Business Edexcel Revision notes Unit 4 - Global business
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Institución
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Developed economies
High income levels
High literacy rate
High life expectancy
Good infrastructure
Highly industrialised
Low levels of unemployment
Developing economies
Low-income levels
Low literacy rate
Low life expectancy
Poor infrastructure
Reliance on the primary sector
High unemployment
High population growth
Emerging economies
An emerging economy could be defined as one with rapid economic growth. Investors like
emerging markets since they are likely to grow more quickly than more mature markets.
Implications of economic growth for individuals and businesses
Trade opportunities:
As an economy grows, consumption may also be growing. Therefore, it is likely that disposable
income is also rising. As a result, demand would increase and become income elastic as more
money is available to spend. Increasing international trade will allow consumers to have access
to cheaper products as big companies’ development their products on cheap-labour areas,
therefore reducing their production costs and allowing a decrease in the consumer´s price.
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, Employment patterns:
A business may also want to assess the employment patterns across an economy. Employment
is one of the most important indicators of the health of an economy.
They may also want to know more about the educational qualifications of potential
employees. If a country has a high unemployment rate it may suggest that citizens don´t have
much money available for purchases o it may not be a good idea to export to that country at
that time.
However, this is also a good opportunity to open a factory in that country as many people are
looking for a job and lower salaries can be given.
Future employment trends are also imp0ortant to keep track of. E.g. new technology may
mean that fewer workers are required to manufacture goods.
Measurement of Country Markets
Gross Domestic product (GDP): The value of all products and services produced in a country
in a yearly basis.
Country Market Comparisons
HDI (Human
Economic GDP Literacy GDP per
Country Gini Index development
Index Growth % rate % capita
index)
Spain 66.9 34.3% 2% 98.44% $ 29,600.38 0.891
UK 79.3 34.7% 1.5% 99% $ 42,330.12 0.922
USA 76.6 48.2% 2.2% 99% $ 65,297.52 0.924
Pakistan 54.8 36.2% 1% 59% $ 1,284.70 0.562
Mexico 66 45.9% -0.1% 95.38% $ 9,946.03 0.774
Mozambique 50.5 39.9% 2.3% 47% $ 503.57 0.456
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, Economic Index: It measures the ease of doing business.
GINI index: represent the income inequality or wealth inequality within a nation or any other
group of people.
GDP Growth: The GDP growth rate compares one year (or quarter) of a country's GDP to the
previous year (or quarter) in order to measure how fast an economy is growing.
Literacy rate: The percentage of population aged 15 years and over who can both read and
write with understanding a short simple statement on his/her everyday life.
GDP per capita: a measure of a country's economic output that accounts for its number of
people. It divides the country's gross domestic product by its total population.
HDI (Human Development index): index of life expectancy, education, and GDP per capita
income indicators, which are used to rank countries into four tiers of human development.
Implications of country specialisation and FDI
UNCTAD: Defines a country as dependent on commodities when these account for more than
60% of its total merchandise exports in value terms.
Specialisation by country
If one country has developed more efficient production methods than other countries
– it may specialise in production of a particular good or service. E.g. (Mining –
Australia)
If one country has access to cheaper resources – it may specialise in the production of
a particular good or service (e.g., labour force – Bangladesh and textile industry)
Global output is likely to go up and average incomes likely to rise as well – if countries
specialise (countries trade more with each other)
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