the country’s income and the purchasing power
of its people; the legal, regulatory, and commercial infrastructure, including communication, transportation, and
energy; and the overall sophistication of the business environment.

Statistics Used in Classifications

1..Gross domestic product (GDP) is the value of all the goods and services produced by a country in a single year. shows
the total size of the economy, but a company will want to know the income per person, which may be a better indicator
of the strength of the local economy and the market opportunity for a new consumer product. GDP is often quoted on a
per person basis. Per capita GDP is simply the GDP divided by the population of the country.

2. Purchasing power parity (PPP) allows for economists to compare economic productivity and standards of living
between countries. Purchasing power parity (PPP) is, in essence, an economic theory that adjusts the exchange rate
between countries to ensure that a good is purchased for the same price in the same currency. This is the measure most
economists prefer when looking at per-capita welfare and when comparing living conditions or use of resources across
countries.

3. Human Development Index (HDI) the human development index (HDI), which measures people’s satisfaction in three
key areas—long and healthy life in terms of life expectancy; access to quality education equally; and a decent, livable
standard of living in the form of income.

The HDI is a summary composite index that measures a country’s average achievements in three basic aspects of human
development: health, knowledge, and a decent standard of living. Health is measured by life expectancy at birth;
knowledge is measured by a combination of the adult literacy rate and the combined primary, secondary, and tertiary
gross enrollment ratio; and standard of living by (income as measured by) GDP per capita (PPP).

Understanding the develop world

 Developed economies, also known as advanced economies, are characterized as postindustrial countries—
typically with a high per capital income, competitive industries, transparent legal and regulatory environments,
and well-developed commercial infrastructure.
 In general, the developed world encompasses the United States, Canada, Japan, South Korea, Australia, and
New Zealand.
 Many people are quick to focus on the developing economies and emerging markets as offering the brightest
growth prospects. And indeed, this is often the case. However, you shouldn’t overlook the developed
economies; others too can offer growth opportunities.

What is a Developing World?

 A developing country or world is a sovereign state with a lesser developed industrial base and a lower
Human Development Index (HDI) relative to other countries.
 The average income per resident is lower in developing countries and residents tend to have limited access to
quality health care and education.
 One of the best example here is the country of BURUNDI.
 The best examples of developed countries are the United States, Canada, Japan, Australia, New Zealand, and
all the countries of Europe.

Characteristic of the developing world.

Low capita real income- Developing countries have low real per capita incomes. This suggests emerging nations' average
income or per-person income is too low to invest or save.
Mass poverty- Most people in developing countries have been living in poverty for a long time. They can't even take
care of their most basic needs. The problem of poverty is also shown by the low per capita income in developing
countries.
Rapid population growth- Developing nations have high population growth or large populations. Developing nations
have higher population growth for various reasons. High child and infant mortality rates in such countries make
people feel insured and have more children.
The problem of unemployment and underemployment- Unemployment and underemployment are major issues in
developing countries. Why? because the main causes of underemployment include skill mismatch, unqualified
graduates, obsolete school curricula or curriculum, and technological advancements.

Giselle Villasanta
What is Emerging Market ? An emerging market economy is one that's in the process of shifting to a mature, developed
system where growth is more steady and political risks are lower. These markets are usually located in underdeveloped
countries looking to build a steady business infrastructure. Many developed countries partner with emerging markets in
pursuit of discounted goods and labor, while helping the emerging market grow.

Characteristics of Emerging -Market

-Low Income
-Swings
-Rapid Economic Growth
-Maintain a Regulatory Body
-Transitional Nature
-Growth Potential
-Young Labor Force

List of Emerging Market Countries.

Some of the most popular emerging markets are:

*Asia
China
India
South Korea
Taiwan
Thailand
Philippines
Malaysia
Indonesia

*Eastern Europe
Poland
Romania
Turkey
Greece
Czech Republic

*Africa
Nigeria
Angola
South Africa

*Latin America
Mexico
Colombia
Peru
Brazil
Chile
Argentina