2- Factors Changing IBE, Economic Growth Impact

8/14/2019 2- Factors Changing IBE, Economic Growth Impact

1/11

LEGAL copyright

patents consumer protection forex management

LEGAL copyright

patents consumer protection forex management

ECONOMICS technology

education inflation exchange rate infrastructure

ECONOMICS technology

education inflation exchange rate infrastructure

CULTURAL language family religion customs traditions food

CULTURAL language family religion customs traditions food

POLITICALFACTORS government system political stability trade barriers

POLITICALFACTORS government system political stability trade barriers

Factors that change IBE


2/11

g

Other FactorsDemographic factors- population, age, sex,

fertility, mortality ratios.Public relations factors- suppliers, customers,

distribution channel members, rivals, welfaregroups etc. Internal factors- work & productivity standards,

team spirit, compensation systems, employee

standards, employee motivation, job design etc.Competitive factors- price-fixing, dumping,

discrimination, acquisitions, takeovers etc.


3/11

Determinants of IBE

World economy & distribution of world output International economic cooperation Economic institutions, laws, treaties, agreements, norms, practices and codes

( WTO, WHO, World Bank etc.) Political systems & cultural factors in different countries. Growth and spread of MNCs

Technology growth and transfer , the way we communicate and exchangeinformation Ethical practices International market structure and competition Globalization Rise of new markets, powers Trade Blocs and agreements

Forex rates, reserves Supply chains & routes Changes in the work force- multicultural, empowered women etc. Changes in consumer needs & wants


4/11

International Economic Growth Economic growth is the increase in value of

the goods and services produced by aneconomy. It is conventionally measured as thepercent rate of increase in real gross domesticproduct, orGDP. Growth is usually calculated in

real terms, i.e. inflation-adjusted terms, in orderto net out the effect of inflation on the price ofthe goods and services produced.

Japan's economy grew at a much faster than

expected 3.7 in the fourth quarter of 2007,helped by solid exports and businessinvestment.


5/11

Relationship between BE &Economic Growth?

After IndependenceAfter Independence,, Indian Economic policy was influenced by thecolonial experience (which was seen by Indian leaders. Policy tendedtowards protectionism, with a strong emphasis on import substitution,industrialization, state intervention in labour and financial markets, a largepublic sector, business regulation, and central planning.

Jawaharlal Nehru, the first prime minister along with the statistician

Prasanta Chandra, carried on by Indira Gandhi formulated and oversaweconomic policy. They expected favorable outcomes from this strategy,because it involved both public and private sectors and was based ondirect and indirect state intervention, rather than the more extreme Sovietstyle central command system. The policy of concentrating simultaneouslyon capital- and technology-intensive heavy industry and subsidisingmanual, low-skill cottage industries was criticized by economist

Milton Friedman, who thought it would waste capital and labour, and retardthe development of small manufacturers.

India's low average growth rate from was derisively referred to as theHindu rate of growth, because of the unfavorable comparison with growthrates in other Asian countries, especially the East Asian Tigers
http://en.wikipedia.org/wiki/Milton_Friedmanhttp://en.wikipedia.org/wiki/Hindu_rate_of_growthhttp://en.wikipedia.org/wiki/Hindu_rate_of_growthhttp://en.wikipedia.org/wiki/Milton_Friedman


6/11

After the economic policy

change of 1991. In the late 80s, the government led by Rajiv Gandhi easedrestrictions, removed price controls and reduced corporate taxes.While this increased the rate of growth, it also led to high fiscaldeficits and a worsening current account. The collapse of the SovietUnion, which was India's major trading partner, and the first Gulf

War, which caused a spike in oil prices, caused a major balance-of-payments crisis for India, which found itself facing the prospect ofdefaulting on its loans. In response, Prime Minister Narasimha Raoalong with his finance minister ______________ initiated theeconomic liberalization of 1991.

The reforms did away with the License Raj (investment, industrialand import licensing) and ended many public monopolies, allowingautomatic approval of FDI in many sectors. Since then, the overalldirection of liberalization has remained the same, irrespective of theruling party, although no party has tried to take on powerful lobbiessuch as the trade unions and farmers, or contentious issues suchas reforming labour laws and reducing agricultural subsidies.
http://en.wikipedia.org/wiki/Economic_reforms_in_Indiahttp://en.wikipedia.org/wiki/Economic_reforms_in_India


7/11

Since 1990 India has emerged as one of the wealthiesteconomies in the developing world; during this period, theeconomy has grown constantly, but with a few major setbacks.This has been accompanied by increases in life expectancy,

literacy rates and food security.

While the credit rating of India was hit by its nuclear tests in1998, it has been raised to investment level in 2007. In 2003,Goldman Sachs predicted that India's GDP in current prices will

overtake France and Italy by 2020, Germany, UK and Russia by2025 and Japan by 2035. By 2035, it was projected to be thethird largest economy of the world, behind US and China.
http://en.wikipedia.org/wiki/Goldman_Sachshttp://en.wikipedia.org/wiki/Goldman_Sachs


8/11

International trade trends

India whose share was 2.2% of world exports during independencecurrently stands at 0.7%. This means that Indian exports have not keptpace with other countries.

Indias Trade Turnover increased from $95 bn in FY02 to $245 bn inFY06. Indias Exports increased from $44 bn in FY02 to $103 bn in

FY06.

Indias Imports increased from $51 bn to $142 bn.

The world economy expanded by 3.3 per cent, slightly faster than thedecade average. Only Europes economy continued to record low GDP

growth.

In contrast to Europe, Japan experienced a strengthening of economicactivity. The trade deceleration was most pronounced in the developed,oil-importing regions.


9/11

Regional breakdown of the present world economyreveals that the sluggishness of the Europeaneconomy constituted the major drag on world tradeand output growth as Europe continued to report the

weakest trade and output expansion of all regions.

Although the depreciation of the euro, the British poundand the Swiss franc improved somewhat the pricecompetitiveness of European exporters in markets outside

Europe.. However, as three-quarters of Europes exportsare destined to European countries, trade growth canonly recover with stronger intra-European trade flows.


10/11

The major net-oil exporting regions the Middle East,Africa and the Commonwealth of Independent States all recorded a very strong expansion of their real

merchandise imports by far exceeding world tradegrowth.

Asias merchandise exports and imports expanded by

9.5 per cent and 7.5 per cent respectively. Asias tradedevelopments are prominently shaped by Chinasperformance.


11/11

India is emerging as one of the stronger players in the

world market of the next decade. Indian overseas direct investments (ODI) have shown arising trend both in terms of approvals as also in terms ofactual outflows.

USA Indias largest trading partner; but Asian countries

gaining significance China increasingly becoming an important partner (has

become the largest source of imports) Direction of exports moving towards the Southern

countries, particularly Asia.

IT & ITES exports rose from $4.0 bn in FY 2000 to $17.9 bnin FY 2005.

Projected growth US$ 60 bn by 2010. USA largest destination of Indias IT exports with a share

of 68%.

2- Factors Changing IBE, Economic Growth Impact

Documents

Transcript of 2- Factors Changing IBE, Economic Growth Impact