Answer 2 questions from chapter 9 and 2 questions from chapter 10 so the total will be 4 questions. It's your choice which questions to chose then RESPONSE TO 2 students ( I uploaded a file have 5 stu

Tyler Kring

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Chapter 9

10. Discuss the impact of the IT revolution on the poorest countries.

Information technology has not only better-connected people within their own countries, it has connected countries to the rest of the world and its citizens with consumers on the other side of the world. The rise of satellite, cell phone, and internet technology has allowed for infrastructure to reach the remotest parts of countries. Where it used to take decades to build telephone infrastructure or railroads to deliver mail, it now takes a fraction of the time for internet and cellular systems to be built and to connect these remote areas of poor countries to the rest of the world (Cateora, Money, Gilly, & Graham, 2020). Even in urban slums, cell phone technology has connected the poorest people to the world in areas where the money and capabilities for installing landline communication were not available (Cateora, Money, Gilly, & Graham, 2020). On a global scale, information technology has connected the poorest countries to the most affluent, putting them on a more even playing field in international commerce. Information technology has reduced the cost of business dramatically to where even small countries with limited resources can sell and ship its goods internationally because communicating and selling on the internet it so economical and easy.

18. One of the ramifications of emerging markets is the creation of the middle class. Discuss.

The creation of the middle class has created a middle ground of society that is largely based on superficiality and material possessions, particularly in emerging markets where wealth is new. Whereas the middle class in the United States has debatably little buying power because of the American standard of living (two or more cars, large suburban home, private healthcare), the middle class has decidedly more buying power because of government-subsidized healthcare and less emphasis on vehicles and expansive homes (Cateora, Money, Gilly, & Graham, 2020). The result is the middle class wishes to establish and show its wealth by purchasing more material possessions, such as TVs, radios, clothing, and “special treats” (Cateora, Money, Gilly, & Graham, 2020). Often, the middle class opts for luxury, name brands as status symbols to show their new wealth like Rolex, Louis Vuitton, and Mercedes-Benz (Cateora, Money, Gilly, & Graham, 2020). This new materialistic, superficial culture of the middle class decidedly clashes with the historic dichotomy of wealth in emerging nations. Historically, there were few rich and many poor with no movement between the classes. The new middle class is struggling to carve a space for itself and to maintain its wealth. This is exemplified by the traditional dowry in India. In her study of the Indian middle class, an interviewee of author Sara Dickey details the strain of paying the traditional marriage dowry, “If you’re upper-class giving a good dowry is no big deal, because you have lots of money. On the other and, if you’re lower-class, you don’t face the problem because that group doesn’t ask for a big dowry. But in the middle class, it’s a big problem. Dowry demands are high-money, gold, scooters, refrigerators – and we don’t have enough money to meet these demands without huge trouble” (Dickey, 2012). Anxiety has also increased in countries with emerging middle classes. In India, fear of downward class-mobility is the leading reason for increases in anxiety as the public shame of one’s children being worse off than the parents is a large cultural concern (Dickey, 2012). The concern is a real one in more developed, emerging economies, like India, where the advantages of the middle class are starting to regress, particularly in regards to the new access to education. Not unlike the United States, educated Indians are now finding it hard to find work. As one interviewee in Dickey’s piece states, “We’ve studied so much, we ought to be able to get a good job. Nowadays everyone has studied – it’s compulsory. But there aren’t any jobs” (Dickey, 2012). So, it seems, that the United States is a looking glass into what the middle class of the emerging economies will soon face – an overeducated, materialistic society with anxieties and fears built by “keeping up with the Joneses”. The difference is that the United States, as an economic superpower, is better equipped to handle such a cultural and economic crisis. Emerging and fragile economies may not be so lucky, but only time will tell.

Chapter 10

8. Differentiate between a free trade area and a common market. Explain the marketing implications of the differences.

A free trade area is a group of nations that have agreed to reduce or eliminate customs duties and non-tariff trade barriers amongst themselves, but they still maintain individual tariff schedules for external countries (Cateora, Money, Gilly, & Graham, Chapter 10: Europe, Africa, and the Middle East, 2020). A customs union takes a free trade area a few steps further by outright eliminating all tariffs on internal trade, setting a common set of tariffs for external countries, and removing all restrictions on the free flow of capital and labor (Cateora, Money, Gilly, & Graham, Chapter 10: Europe, Africa, and the Middle East, 2020). In all, the common market is one unified economy between the member nations. As an international marketer, it is important to know the implications for the differences between a free trade area and a common market. In marketing to a free trade area, it is important to know what the different tariffs are on your product as one market within the area. This could greatly affect the price of your product and, as a result, the ability of the consumer to purchase it. It could be advantageous to produce the product in one of the member nations then ship it to the other members if the internal tariffs are less than what is charged to an outside country. In a common market, while all the tariffs to outside countries are the same, making it easier to navigate, the real advantage comes because of the absence of tariffs between the member nations. In this scenario, a multinational company is advantaged in setting up production within the common market to avoid tariffs altogether.

16. Discuss the implications of the European Union’s decision to admit Eastern European nations to the group.

The largest implication of the European Union’s decision to admit Eastern European nations to the group is migration and immigration. On the migration front, western European countries fear that a wave of cheap labor coming from the former communist and Soviet countries will create a labor crisis and cause a decrease in labor wages. However, this has not yet proven to be the case (Cateora, Money, Gilly, & Graham, Chapter 10: Europe, Africa, and the Middle East, 2020). The current, pressing issue is the one that Joanne van Selm outlines as the wave of immigrants and asylum seekers coming into the European Union through eastern European nations from the Middle East. Van Selm states that “in creating a frontier-free space for European goods, services, and citizens, the EU Member States have acknowledged the (almost) unintended consequence of creating a frontier-free space for people all over the world” (Selm, 2016). The issue is that immigrants are not simply trying to come to EU as van Selm states, but trying to get to select, developed nations, such as Germany, Sweden, and the United Kingdom (Selm, 2016). Allowing eastern European countries into the European Union has simply given immigrants and asylum seekers a door to those countries and leaving the countries to deal with it even though they didn’t come in through their borders. An overarching immigrant policy appears to be needed for the European Union so that member states share the burden of receiving immigrants and refugees equally so it doesn’t all fall on a handful of nations.

References

Cateora, P. R., Money, R., Gilly, M. C., & Graham, J. L. (2020). Chapter 10: Europe, Africa, and the Middle East. In P. R. Cateora, R. B. Money, M. C. Gilly, & J. L. Graham, International Marketing, Eighteenth Edition (pp. 290 - 315). New York: McGraw-Hill Education.

Cateora, P. R., Money, R., Gilly, M. C., & Graham, J. L. (2020). Chapter 9: Economic Development in the Americas. In P. R. Cateora, R. B. Money, M. C. Gilly, & J. L. Graham, International Marketing, Eighteenth Edition (pp. 262 - 289). New York: McGraw-Hill Education.

Dickey, S. (2012, May). The Pleasures and Anxieties of Being in the Middle: Emerging Middle-Class Identities in Urban South India. Modern Asian Studies, pp. 559 - 599.

Selm, J. v. (2016). Are asylum and immigration really a European Union issue? Forced Migration Review, 60 - 62.

Delanie Braun

Week 5: Ch. 9 & 10

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Chapter 9

10. Discuss the impact of the IT revolution on the poorest countries.

From my understanding, the impact that the IT revolution has had the poorest countries is not very positive. Although technology breakthroughs are the foundation of many newly industrialized countries, poor countries do not get the advancements that so many others are receiving, instead they are in the decline. While countries who have the funds and the information to succeed in an IT revolution flourish, the countries that are steps behind and do not have the resources to handle such a drastic change, move backwards. The book states that, “the Internet and mobile phones cut transaction costs and reduce economies of scale from vertical integration..”, which is great for those countries that can take place in this revolution, but devastating to the poorest who do not have the capabilities. The IT revolution is a dangerous slope for those who cannot keep up with the trends, because as more countries accept and utilize things like the internet, they will only do business with other countries that use the internet also; forgetting about those countries who do not. So, not only are the poorest countries not able to utilize the new IT resources, they are also losing business with those countries who can.

18. One of the ramifications of emerging markets is the creation of a middle class. Discuss.

In the creation of emerging markets a number of things happen, but a common trait is that more jobs are being created, the book states, “increased economic activity means more jobs and more income to spend on products not yet produced locally.” These jobs are not necessarily c-level positions, they are general positions needed to be filled to conduct business, and these spots are filled by persons who may have had a lower paying job and are now transitioning to the new positions being created, this transition creates a larger middle class. Although this transition may seem beneficial, the issue with emerging markets is that they are not yet stable, and the creation of the middle class in this case is that they will not stay middle class forever, many will return back to a lower rank; “In most emerging countries, the middle class has a very high incidence of informal labour, a phenomenon that in advanced countries is concentrated among the poorest in the population.” (Canals, 2019) This phenomenon causes a large boost in the economy, but because of the unstable environment, many retract backwards, resulting in the ramification of an unstable middle class.

Chapter 10

8. Differentiate between a free trade area and a common market. Explain the marketing implications of the differences.

In general, a free trade area offers its members a “mass market without barriers to impede the flow of goods and services” in accordance with our book. Whereas a common market utilizes external tariffs, but also removes restrictions to free the flow of capital among its members. The major difference between the free trade area and the common market is that the common market utilizes more rules such as eliminating tariffs on internal trade, along with eliminating a number of other restrictions.

The marketing implications of the free trade area include issues like adhering towards both/all countries in the trade, since it is made on the basis of an agreement. Without the typical barriers established with countries in trading, the marketing tactics used must be modified to fit the new agreement. A common market may endure marketing implications like adhering toward the external tariffs, since the already established tariff agreements between the countries are wiped out, and a new tariff is adopted, marketing implications must be changed to utilize the new external demands.

16. Discuss the implications of the European Union’s decision to admit eastern European nations to the group.

Although in hindsight the admission to extend welcome to eastern European nations seems beneficial, many issues and implications have come from this new agreement. The first issue is that eastern and western Europe do not function as one, they act as two separate entities; “Many Western Europeans routinely refer to these states, as well as those that joined in 2007 and 2013, as “new,” implying a failure to become fully “European.”” (Valasek, 2019) The slow acceptance has caused dismay between the two sides, where this agreement was planned to result in a union, may have resulted in even more tension. Another implication to the admission of eastern Europe is that the two sides have varying beliefs and values, which have only become more prominent as the two sides attempt to work together, this again, is causing more tension and misunderstanding. One last implication is the unfamiliarity of the two sides, where both were happy functioning as two separate entities with no intention to indulge more, are now forced to exist as one, resulting in stereotyping and unfair assumptions, on both sides. All of these implications have generally resulted in more tension than before, and the expectation to become one has resulted in both sides becoming more and more independent. (Valasek, 2019)

Canals, C. (2019, September 16). The emergence of the middle class: an emerging-country phenomenon. In CaixaBank Research. Retrieved from https://www.caixabankresearch.com/en/economics-markets/labour-market-demographics/emergence-middle-class-emerging-country-phenomenon

Valasek, T. (2019, November 8). Why Can’t the EU’s West and East Work as One?. In Carnegie Europe . Retrieved from https://carnegieeurope.eu/2019/11/08/why-can-t-eu-s-west-and-east-work-as-one-pub-80300

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Ashley Fifield

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Chapter 9

10. Discuss the impact of the IT revolution on the poorest countries.

Information technology is the various applications of a computer and internet which are combined to effectively undertake and realize activities within organizations. IT is used as a wide platform for marketing goods and services to the global population and by using its applications, information technology can sell these services and products as well as gain access to different populations needs. IT and the internet have allowed communication to become very effective and quick. Thus, on this basis, IT accelerates the process of economic growth and the country will be able to progress from a traditional economy to a more advanced economy. This is due to good use of the internet application and therefore it will effectively support the poorest of countries. The only issue that some countries are seeing, is that gaining internet access is not as easy for some. The countries that can gain access to the internet have seen a positive economic impact, where countries that are still working towards gaining access are not as fortunate. According to Slamecka (2007), while the economic impact IT has on the poorest countries of the world is vast, there is also a large impact on the social and cultural realms.

18. One of the ramifications of emerging markets is the creation of a middle class. Discuss.

Economic growth stands for the total increase in the production of goods and services in a country in a particular year affecting the economic growth of the country. One of the ramifications of emerging markets is the creation of a middle class. As a country progresses from one economic stage to another, the marketing effects in general vary drastically from each other and expand with every further stage. A countries marketing effort are focused on different parts and industries in society to build up that portion of the economy and then transitions into the next stage. Eventually a countries economy should reach the take-off stage where marketing efforts will be focused on a progressive turn upon industrialization, growing investments, changes in political scenarios, and overall regional growth in marketing areas. Next the countries economy will reach the maturity stage. During this stage the marketing efforts are arranged towards diversification, effective investments, less reliance upon imports, and large-scale innovation in in marketing activities. When an economy reaches the point of high mass consumption of goods and services, the marketing efforts are directed towards consumer-oriented stuff, durable goods and thereby flourishment of services sector takes place. Thus, this is the way the middle class gets affected with the ramifications in emerging markets.

Chapter 10

15. Why have African nations had such a difficulty in forming effective economic unions?

African nations have had difficulty in forming effective economic unions because these groups of countries leads to globalization which is not easy to accomplish. It calls for the creation of political union parties that pose threats in the future and sometimes business agreements pressures global competition and other countries unwillingly have to become a part of it. According to Kenton (2020) economic integration is an arrangement among nations that typically includes the reductions or elimination of trade barriers and the coordination of monetary and fiscal policies. This type of integration aims to reduce the costs for both consumers and producers and to increase trade between the countries involved in the agreement. While the benefits of forming economic unions provide many benefits, African nations have had difficulty forming effective economic unions due to globalization and liberalization.

16. Discuss the implications of the European Union’s decision to admit eastern European nations to the group.

The European Union decided to admit Eastern European Nations to the group which could lead to the marketing implications for the global market that exists around the world crossing the border and make free trade easier. This would allow the organizations to widen their horizon and enter foreign markets to undertake business activities. This will give the world a global market and globally accepted goods and services to choose from making the countries that have integrated, to benefit from unrestricted marketing activities. The region that carries a trade block, but whose member countries have signed a free trade agreement, reduced the trade barriers and increased the trade of goods and services between each other and also allowed free trade agreement.

The trade area carried relative free movement of capital and services giving scope of the management and occurrence of economic integration along with political integration. The European Union was founded with an intention to create a common market so that economic integration could be supplemented by political integration, thus, accomplishing this objective could get more benefits with the admission of Eastern European Nations to the group.

Cateora, P., Graham, J., & Gilly, M. (2020). International Marketing (18th ed.). New York, NY: McGraw-Hill Publishing Company.

Kenton, W. (2020, March 02). What Is Economic Integration? Retrieved July 20, 2020, from https://www.investopedia.com/terms/e/economic-integration.asp

Slamecka, V. (2007, March 22). Information technology and the third world. Retrieved July 20, 2020, from https://asistdl.onlinelibrary.wiley.com/doi/abs/10.1002/asi.4630360308

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Andrew Harrell

Week 5 DB 3 Andrew Harrell

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Chapter Nine: Question ten: Discuss the impact of the IT revolution on the poorest countries:

IT investment has played an essential role in economic development around the world. Computers, cellphones, the Internet, and software have all impacted the world. Positive GDP and economic growth are related to IT investment. (Cavallo, 2016) IT investment has reduced the number of people living in poverty from 29% in 1990 to 18% in 2004. (Rodgers, 2009) The poorest countries have seen some impact on the revolution of IT; however, there are still significant barriers to overcome. Poverty, economic vulnerability, and weak social factors are some of the barriers.

It is estimated that 577 million people in the poorest countries do not have access to electricity. (Rooks, 2017) Impoverished nation's access to electricity has quadrupled between 1990-2014 with technology improvements. Solar power panels are being positioned as a solution to the problem. (Rooks, 2017)

IT investment has helped developing countries gain access to educational resources that have helped reduce illiteracy rates. Latin America literacy rates have increased 40 to 50% over the last century, and IT investments contribute to the improvement. (Roser, Ortiz-Ospina, 2013) The poorest countries still struggle to gain access to technological advances with a lack of infrastructure or investments. Teachers in poorest countries lack the skills to help children learn. iPad tablets have assisted with providing curriculum to students to help combat illiteracy rates.

Poor countries with access to the Internet have gained access to communicate and facilitate commerce among its peers. The poorest economies that have access to Internet are gaining knowledge and insights best methods for agriculture. Not everyone in poor countries has access to cellphones, but they can purchase minutes and facilitate business.

Poor countries have poor road infrastructure and, in the past, have been impossible to deliver medicine to treat their citizens. The company I work for UPS has developed drone technology that helps deliver medicine to poor countries to overcome the poor road infrastructure.

Chapter Nine: Question 18: One of the ramifications of emerging markets is the creation of a middle class. Discuss.

In the future, International marketing professionals must focus on the middle class in all global markets because they will account for 60% of global expansion in the world. (Lung, Bathold, 2019)

The middle class of the United States of America average income is between $45,200 to $135,000 with a family size of two to three people. (LaMagna, 2018) The middle class in the United States spends its income on two cars, sizable house payments, clothing, food, electronics, insurance, and entertainment. They tend to go out to dinner more often. The middle class in the United States has stable employment and a good education.

The middle class of emerging markets consumption pattern is different from that of the United States. They may own one car, own a smaller house, rent an apartment, and consume less food. They have a lower per capita spending capacity than the United States. (Canals, 2019) The emerging market's middle class does not have a stable income. Middle-class consumers in emerging markets insurance is subsidized, which would free income to purchase other items. (Cateora, Money, Gilly, Graham, 2020 Pg 287)

Chapter Ten: Question Eight: Differentiate between a free trade area and a common market. Explain the marketing implications of the differences.

The free trade area is an agreement between two or countries to reduce or eliminate trade barriers. Barriers can include tariffs or quotas. Countries that enter into a free trade agreement still maintain their tariff schedules with other countries that are not in the agreement. The United States-Mexico-Canada-Agreement is one of the 14 free trade agreements that the United States has in place. (Chappelow, 2019)

Common markets is an agreement with the members to eliminate all trade barriers and restrictions. (295) Capital, labor, services, and people can flow freely within the boundaries of the common market. East Africa Community is a common market established in 2010 and includes Kenya, Tanzania, Uganda, Rwanda, and Burundi. The East Africa Community has a GDP of $159.5 billion, with a $918 per capita. (UNECA, 2020)

Free Trade area and common markets both eliminate tariffs and restrictions within their member's parameters. Free Trade area and common markets encourage the flow of import and export movement between members. Consumers in the free trade area or common markets will purchase more goods or services from members within the agreement because of lower prices. Marketing restrictions may be reduced from participating members in the free trade area or common market agreements. The marketing mix of companies is structured in the free trade area or common area and instead of individual countries.

Chapter Ten: Question 15: Why have African nations had such difficulty in forming effective economic unions?

African countries have difficulty in forming effective economic unions for several reasons. Economic development has been one of the main factors that prevent unions with forming. Poor economies lack the resources to commit to an economic union. Poor infrastructure with roads, electricity, Internet, and phone networks has impacted the region's potential growth. Weak educational structures have hindered the country from forming economic unions. African countries lack strong government leadership that has high turnover rates. There are over 2000 languages in Africa and a barrier to forming effective economic unions. (Felter, 2015)

Sovereignty is something that most African countries have a hard time giving up when getting into an economic union. History of internal conflicts is still present in some countries, and they are unwilling to enter into an effective, economic union. Lack of follow-through from countries in Africa has prevented the economic union.

Corruption in Africa is another barrier to forming effective economic unions. The average corruption perception index in Africa is 32; however, some countries have a score that is over 50. (Transparency International, 2019) Examples of countries that have a corruption perception index over 50 are Botswana (61), Cabo Verde (58), and Rwanda (53). (Transparency International, 2019) Government officials are elected because of bribes to gain support. Brides are a common way of gaining an advantage in politics or business in some countries in Africa.

Thank you,

Andrew Harrell

References:

Cavallo, M. (2016, December). The Growing Importance of the Technology Economy, Retrieved from:

https://www.cio.com/article/3152568/the-growing-importance-of-the-technology-economy.html

Rogers, B. (2009, November). Technology Boosts Income, Reduces Poverty, In Developing Countries,

Retrieved from: https://www.voanews.com/archive/technology-boosts-income-reduces-poverty-developing-countries

Rooks, T. (2017, November). To Prosper, Poorest Countries Need Avenues to Electricity, Retrieved from:

https://www.dw.com/en/to-prosper-poorest-countries-need-avenues-to-electricity/a-41472049

Roser, M., Ortiz-Ospina, E., (2018, September). Literacy, Retrieved from:

https://ourworldindata.org/literacy

Lung, R., Bathold, D. (2019). The Geography of the Global Middle Class: Where they Live, How they

Spend, Retrieved from: https://usa.visa.com/dam/VCOM/global/partner-with-us/documents/middle-class-spending-whitepaper.pdf

LaMagna, M. (2018, December). Who is Really Middle Class in America? Retrieved from:

https://www.marketwatch.com/story/who-is-really-middle-class-in-america-this-chart-shows-just-how-much-family-size-matters-2018-12-28

Canals, C. (2019, September). The Emergence of the Middle Class: An Emerging Country Phenomenon,

Retrieved from: https://www.caixabankresearch.com/en/economics-markets/labour-market-demographics/emergence-middle-class-emerging-country-phenomenon

Cateora, P., Money, B., Gilly, M., & Graham, J. (2020). International Marketing (18th ed.). New

York: McGraw Hill.

Chappelow, J. (2019, October), Free Trade Area, Retrieved from:

https://www.investopedia.com/terms/f/free_trade_area.asp

UNECA. (2020). EAC – East African Community, Retrieved from:

https://www.uneca.org/oria/pages/eac%E2%80%93-east-african-community

Felter, C. (2015, April). Why does Africa have so many Languages?, Retrieved from:

https://www.csmonitor.com/Science/Science-Notebook/2015/0421/Why-does-Africa-have-so-many-languages

Transparency International. (2019), CPI 2019: Sub-Saharan Africa, Retrieved from:

https://www.transparency.org/en/news/cpi-2019-sub-saharan-africa

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Olivia Stemen

Discussion Board 3: O. Stemen

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Chapter 9: Question #10

Discuss the impact of the IT revolution on the poorest countries.

Information technology (IT) is an essential part of an economy’s growth and development. By adapting to the changing technology, it opens the door of opportunity for emerging markets to catch up to those of richer ones. Although it is an essential part of becoming a developing nation, it can also cause some issues. “Because the Internet and mobile phones cut transaction costs and reduce economies of scale from vertical integration, some argue that it reduces the economically optimal size for firms” (Cateora, Money, Gilly, Graham, 2020, pg. 269). For poor countries with a high literacy rate, information technology can leapfrog them from being literate with computer technology causing them to have a jump start with their economy.

Chapter 9: Question #18

One of the ramifications of emerging markets is the creation of a middle class. Discuss.

Emerging markets see a huge increase in the size of their middle class which is due to rapid economic growth causing people to rise above the poverty line. The expansion of a middle class causes competition for resources, housing, labor, etc. but opens new doors for global consumer markets. People shift from focusing their purchases on food and electricity to non-essentials like name brand fashion and sports cars. “Interestingly, the boom does not stop when people have the ‘right’ stock of goods, but households instead over-shoot because the boom period is a good time to buy even knowing that a recession will eventually come” (Beaudry, 2020). One of the largest issues that arise is since the emerging market is not stable quite yet, many will find themselves going from middle class back down to just above the poverty line.

Chapter 10: Question #8

Differentiate between a free trade area and a common market. Explain the marketing implications of the differences.

A common market eliminates all tariffs on internal trade and the trade area has free movement of capital and services. Since there are no trade policies and governing regulations on marketing, it can lead to haphazard marketing activities. Countries that exist in a free trade area can expect to have a reduction In trade barriers and have an increase in trades between the other countries in the agreement. By removing trade barriers, it allows for more marketing and promotional activities that are more concentrated than those of a common market.

Chapter 10: Question #15

Why have African nations had such difficulty in forming effective economic unions?

Industrialization has been a campaign promise for a long time in African nations and their manufacturing industry is bound to remain small for quite some time yet. There is quite a lot of political instability that still exists that causes little actual economic integration. The Economic Community of West African States (ECOWAS), a 15 African nation group, “continues to be plagued with financial problems, conflict within the group, and inactivity on the part of some members” (Cateora, Money, Gilly, Graham, 2020, pg. 306). Nothing has been achieved after 30 years and free trade still has not yet been accomplished despite it being a goal over a 15-year period. “In fact, the contribution of Africa’s manufacturing sector to the continent’s gross domestic product actually declined from 12% in 1980 to 11% in 2013” (Tafirenyika, 2016).

References:

Beaudry, P. (2020). Are market economies inherently stable or unstable? Retrieved from: https://www.weforum.org/agenda/2015/07/are-market-economies-inherently-stable-or-unstable/

Cateora, P., Money, B., Gilly, M., Graham, J., (2020). International Marketing (18th Edition). New York, NY: McGraw Hill Education.

Tafirenyika, Masimba, (2016, August-November). African Renewal: Why has Africa failed to industrialize? Retrieved from: https://www.un.org/africarenewal/magazine/august-2016/why-has-africa-failed-industrialize

Dylan Reinink

Discussion Board #3

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Chapter 9

Question 10: Discuss the impact of the IT revolution on the poorest countries.

The impact of the IT (information technology) revolution on the poorest countries is vast. Information technology has been identified as a key factor for countries in terms of economic growth. Inventions like the cell phone and the Internet all have helped countries become more successful and grow their economies. While there are many advantages with information technology being implemented, there can also be issues. According to Cateora, the Internet and mobile phones have essentially “cut transaction costs and reduce economies of scale from vertical integration” (Cateora, 2020). Some say that this would reduce the economically optimal size for firms, where others argue that lower transaction costs enable smaller firms to work together in obtaining a global reach. In layman’s terms, the IT available makes it easier for businesses in Asia to create custom jewelry for someone in Houston, Texas.

The Internet speeds up economic growth, compared to the old days where new railways, telephones or electricity helped speed up economies. The Internet can give instant access to people in any country to learn just about anything, as well as create and sell just about anything, at a smaller cost (economically and environmentally) of railways or telephones.

While IT seems to provide positive development to poorer countries, there can also be negative impacts, impacts that could limit and potentially undermine poorer countries and their economic performances. The introduction of new technologies takes places through global value chains (GVC’s), benefiting these poorer economies by easing their entry into global markets (Rodrik, 2018). A way GVC’s can harm poorer economies by overall bias in favor of other skills or capabilities, such as a bias that “reduces developing countries’ comparative advantage in traditionally labor-intensive manufacturing (and other) activities, and decreases their gains from trade” (Rodrik, 2018).

While there are positive outcomes in the IT revolution, it is imperative to also remember the negatives that are bound to come along with it.

Question 18: One of the ramifications of emerging markets is the creation of a middle class. Discuss.

One of the ramifications of emerging markets is the creation of the middle class. As incomes rise, consumers are finding themselves with more disposable income/ discretionary income. Discretionary income is money that consumers can spend, after taking care of essentials like food, shelter, clothing etc. For many in the middle class in the United States, they do not own multiple cars of luxury homes, their primary focuses are housing and health care, which often times can be subsidized, giving more discretionary income for them to purchase items such as refrigerators, coffee machines, radios, and even food from special restaurants. For emerging markets specifically, more people spend money on food than developed countries, who spend more money on appliances or durable goods. For all these reasons, emerging markets have great upside for growth in the coming years for economies.

Chapter 10

Question 8: Differentiate between a free trade area and a common market. Explain the marketing implications of the differences.

A free trade area (FTA)essentially is “an agreement between two or more countries to reduce or eliminate customs duties and nontariff trade barriers among partner countries” (Cateora, 2020). Members also maintain their tariff schedules for outside countries. Free trade areas rely more heavily on cooperation and integration, rather than using the Regional Cooperation for Development (RCD). Overall, the FTA gives members a mass market without barriers to put a wrench in the flow of goods and services.

A common market is an agreement that eliminates all tariffs and other restrictions on internal trade. Common markets also adopt a set of common external tariffs, removing restrictions on the free flow of capital and labor among member nations. Overall, a common market is a joint marketplace for goods, services and capital, classified as a unified economy.

While the two seem very similar, the difference between the two is that a free trade area provides members with a mass market without barriers.

Question 15: Why have African nations had such difficulty in forming effective economic unions?

The reason Africa has had such difficulty forming effective economic unions is due in large part to the political instability that is affecting the unstable economic base Africa started with. The economic decline in Africa, according to Les Picker, could improve “if the military conflicts that have plagued the continent over the past half-century stopped” (Picker, 2020)

Africa has also had difficulty defining their African Union, with bilateral agreements between African countries and more than 200 other economic arrangements existing as well between the countries.

References

Cateora, P. R., Money, R. B., Gilly, M. C., & Graham, J. L. (2020). International

marketing (18th ed.). New York, NY: McGraw-Hill Education.

Picker, L. (2020, July 20). Retrieved July 21, 2020, from https://www.nber.org/digest/jan04/w9865.html

Rodrik, D. (2018, October 09). Will new technology in developing countries be a help or a hindrance? Retrieved from https://www.weforum.org/agenda/2018/10/will-new-technologies-help-or-harm-developing-countries/

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