Understanding Emerging Markets

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1. What are advanced economies, developing economies, and emerging markets? What are the major distinctions among these three country groups?

|Advanced economies |Developing economies |Emerging markets | | | | | |- high per-capita income |-low income |- improved living standards | |- highly competitive industries |-limited industrialization |- achieved industrialization and modernization | |- well-developed commercial infrastructure |- stagnant economies |- rapid economic growth | |- U.S, U.K, Germany, Japan | |-China, Taiwan, Hongkong | | |- African, Asian, Eastern Europe, South | | | |American countries | |

2. Explain the major reasons why firms would want to do business in emerging markets. What makes these markets attractive?

Global sourcing: huge demand, outsourcing

• Growth rate of the middle class in these countries promise a potential consumer market with huge demand for exporting. To a certain extent, an emerging market is really a market where a middle class is emerging. As jobs and opportunities are created, more people move out of poverty and into a comfortable middle zone where they can afford some luxuries that were previously unimaginable. Ex:...
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