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global marketplaces and business centers international business, 5th edition chapter 2 Chapter Objectives 1 • Evaluate the impact of the political and economic characteristics of the world’s various marketplaces on business • Appreciate the uses of national income data in making business decisions • Discuss North America as a major marketplace and business center in the world economy 2-2 Chapter Objectives 2 • Describe Western Europe as a major marketplace and business center in the world economy • Discuss the problems facing the economies of the former communist countries of Eastern and Central Europe 2-3 Chapter Objectives 3 • Discuss Asia as a major marketplace and business center in the world economy • Assess the development challenges facing African, Middle Eastern, and South American countries 2-4 Vital Information in International Business 2-5 Basic geography Market characteristics Culture Politics World Economic Activity • The Triad – Japan – Triad – European Union – Canada – United States 2-6 • The Quad Figure 2.1a Shares of World’s GDP, 1970 2-7 Figure 2.1b Shares of World’s GDP, 2004 2-8 Marketplaces of North America 2-9 • United States • Greenland • Canada • Central America • Mexico • Caribbean islands Map 2.1 North America 2-10 United States • Third largest population in world • Fourth largest land mass • Largest economy • 30 percent of world’s GDP in 2004 • Prime market for exports 2-11 The U.S. Dollar Invoicing currency 2-12 Flight capital Classifying Countries by Income Levels 2-13 High Income Middle Income Lower Income Least Developed Figure 2.2 Headquarters of World’s Largest Corporations in 2005 by Country 2-14 Canada • Second largest land mass • 80 percent of population concentrated along U.S./Canadian border • Rich natural resources • Trade with U.S. - single largest bilateral trade relationship in world 2-15 Advantages of Canada • Proximity to U.S. market • Stability of legal and political systems • Excellent infrastructure and educational systems 2-16 Mexico • Largest Spanish-speaking nation • Federal government system • Participant in NAFTA along with U.S. and Canada 2-17 Central America and the Caribbean • Economic development hindered by – Political instability – Chronic U.S. military intervention – Inadequate educational systems – Weak middle class – Poverty – Import limitations 2-18 Marketplaces of Western Europe European Union Member Countries Other Countries in Western Europe 2-19 Euro Countries 2-20 • Belgium • Ireland • France • Greece • Luxembourg • Portugal • Germany • Spain • Italy • Austria • Netherlands • Finland Map 2.2 Western Europe 2-21 Marketplaces of Eastern Europe 2-22 • Russia • Belarus • Estonia • Georgia • Latvia • Moldova • Lithuania • Ukraine • Armenia • Azerbaijan Map 2.3 Eastern Europe 2-23 Marketplaces of Central Europe 2-24 • Romania • Albania • Bosnia-Herzegovina • Austria • Croatia • Bulgaria • Macedonia • Czech Republic • Slovenia • Slovak Republic • Serbia • Hungary • Montenegro • Poland Map 2.4 Central Europe 2-25 Marketplaces of Asia • Japan • India • Australia and New Zealand • Afghanistan and Central Asian Republics • The Four Tigers • China 2-26 • Southeast Asian Countries Map 2.5 Asia 2-27 Japan • Second largest economy • GDP of $4.6 trillion in 2004 • Industries controlled by keiretsu • GDP growth rate of 1.3 percent 2-28 Map 2.6 Australia and New Zealand 2-29 The Four Tigers 2-30 South Korea Taiwan Singapore Hong Kong China • World’s most populous country • Communist ideology mixed with market-oriented economic policies • Heavy FDI 2-31 India • World’s second most populous country • Per capita GDP of $620 • British colony until 1947 2-32 Afghanistan and the Central Asian Republics 2-33 • Afghanistan • Tajikistan • Kazakhstan • Turkmenistan • Uzbekistan • Kyrgyzstan Southeast Asian Countries • Thailand, Malaysia, and Indonesia • Low labor costs • Significant FDI in recent years • Continued recovery from currency crisis in 1997 and 1998 2-34 Marketplaces of Africa and the Middle East • Africa – 867 million people – 54 countries – Major economies: • South Africa • Ivory Coast • Algeria • Nigeria 2-35 • Middle East – Cradle of civilization – Major economies: • Saudi Arabia • Kuwait • UAE Map 2.7 Africa and the Middle East 2-36 Map 2.8 The Middle East 2-37 Marketplaces of South America • Brazil • Colombia • Bolivia • French Guiana • Uruguay • Paraguay • Argentina • Peru • Chile • Ecuador • Venezuala 2-38 Map 2.9 South America 2-39