560- post and responses 3

Ben Hilmus

Discussion Board: 3

Chapter 9

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

The Internet can accelerate the process of economic growth, education and jump-start national economies by speeding up the diffusion and adoption of new technologies.  

Mobile devices can reduce historic geographic hurdles that made telecommunication infrastructures cost-prohibitive and enable new forms of communication and commerce to underserved communities. (Cateora et al., 2019. p. 268).

While our text highlights the inarguable economic and social developmental benefits to these emerging nations fortunate enough to leverage these technologies, its advantages remain primarily geographically concentrated in developed countries.

"Too often, the least developed countries (LDCs) remain far behind if not excluded entirely." (Utoikamanu, n.d.). So, access to technology remains a core issue in these impoverished countries. Inadequate or non-existent connectivity and obsolete hardware keep these communities from advancing as they struggle to make broadband access and associated devices available and affordable to all. (Utoikamanu, n.d.).

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

As the disparity between the wealthiest and the poorest consumers in developed countries becomes more profound over time, the middle-class in emerging markets are blossoming.

Rising incomes in emerging markets have shifted the middle-class spending distribution toward new entrants. As a new class of consumers evolves, new market segments will arise. "Households just entering the middle class will seek to purchase consumer durables, as well as services including tourism, entertainment, health, education, and transport." (Kharas, 2017).

As standards of living rise and consumption patterns change, governments and businesses will need to address the new demand generated. In the search for prosperity, population concentrations may shift, requiring capital investments by governments in new infrastructure and social programs. Businesses will need to be attuned to the inevitable fluctuations in market behavior and keyed to the country's variations in requirements or consumer preferences. (Cateora et al., 2019. pp. 286-287).

Chapter 10

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 agreement between two or more countries to reduce or remove tariffs and non-tariff trade barriers. In essence, this type of agreement creates a mass market between its members. However, there is no mandate for uniformity in their trade policies or tariff schedules for external countries.

A common market moves beyond the scope of a free trade area (FTA). While lowering or eliminating barriers to trade among member countries, a common market also adopts common external tariffs and allows for the free movement of labor and capital. This level of trade agreement provides a more holistic approach with the benefit of the free movement of people, goods, services, and capital. The addition of political integration to the economic integration of a common market would create a political union. (Cateora et al., 2019. p. 296).

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

The African Union (AU) encompasses 55 member states that represent the entire continent. Morocco rejoined the African Union after 30 years in 2017. Morocco was the only country in Africa that was not a member, after leaving the predecessor, the Organization of African Unity, in 1984 after a majority of the member states recognized the disputed territory of Western Sahara." (Quinn, 2017).

Despite this union, the thought of African economic integration remained mired in division, political instability, conflict, inward-looking trade, and investment policies while still lacking the necessary infrastructure, skilled labor force, and freedom of cross-border movement to be gain traction. (Tafirenyika, 2016). Old problems needed a fresh approach.

Enter the African Continental Free Trade Area (AfCFTA), founded in 2018 and officially launched in 2021. "This free trade area eliminates tariffs on 90 per cent of goods produced on the continent, tackles non-tariff barriers to trade and guarantees the free movement of persons." (Ighobor, 2020).

While this moves them forward in reducing the high tariffs and non-tariff barriers, they still lack the adequate infrastructure to facilitate free and efficient trade.

The African Union (AU) is addressing this infrastructure gap through its Programme for Infrastructure Development in Africa (PIDA). Its current efforts are "expected to yield the Lagos-Abidjan transport corridor, the Zambia-Tanzania-Kenya power transmission line, the Lagos-Algiers highway and the Brazzaville-Kinshasa bridge, among others." (Ighobor, 2020).

These investments will need to be complemented by individual countries developing modern ports, airports, and rail line infrastructure. However, success breeds successes, and results can fuel their future expansion and help quell the political, social, and economic instability that has plagued them to date.

 

Cateora, Philip, Graham, John, Gilly, Mary, & Money, Bruce. (2019, February 19). International Marketing, 18th Edition. [[VitalSource Bookshelf version]].  Retrieved from vbk://9781260665574

Utoikamanu, Fekitamoeloa. (n.d.). "Closing the Technology Gap in Least Developed Countries". The United Nations. Retrieved from https://www.un.org/en/chronicle/article/closing-technology-gap-least-developed-countries

Kharas, Homi. (2017, February 28). "The unprecedented expansion of the global middle class". The Brookings Institution. Retrieved from https://www.brookings.edu/research/the-unprecedented-expansion-of-the-global-middle-class-2/

Quinn, Ben. (2017, January 31). "Morocco rejoins African Union after more than 30 years ". The Guardian. Retrieved from https://www.theguardian.com/global-development/2017/jan/31/morocco-rejoins-african-union-after-more-than-30-years

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

Ighobor, Kingsley. (2020, December). "AfCFTA: Africa readying for free trade come January 2021". United Nations Africa Renewal. Retrieved from https://www.un.org/africarenewal/magazine/november-december-2020/afcfta-africa-readying-free-trade-come-january-2021

Kelly Moltmaker

DB3

Chapter 9

Discuss the impact of the IT revolution on the poorest countries

A country’s investment in information technology (IT) is an important key to economic growth. The Internet allows for innovative services at a relatively inexpensive cost. Telecenters in many developing countries provide public telephone, fax, computer, and Internet services where students can read online books and seek potential business partners. For example, medical specialists from Belgium help train local doctors and surgeons in Senegal via video and provide them with Internet access to medical journals and databases. Traveling there to teach them would be expensive, but via Internet technology, it costs practically nothing. Technology can help economies in developing countries such as reducing the cost of production, establishing standards for quality, and allowing individuals to communicate all around the world. Industrialization is the fundamental objective of most developing countries. Companies do market in less-developed countries, but often they must modify their offerings and augment existing levels of infrastructure. 

 

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 a middle class household that generates new markets for everything from diapers to automobiles. In the United States, the middle-class in emerging markets differ. Discretionary income is income not needed for food, clothing, and shelter, however it is income that can be spent on goods such as washing machines, TVs, and special treats. Examining how income is spent in households between developing and developed countries reveals that more household money goes for food in emerging markets than in developed markets. The next category of high expenditure for emerging and developed alike is appliances. For example, the middle-class in developing countries typically do not own a car. 

Chapter 10

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

A free trade area and a common market have one common objective, which is to eliminate tariffs within their respective boundaries. A free trade area is an agreement between two or more countries to reduce or eliminate customs duties and non tariff trade barriers among partner countries while members maintain individual tariff schedules for external countries (pg. 295). A common market agreement eliminates all tariffs and other restrictions on internal trade, adopts a set of common external tariffs, and removes all restrictions on the free flow of capital and labor among member nations (pg. 295). In addition, a common market eliminates restrictions on the movement of goods, capital, and labor. 

 

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

African nations have had difficulty in forming effective economic unions for multiple reasons. The African nations are politically not strong and are backed by corruption. Also, the government earnings, taxation policy, and low government spending makes it difficult to form effective economic unions. In addition, the lack of communication between African nations increases the trade barriers. Due to the lack of communication, there are many rivalries that exist in the African nations. Most of the African nations are poor and have no technological change due to which they produce low quality products.

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