Key Players In The World Economy

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Unit 3 ­ International Business
Unit 3.3.2 ­ Key Players in the World Economy
What will be the likely impact of the growing economic power of China and India on
individuals, national and multinational firms?
Roseanne Theyara
Implications of China's Population Size:
1.33 billion Population level in 2010.
This is a country with a quarter of the world's population.
0.6% Population growth a year.
265 million aged 14 and under in the Population in 2010.
China has made huge efforts over the past 30 years to curb population growth by
pressing its people to have only one child per family. Due to this, only 20% of the
Chinese population is 14 or under.
Implications of India's Population Size:
1.18 billion Population level in 2010.
1.4% Population growth a year.
352 million aged 14 and under in the Population in 2010.
India's population has two features that China cannot match ­ It is rising and it is
very young.
China's Economic Growth:
China has been booming for three decades.
High growth rates are normal for a developing economy, but to have double digit
growth rates for such a prolonged period of time is truly remarkable.
From this economic growth the population of China has benefitted greatly.
India's Economic Growth:
In the 1990's government control over businesses were removed.
As a result export as a percentage of GDP increased, making India an open economy.
Open economy ­ An economy in which exports and imports form a significant part of
the GDP.
India now has about 50% of the global market for outsourced IT and business
services, made possible by its English speaking population and good education
system.
India also has great human capital as there are many unemployed graduates in India
with growing industries in pharmaceuticals, electronics, cars, aerospace and
biotechnology.
China's Increased Purchasing Power:
Purchasing power is measured by the purchasing power parity.
Purchasing power parity - An exchange rate that allows the accurate comparison of
purchasing power.
It is used because process for specific products such as food vary considerable
between countries and consequently the purchasing power of a sum of given
money.
Much or rural China still remains poor, even though there has been dramatic change
over the past few decades.

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Unit 3 ­ International Business
Unit 3.3.2 ­ Key Players in the World Economy
What will be the likely impact of the growing economic power of China and India on
individuals, national and multinational firms?
Roseanne Theyara
Overall, the massive increase in total GDP has helped China.
Cities such as Shanghai have very wealthy citizens, facilitating the growth in demand
for luxury goods.
India's Increased Purchasing Power:
Purchasing power is measured by the purchasing power parity.…read more

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Unit 3 ­ International Business
Unit 3.3.2 ­ Key Players in the World Economy
What will be the likely impact of the growing economic power of China and India on
individuals, national and multinational firms?
Roseanne Theyara
China's Predicted Economic Power compared with US and EU:
The USA has a far higher GDP than China for the time being. Predictions state that
China will overturn the USA by 2040, and is currently the second largest economy.…read more

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Unit 3 ­ International Business
Unit 3.3.2 ­ Key Players in the World Economy
What will be the likely impact of the growing economic power of China and India on
individuals, national and multinational firms?
Roseanne Theyara
Lack of Infrastructure.
Infrastructure in such areas as electric power, roads and telecommunications
networks has not been developed and this is the principal barrier to the
enlargement of overseas investment in India.…read more

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