Chapter 4

CHAPTER 4:
INTERNATIONAL ECONOMIC ENVIRONMENT

GROUPS BY ECONOMIC CLASSIFICATIONS
ACTIVITY 1: GROUP DISCUSSION ON
JAMBOARD
1. Get into your planet groups. You will be divided by these
topics:
MERCURY - BRICS
JUPITER - IBAS
MARS – G5
VENUS – G8
PLUTO – G20
2. Find information about the reasons behind the formation
of the economic groups and what are the advantages of
having such alliance.
3. Share your answer in the Jam board provided by the
lecturer.
STAGES OF ECONOMIC DEVELOPMENT
1.Traditional Society
At the most basic level, many countries are characterized by
subsistence activity in which output is consumer by producers
rather than traded.
This stage is characterized by a subsistent, agricultural based
economy, with intensive labor and low levels of trading, and a
population that does not have a scientific perspective on the world
and technology.
The stage is most associated with subsistence farming, the most
economic activity in the world’s poorest countries. E.g regions of
South and South East Asia and sub-Saharan Africa.
2. Transitional Society
Here, a society begins to develop manufacturing, and a more
national/international, as opposed to regional, outlook.
Countries evolve beyond dependence on agriculture and begin
engage in simple manufacturing of value-added goods. The stage
coincides with development of infrastructure in transportation,
communications, and other areas.
Entrepreneurs emerge who launch small firms that require basic
inputs and trade in natural resources and other primary products.
Many late-stage developing economies – for example Honduras,
Vietnam, and Zimbabwe – are in the transitional phase.
3.Take-off
Rostow describes this stage as a short period of intensive growth, in
which industrialization begins to occur, and workers and institutions
become concentrated around a new industry.
Here, workers progress from agriculture to manufacturing.
Producers specialize and begin to mass produce goods that can
be exchanged with trading partners worldwide.
Most emerging markets – such as Brazil, China, India and Russia –
have attained this stage.
Rising incomes stimulates investment and development of a
thriving consumer economy.
4. Drive to Maturity
This stage takes place over a long period of time, as standards of
living rise, use of technology increases, and the national economy
grows and diversifies.
In this stage, countries emphasize the production of high-
technology products and development of strong services sector.
Late-stage emerging markets such as Poland, Saudi Arabia, and
South Korea are examples.
5. High Mass Consumption
At the time of writing, Rostow believed that Western countries,
most notably the United States, occupied this last "developed"
stage.
Here, a country's economy flourishes in a capitalist system,
characterized by mass production and consumerism.
Most countries have not reached this stage, which is characterized
by a thriving consumer and industrial economy with a substantial
service sector.
Numerous advanced economies are in this category.
ACTIVITY 2: KAHOOT!
You will be tested with all the

topics in the International
Economic Environment;
1. Stages of Economic
Development
Get into your groups.
ECONOMIC GROWTH FACTORS
Population Income Consumption Infrastructures

Patterns
1. Population
The total world population exceeded 8
billion in 2022.
The number of people in a particular
market provides one of the most basic
indicators of market size, and is in itself
indicative of the potential demand for
certain staple items that have universal
appeal and are generally more
affordable.
Income
• Subsistence economies tend to be characterized by rural populations in which consumption relies
on personal output or barter. Some urban centres may provide markets. E.g. Cameroon and
Very low family
incomes Burundi.
• Some countries exhibit strongly bimodal income distributions. The majority of the population may
live barely above the subsistence level, but there is a strong market in urban centres and a growing
Very low and very
high family incomes middle class. The affluent are truly affluent and consume accordingly. E.g. India and Mexico.
• Industrialization produces an emerging middle class with increasing disposable income. The very
low and very high income classes tend to remain for traditional reasons of social class barriers. E.g.
Low, medium and
high family incomes Portugal.
• The advanced industrial nations tend to develop institutions and policies that reduce extremes in
income distribution, resulting in a large and comfortable middle class able to purchase a wide array
Mostly medium
family incomes of both domestic and imported products and services. E.g. Denmark.
http://www.adorngeo.com/1-global-trends-in-consumption.html
Consumption Pattern
Depending on the sophistication of
the country’s data collection
systems, economic data on
consumption patterns can be
obtained and analyzed.
The share of income spent on
necessities will provide an indication
of the market’s development level
as well as an approximation of how
much money the consumer has left
for other purchases.
Infrastructure
The availability and quality of an infrastructure
is critically important in evaluating marketing
operations abroad.
Each international marketer will rely heavily
on services provided by the local market for
transportation, communication, and energy.
Indicators such as steel consumption, cement
production, and electricity production relate to
the overall industrialization of the market and
can be used effectively by suppliers of industrial
products and services.
Infrastructure in Hong Kong
https://www.businessinsider.com/wef-countries-in-the-world-with-the-best-infrastructure-2016-10#1-hong-kong-67-
the-country-has-the-best-infrastructure-in-the-world-from-world-class-construction-to-seamless-transportation-
networks-it-is-one-of-the-easiest-places-in-the-world-to-do-business-due-to-its-up-to-date-travel-logistics-and-
telecommunications-networks-and-a-thriving-port-21
ACTIVITY 3: CASE STUDY TUTORIAL
You will be given a case study
titled:
AFRICAN GROWTH AND THE
RISING OF AFRICAN MIDDLE
CLASS
Discuss the answers with your
partner.
THE IMPACT OF INTERNET ON ECONOMIC
GROWTH
Increase Increase Save costs Lower the price

productivity efficiency of goods
LEVEL OF MARKET DEVELOPMENT
Market development is a Domestic-market
Export research
strategic step taken by a establishment
and planning
company to develop the
existing market rather than
looking for a new market. Expansion of
Initial report sales international
The company looks for new sales
buyers to pitch the product to a
different segment of consumers
in an effort to increase sales. Investment
abroad

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Chapter 4

Uploaded by

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CHAPTER 4:

INTERNATIONAL ECONOMIC ENVIRONMENT

You will be tested with all the

Population Income Consumption Infrastructures

Increase Increase Save costs Lower the price

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