Growing Economies

The growth rate of economies around the world is very different. Over recent years, growth rates in
BRICS (Brazil, Russia, India, China and South Africa) and MINT (Mexico, Indonesia, Nigeria and Turkey)
have been faster than in the developed economies of the USA, Japan and Western Europe. This rapid
growth creates opportunities and threats for International businesses.

BRICS

MINT

Growth Rate of UK economy and emerging economies.

The UK was once a major producer of manufactured foods exporting all over the world. Nowadays it
is the service industry that dominates with manufactured goods being predominantly produced in
emerging markets.

In the emerging markets, growth rates have been rapid over recent years. The growth results in
higher average incomes and the development of new industries and markets withing these
countries.

An increase in incomes leads to greater demand, both domestically and from international markets.
As markets grow, so does the infrastructure in these countries, the quality of education and the skills
of the workforce.

Out of the emerging markets come competitive multinational corporations (MNCs) that pose
significant competition to establish global market leaders.

Economic growth of countries

Opportunities for rapid growth are created in countries with higher than average growth rates.
However, these markets can often be uncertain and also present greater risk than countries with an
established economy and infrastructure.

Refer to figures and Charts

Trade Opportunities
The growth of emerging economies creates a number of trade opportunities for international
business. These include:

• Increased Foreign Direct Investment (FDI)

• Opportunities for exporting to developing economies.
• Better infrastructure leading to developing economies.
• Better infrastructure leading to developing economies becoming a production location.

FDI

Employment Patterns
As economies develop, unemployment rates tend to fall significantly. This can also create
opportunities for International trade as increased economies generate demand in an economy. As
economies grow, so do the levels of skilled workers and the quality of education. This offers
international businesses the opportunity to recruit to skilled posts when producing abroad.

1
Now try this
1- What do BRICS AND MINT stand for?

BRICS and MINT are acronyms for the world’s fastest developing countries.

2- What opportunities are created through emerging economies.

Emerging economies create opportunities for international business because trade becomes easier
with these nations due to the development of supporting industries and national infrastructure, as
well as increase in average incomes leading to an increase in imports.

Developed Economies Developing Economies Emerging Economies

Many European countries, Most of the counties in BRICS and MINT

USA, Canada, Japan, Australia. Southern Hemisphere

China, Hong Kong, Indonesia,

Malaysia, Singapore, South
Korea, and Thailand

Characteristics Characteristics Characteristics

High Income Levels, High
Literacy rate, High life
expectancy, Good
infrastructure, Highly
industrialised, Low levels of
unemployment.
Low income levels, Low Rapid economic growth,
literacy rates, Low life Increase in average incomes,
expectancy, Poor Lot of risk –
infrastructure, reliance on the
primary sector, High
unemployment, High
population growth.

Least developed countries such as Afghanistan, Ethiopia, Haiti, and Yemen, which have the lowest
levels of income and human development

Indicators of Growth
A variety of measures might be used to evaluate the potential opportunities in developed and
emerging markets.

Gross Domestic Product (GDP)

GDP is a measure of all the goods and services produced in a country divided by the number of
people in the country.

Issues with GDP include:

• Real GDP – using figures adjusted for inflation

• Reported figures for each individual (per capital GDP)
• Comparing currencies – GDP can be hard to compare across nations with different
currencies. One way to deal with currency differences is to compare the buying power across
countries for a standardised basket of goods.

2
 Health
The health of a nation is a good indicator of the standard of living (how much people can buy with
their incomes) and the potential demand and prosperity in a country. Measures of health include.

• Life expectancy
• Infant mortality rates
• Access to clean water
• Doctors per 100000 people.

Literacy
As the health, literacy rates give an indication of standard of living in terms of the quality of the
education and the skills of the workforce in a country. Higher literacy rates lead to better quality
workforce. As literacy rates improve, so will the nature of the products and services bought and sold
in that country. For example, counties with high literacy rates purchase more luxury goods.

Human Development Index

The Human Development Index (HDI) combines a range of economics statistics for a country. The
purpose of the HDI is to focus on a country’s people rather than simply the economic context. A
business looking to expand into international markets might use the data to analyse the potential
demand, income and skills within a country.

Life expectancy Mean years of schooling

HDI Measures

Gross national Income – GNI per capita

(measure of income based on US dollar
value if a country’s income divided by
its population.)

Now try this

1- Why is health an important indicator of a country’s economic development?

Health id an indicator of economic development because people have better health and live longer in
wealthier countries. Measures associated with health include life expectancy and access to clean
water.

2- Why is literacy an important indicator of a country's economic development?

Literacy rates are an important indicator of developing economy because a higher literacy rate is an
indication of educational achievement and the level of skills in the workforce.