International Marketing

For

Bachelor of Business Administration

Unit 8
Economic Development and Americas
Resource person
© 2005 John Wiley & Sons

Sana-ur-Rehman

PPT 1-1
 Economic development
• Economic development is generally
understood to mean an increase in national
production reflected by an increase in the
average per capita gross domestic product
(GDP) or gross national income (GNI).

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 Economic Growth
Factors
• Political stability in policies affecting their development.
• Economic and legal reforms. Poorly defined and/or weakly
enforced contract and property rights.
• Entrepreneurship. In all of these nations, free enterprise in the
hands of the selfemployed was the seed of the new economic
growth.
• Planning. A central plan with observable and measurable
development goals linked to specific policies was in place.
• Outward orientation. Production for the domestic market and
export markets with increases in efficiencies and continual
differentiation of exports from competition was the focus .

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 • Factors of production. If deficient in the factors of production—land (raw
materials), labor, capital, management, and technology—an environment
existed where these factors could easily come from outside the country and
be directed to development objectives.
• Industries targeted for growth. Strategically directed industrial and
international trade policies were created to identify those sectors where
opportunity existed. Key industries were encouraged to achieve better
positions in world markets by directing resources into promising target
sectors.
• Incentives to force a high domestic rate of savings and direct capital to
update the infrastructure, transportation, housing, education, and training.
• Privatization of state-owned enterprises (SOEs) that had placed a drain on
national budgets. Privatization released immediate capital to invest in
strategic areas and gave relief from a continuing drain on future national
resources. Often when industries are privatized, the new investors
modernize, thus creating new economic growth.

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 Stages of Economic Development
• UN classifies a country’s stage of economic
development on the bases if its level of
industrialization.
– MDCs (More-Developed Countries)
• Industrialized countries with high per capita income, such as,
Canada, England, France Germany Japan and US
– LDCs (Less Developed Countries)
• Industrially developing countries just entering world trade,
relatively low per capita incomes
– LLDCs (Least Developed Countries)
• Industrially underdeveloped, agrarian, subsistence societies
with rural population, extremely low per capita income.

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 Level of Market Development

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 NAFTA
• North American Free Trade Agreement
– Canada
– USA
– Maxico
• NAFTA was ratified and became effective in 1994,
a single market of 360 million people with a $6
trillion GNP emerged.

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 Mercosur
• Southern Cone Free Trade Area
– Argentina Bolivia
– Brazil Chile
– Paraguay Uruguay
– Treaty singed in 1991 and inaugurated in 1995
– Treaty for common market & free movement of
goods, capital, Labor & services
– With the addition of Bolivia and Chile in 1996,
Mercosur became a market of 220 million
people with a combined GDP of nearly $1 trillion
and 3rd largest free trade in the world
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 Latin American Integration
Association (LAIA)
• Argentina, Bolivia, Chile, Colombia, Cuba, Ecuador,
Mexico, Paraguay, Peru, Uruguay, Venezuela.
• Lower duties on selected products, Ease trade tensions
over Quotas, local-content requirements, import
licenses, and other trade barriers,

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 Europe
• EU (27 members)
– European Commission, The Councils of Ministers,
European Parliament, European Court of Justice
• Eastern Europe
– Romania, Yugoslavia, Croatia, Bosnia, Kosovo
• Baltic States
– Estonia, Latvia, Lithuania

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