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William Tuominen 

Week 5 Discussion Bill Tuominen

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Chap 9, Question 10 -  Discuss the impact of the IT revolution on the poorest countries.

 

The IT revolutions has hastened world awareness of many in the poorest nations.  Two of the most substantial breakthroughs creating awareness in developing nations have been cellular LTE networks and high-powered cellular phone processors.  In most underdeveloped nations, there is little conventional (wired) communications infrastructure. It is more cost effective and economical to stand up cellular networks than wired infrastructure. For instance, according to CEICData.com (2018), Kyrgyzstan, a central Asian nation, has a population of about 6.6 million, with 8.7 million cellular subscribers, and only 331,140 fixed line subscribers.  Though cellular subscriber data is oftentimes inaccurate due to latent accounts, it is safe to say that this nation probably has more than fifteen to twenty cellular users for each landline user.  Liberia is a poor African nation of about 4.5 million people.  According to Theodora.com (2020), it has over 3 million cellular subscribers, and only 8000 landline subscribers, a ratio of 375 to 1.  In poorer nations, cellular devices are often the only link to the web and the only means of outside communication. The processors and storage of today’s phones rival laptop computers from a decade ago.  They are used to talk, text, mine data, view sports and news programming, become part of social networks, and conduct commerce.

Chap 9, Question 18 - One of the ramifications of emerging markets is the creation of a middle class.  Discuss.

Emerging markets distribute wealth more quickly and evenly than subsistence, agrarian-based markets.  This creates a growth in the amount of disposable income throughout the economy.  A rise in disposable income creates a rise in discretionary consumption.  That consumption has a cumulative affect on the economy, bringing more trade, creating a need for more labor, and creating more income.  This allows a higher level of discretionary consumption among families and groups who heretofore were surviving in a subsistence economy, where the majority of commerce was geared toward essential goods (food, medicine, shelter). 

Chap 10, Question 15 - Why have African nations had such difficulty in forming effective economic unions?

The African slave trade that ended in the late 1800’s gave way to colonial intrusion from European nations; These nations exported great quantities of resources (Frankema, 2015) and formed colonial states with little regard to culture, ethnicities, languages, or African history.    Deng ( 2015) asserts that this arrangement has propagated ethnic tensions and eroded the ability of many African nations to govern effectively. This eventually created today’s economic environment, what Deng (2015) describes as a high-risk competition for power and resources.  These tensions also run along political lines, fostering distrust within nations and groups of nations, affecting the ability of African nations to effectively work together and manage their economies. Though many economists believe that African markets will grow and thrive in the next two decades, exploitation of African workers is still rampant (Congo, Nigeria), ethnic tensions continue to foment war and create risk, and the sheer weight of history (Biafra, Rwanda, Dafur) affect investments and markets.

EChap 10, Question 16 - Discuss the implications of admitting Eastern European nations into the EU.

Eastern European membership in the EU is a complicated issue, due to the varying degree of economic and social development of each nation.  Estonia and the Czech Republic moved quickly to cast off the vestiges of Soviet rule, which included moving quickly to a market-based economy.  But there were other factors to consider in their admittance beyond the economic , such as the cultural and linguistic ties that Estonia shares with Finland (a nation very active in the EU), and the cultural and historical ties that the Czech people hold with Germany, another EU powerhouse.  Geography and security are also important factors for nations working toward full EU admittance.  A quick venture into recent history (Crimea) and a scan of the borders of Russia’s Kaliningrad Oblast highlight the fragile security situation that still plagues some Easter European nations.

References

Deng, Francis, Ethnicity: An African Predicament (1997),

https://www.brookings.edu/articles/ethnicity-an-african-predicament/

Frankema, Ewout (2015), How Africa’s Colonial History Affects its Development,            https://www.weforum.org/agenda/2015/07/how-africas-colonial-history-affects-it  s-development/

Kyrgystan Number of Subscriber Mobile (2018).    https://www.ceicdata.com/en/indicator/kyrgyzstan        /number-of-subscriber-mobile

Liberia Communications (2018) https://theodora.com/wfbcurrent/liberia/liberia_communications.html

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Lindsay Detzler 

Lindsay Detzler DB3

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

Jan-Francois Rischard suggested early on that the introduction of technology would boost educational development, a factor that has been noted as a characteristic of economic development (1996, p. 99). With the growing demand of IT in modern business, developed economies seeking to make waves in emerging markets will be prompted to provide such countries access to the technological advancements that currently exist, which will also require investment in training and education.

Rischard’s points were certainly accurate, as proven by a fact provided by Deanna Wetmore, sharing that thirty-eight percent of Nigeria, Egypt and Indonesia’s gross domestic product (GDP) was generated by micro-entrepreneurs that had access to the technological offerings and were able to be educated and trained in current business affairs (2017). Wetmore further shares that skewed distribution of technology can hamper an emerging market’s growth (2017). Economic growth will not be stable and recurring unless technology is supplied evenly, properly trained and discussed, and monitored and evaluated.

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

               While creation of the middle class brings economic opportunity and growth, with it comes concern of future maintenance of middle class wants and possible fiscal fragmentation. Mario Pezzini stated though a middle-class existence is swiftly developing in emerging markets, in prosperous countries it has matured and is depleting in prosperous markets, which is suffocating the consumer’s ability to maintain standards of living; this can be witnessed in England, Israel and Spain (2012). The middle class’s role, predominately industrial line work, is losing its need as technologies replace manual labor and financial wealth redistributes to the wealthier classes.

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

               A free trade area (FTA) is an arrangement between at least two countries that aims to reduce or altogether remove trading expenses and barriers between the member nations, while members of the arrangement continue to uphold tariff charges with non-member nations. Common market agreements remove all tariffs and restrictions on internal trade, capital, and labor, as well as requires the acceptance of common external tariffs (Cateora, Money, Gilly, and Graham, 2020, p. 295). FTAs allow for the benefit of a trade cooperation between countries but act separately regarding home country trading expectations and fees when transactions occur with other nations, compared to common markets, which are further synchronized in shared treatment of external trade contracts.

               While FTAs allow for liquidity in movement of product and services, marketing implications of an FTA arise in that cost implications of labor and capital, which impact pricing, thus causing difficulties in competition if the market includes comparable offerings. The homogenous nature of the common market provides ease of transfer with product, service, labor and capital, which allows for competitive pricing structure. Further, while both FTAs and common market have been noted to generally share geographical location as well as cultural beliefs, a common market would be more synced with the firm’s home base’s audience, making marketing efforts relatively simpler (Salter, 2017).

 

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

               The countries of Africa are small and impoverished, with differing economies regarding structure, policies, available and reliable data, and exchange rates and deflators, as well as continued political turmoil and civil discord (Tarp, 1997, pp. 7 and 11). Without the reliance of sound statistics and performance metrics, a developed economy would rather establish trade alliances in less risk territories. Without the outside investment, financial health runs stagnant, thus allows for no internal development of free trade arrangements. The varying policies and inability to link monetary exchanges would further hamper  the development of an economic union, as ease of doing business would be warded away with the concern of loss at exchange rate. Most importantly, the dismantled political health of Africa shows the lack of ability to create compromise among participating nations.

 

 

Cateora, P. R., Money, R. B., Gilly, M. C., & Graham, J. L. (2020) International Marketing. (18th ed.) New York, NY: McGraw Hill.

Pezzini, M. (2012). An Emerging Middle Class. https://oecdobserver.org/news/fullstory.php/aid/3681/An_emerging_middle_class.html

Rischard, J. (1996). Connecting Developing Countries to the Information Technology Revolution. SAIS Review 16(1), 93-107. doi:10.1353/sais.1996.0019.

Salter, J. P. (2017, February 3). What is the difference between a free-trade area and a single market? Retrieved from https://ukandeu.ac.uk/explainers/what-is-the-difference-between-a-free-trade-area-and-a-single-market/#

Tarp, F. (1997). Stabilization and structural adjustment macroeconomic frameworks for analysing the crisis in Sub-Saharan Africa. London: Routledge.

Wetmore, D. (2017, November 29). How Technology is Helping Economies in Developing Countries. Retrieved from https://borgenproject.org/how-technology-is-helping-economies/

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