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Chapter 4 Geopolitical Analyses of Regional Markets. John S. Hill. Geopolitical Analyses of Regional Markets . Regional Development in the Worldwide Context. Regional Markets: Geopolitical Analyses Geographic Characteristics Historical & Cultural Perspectives Commercial Characteristics.

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Chapter 4 geopolitical analyses of regional markets l.jpg
Chapter 4Geopolitical Analyses of Regional Markets

John S. Hill


Figure 4 1 geopolitical analyses of regional and national markets topic overview l.jpg

Geopolitical Analyses of Regional Markets

Regional Development in the Worldwide Context

  • Regional Markets: Geopolitical Analyses

  • Geographic Characteristics

  • Historical & Cultural Perspectives

  • Commercial Characteristics

North America

Latin America

Western Europe

Eastern Europe

Middle East and Africa

Asia

Figure 4-1: Geopolitical Analyses of Regional and National Markets: Topic Overview


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Chapter Outline

  • Introduction: The Importance of Geopolitical Studies

  • Regional Development in the Worldwide Context

  • North America

  • Latin America

  • Western Europe

  • Eastern Europe

  • Middle East and Africa

  • Asia


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The Importance of Geopolitical Studies

  • Recognizing how historic factors have affected regional development and the impact of geography on national economic and cultural development within the regional context

  • Understanding regional and national ethnic and linguistic compositions

  • Understanding how climate and topography affect country and regional communications and infrastructure development


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1998 GDP

Billions of $

Average

GDP per Capita

($)

Range per Capita ($)

Population Projections

(Millions)

2000 2010 2020

Africa

$468

1.5%

$672

$100 (Ethiopia) to $3,730 (Mauritius)

696

9.7%

1,009

1,230

Middle East

$421

1.4%

$2,661

$280 (Yemen) to $17,870 (UAE)

214

4.0%

Asia

$7,802

25.5%

$2,210

$210 (Nepal) to $32,350 (Japan)

3,122

58.8%

4,075

4,495

North America

$10,645

34.8%

$25,138

$19,170 (Canada) to $29,240 (U.S.)

290

5.5%

330

358

Latin America

$1,832

6.0%

$3,404

$410 (Haiti) to $8,030 (Argentina)

466

8.8%

583

642

Western Europe

$8,496

27.8%

$17,220

$3,160 (Turkey) to $39,980 (Switzerland)

443

8.3%

523

521

Eastern Europe

$609

2.1%

$3,543

$370 (Tajikistan) to $9,780 (Slovenia)

239

4.5%

307

317

Australasia

$275

0.9%

$17,584

$14,600 (NZ) to $20,640 (Australia)

21

0.4%

33

37

Totals

$30,548

(100%)

5,309

(100%)

6,862

7,601

World and Regional Analyses: Gross Domestic Products and Populations


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NORTH AMERICA

  • Geographic Characteristics


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NORTH AMERICA

Geography

  • Geographically large (Canada #2, US #4)

  • Canada’s latitude gives cold climate and population concentrations in south

  • US’s climate varies from cold north to sub-tropical south; benign topography

  • Good natural resource base—agriculture, minerals and energy


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NORTH AMERICA

  • Historical and Cultural Perspectives

  • Prior to 15th and 16th centuries, North America was inhabited solely by Indian tribes and Inuit

  • 1492, Columbus “discovered” the new continent

  • Immigrants began from Mayflower in 1620; established Anglo Saxon culture and English as the major language

  • Liberation war from the British in 1776

  • Civil War of 1861-1865 united nation

  • 1823 Monroe Doctrine asserted national sovereignty confirmed US independence from Europe

  • US accounts for approximately 5 percent of the world’s population, but it is responsible for over a quarter of the world’s gross domestic product (GDP)


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NORTH AMERICA

  • Commercial History

  • Early North American settlements were agriculturally based

  • In 1869, the first trans-US railroad opened; by 1900 the telegraph facilitated trans-continental communications.

  • The US industrial revolution occurred between 1870 and 1920

  • By 1914, US output exceeded that of Britain, France and Germany combined

  • By the 1920s, it produced 40 percent of the world’s coal and half its manufactured goods


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LATIN AMERICA

  • Geographic Characteristics


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LATIN AMERICA

Geography

  • Geographically large

  • Proximity to equator results in hot, tropical climate over much of region (rain forests)

  • Excellent agriculture, minerals, and energy


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LATIN AMERICA

  • Historical and Cultural Perspectives

  • Many Latin American countries had Indian civilizations predating 15th and 16th centuries (Aztecs, Mayas, Incas)

  • Modern Latin American history dates from the early 1500s, when the Spanish colonized most of the region and the Portuguese occupied Brazil

  • Independence was won from 1810 to 1824

  • US interest in Latin America increased in the early twentieth century

  • Southern European influence on Central and South America is evident in language; religion and social class


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LATIN AMERICA

  • Commercial History

  • Early interest in the region was spawned with the discovery of silver at Potosi

  • In the 17th century, tobacco, hardwood and coffee crops became extensively cultivated in the Caribbean and Brazil

  • Slavery contributed to agricultural development

  • The collapse of the global economy in the 1930’s caused civil unrest throughout the region

  • In the 1980s, privatization and movements towards market blocs followed democratization trends and opened up Latin markets to trade and investment


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WESTERN EUROPE

  • Geographic Characteristics


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WESTERN EUROPE

  • Historical and Cultural Perspectives

    • Romans established Europe-wide empire from 100 BC to 400 AD; built regional infrastructures and established trade

    • Colonizing activities of 16th through 19th centuries established the region as political and economic leaders worldwide

    • Britain was first country to industrialize (between 1750 and 1830)

    • The 1930s economic slump left its mark on European society and politics

    • To pay for Western Europe’s mixed economy, personal tax rates are high compared to those of non-European countries

    • Continue to maintain national distinctions, but significant similarities exist among Europeans

    • Feudal history and heredity monarchs have contributed to


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WESTERN EUROPE

Geography

  • Northern latitude means temperate rainy climate; good for agriculture

  • Geographically compact (trade, communications, infrastructure)

  • Extensive coastlines (naval expertise)


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WESTERN EUROPE

  • History

    • Romans built roads, formalized trade routes, made region-wide laws, established a common currency

    • Monarchies/aristocracies establish hereditary social class system

    • By 15th century, superior sails, rudders, compasses, and maps enabled ships to sail longer distances

    • Colonization establishes trading routes and global reach

    • 17th century – British, German, Belgian, and Dutch banking systems establish financial infrastructures

    • By 1914, region was the center of world commerce

    • 1930s depression highlights needs for social welfare systems and mixed economies

    • 1950s-70s: de-colonization and trade bloc formed


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WESTERN EUROPE

Commercial History

  • 1952 European Coal and Steel Community formed

  • 1957 Treaty of Rome establishes European Economic Community—6 original members

  • 1960 European Free Trade Association formed

  • 1973 European Community expands to 9, then to 15 by 1995 (became the European Union), then to 25 by 2004

  • 1992 Abolition of non-tariff barriers within the EC

  • 1999-2002: establishment of Euro as common currency

  • European multinationals account for about half of the world’s $7.1 trillion of FDI

  • Trend toward privatization and deregulation picked up pace during the 1990s.


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EASTERN EUROPE

  • Geographic Characteristics

  • Eastern Europe includes the Central European countries of Poland, the Czech and Slovak republics, Hungary, the Balkan countries, Russia, and the other states of the former Soviet Union

  • Russia dominates as world’s largest country (11 time zones); northern latitude means colder climates

  • Minerals and energy in good supply

  • Agriculture problematic


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EASTERN EUROPE

  • Historical and Cultural Perspectives

  • Much of Eastern Europe’s post 1500 history is tied to Russia

  • Early attempts to modernize were made by Peter the Great (1672-1725); feudalism dominant into 20th century

  • Russian Revolution of 1917-18 engineered by Vladimir Ilyich Ulyanov, known as Lenin, and Leon Trotsky

  • 1945 Yalta Conference establishes Iron Curtain

  • Communism and cold war dominate until 1980s when perestroika (restructuring) and glasnost (openness) occur

  • 1991: USSR dismantled--1990s saw the countries of Central and Eastern Europe implement democratic reforms

  • 2004 Many eastern bloc nations join EU


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EASTERN EUROPE

  • Commercial History

  • In 1924 Joseph Stalin collectivized agriculture and initiated comprehensive industrialization programs

  • In 1992, Hungary, Poland, and the Czech and Slovak republics signed a Central European Free Trade Agreement

  • In 1994, the EU completed free trade agreements with the Baltic States of Latvia, Lithuania, and Estonia

  • Privatization of former state-owned businesses has been brisk, with an estimated $200 billion of assets returned to private shareholders


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MIDDLE EAST AND AFRICA

Geographic Characteristics

  • Middle East: harsh desert climate; some agriculture though rainfall is variable; OIL dominates regional economy

  • Africa: large land mass; situated on equator; hot, humid climate means tropical vegetation and difficulties in establishing infrastructures; other parts of Africa desert-like with crop-raising problems; major source of minerals


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MIDDLE EAST AND AFRICA

  • Historical and Cultural Perspectives

  • The Middle East and North Africa: Key event was establishment of Islam 7th century and its spread throughout Middle East and North Africa. Ottoman Empire major influence until 1918; colonial interest heightens with oil discoveries; many nation states established in 20th century. Internal tensions over Palestine; external tensions with western powers

  • Africa: Source of slaves 16th-19th centuries; colonized 19th century (1884 Berlin Conference) and major interests in mineral deposits in 20th century; de-colonization after 1945 and many ethnic tensions cause problems establishing democracies; AIDS virus major problem in 21st century


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MIDDLE EAST AND AFRICA

  • Commercial History

  • Middle East major trader with Asia via the Silk Road 6th century onwards

  • From the 1870s to 1918, agricultural produce was the major Middle Eastern export, mainly to Europe

  • The 1930’s depression devastated Middle Eastern economies with major declines in raw material and commodity prices

  • Since the 1950s, oil has been dominant in the Middle Eastern economies; tensions over oil price rises

  • African economic progress has been slowed by ongoing internal conflicts and deflated world prices for commodity exports; trade blocs starting to form (COMESA, SADC)


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ASIA

  • Geographic Characteristics


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ASIA

Geography

  • Large geographic area dominated by Pacific Ocean; island states of Philippines, Indonesia

  • Large nation states of India (1 billion people) and China (1.2 billion)

  • Climatically variable: sub-tropical, monsoons, earthquakes


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ASIA

  • Historical and Cultural Perspectives

  • Dominant religions: Buddhism, Hinduism, Islam, Confucianism and Taoism

  • China an early civilization, with Confucius as a major influence on Chinese government and society for nearly 2000 years; imperial dynasty overturned 1911

  • In India, Hindu religion dominates history and economic development

  • Japan: Island status insulated nation from western influences until 1868 Meiji Restoration; modernization and imperial aspirations caused problems until 1945

  • Colonization by Europeans a major influence on many Asian nations


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ASIA

  • Commercial History

  • China an early innovator (iron, gunpowder, compass)

  • Asia from the 15th century was a source of silks and spices

  • China and Japan reluctant to open to west until 19th century

  • Japan dominates Asia as the first to industrialize. Resurgence after 1945 as the country surged into world markets after the 1960s

  • Asian economic growth in the latter half of the 20th century was powered first by Japan, then by South Korea, Hong Kong, Singapore and Taiwan

  • More recently, China, India, Malaysia, Thailand, Indonesia, and the Philippines have joined the Asian economic resurgence


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Key Points

  • Geopolitical studies

  • North America

  • Latin America

  • Western Europe

  • Eastern Europe

  • Middle East and Africa

  • Asia


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Key Points

  • Geopolitical studies are important to international business people as they provide key insights into regional and national development and valuable background in understanding current policies and problems.


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Key Points (Americas)

  • North American development progressed out of European colonization, with religious freedom and non-hereditary social-class systems as hallmarks of the new American society. Pioneering and westward expansion contributed to societal characteristics of self-reliance and individualism.

  • Latin America was colonized by the Spanish and Portuguese. Their language, religion, and hereditary social-class system are still apparent today.Independence occurred between 1810 and 1824. Instability characterized the next 150 years until major movements toward democratization and market-forces economies during the 1980s and 1990s.


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Key Points (Western Europe)

  • Western Europe’s compact geography and temperate climate significantly aided the region’s industrialization and trading efforts, and historic monarchies and feudal background laid the foundations of a hereditary social-class system.

  • European colonization gave the region worldwide influence up to the mid-20th century. World wars and common historical heritages formed the basis for today’s economic and political integration.


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Key Points (Eastern Europe)

  • Eastern Europe’s geographic size and climate significantly shaped its development.

  • Russian influence through the communist revolution of 1917-18 and the Yalta Agreement were major influences on world politics up to the 1980s, when democratization and market-forces economies have emerged to re-shape regional destinies.


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Key Points (ME & Africa)

  • Development was greatly influenced by geographic size, climate, natural resource deposits.

  • Both regions were heavily affected by European colonizing efforts.

  • Present day development has been hindered by politics and religion (Middle East) and by ethnic compositions (Africa).


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Key Points (Asia)

  • Modern history has been influenced through European colonization activities.

  • Ethnic, cultural, and religious diversity is apparent over much of Asia and has affected regional development.

  • Japan has historically been the dominant regional power, though China’s economic ascendancy has altered the regional, political, and economic balance.


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Key Points

  • Geography and history are primary shapers of regional and national cultures.

  • Geographic size, climate, and topography affect commercial interactions within markets and with the outside world.

  • History records how peoples have responded to their geographic and environmental circumstances and provides key insights into current cultures and behaviors.


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