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Can Modernization Explain the Consumption of Durables in Emerging Markets? Dr. A. N. M. Waheeduzzaman. Presented by: Elizabeth Bennett, Ryan Harvey, Charles Joyce, Jeff Marques, Melanie Swords. Author. Professor of Marketing and International Business in TAMUCC College of Business
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Presented by: Elizabeth Bennett, Ryan Harvey,
Charles Joyce, Jeff Marques, Melanie Swords
Research showed increasing consumption of durables in emerging markets
Conflicting ideas regarding modernization process
Research looking for a link between the consumption of durables and the modernization process
First study to quantify the modernization’s effect on the consumption of durables, specifically in emerging markets
Models estimated using SAS
Longitudinal data used from the period of 1977-2000
Data for income and modernization were collected from the World Development Indicators (2002) from the World Bank
Data for durables consumption from Euromonitor, Data for economic freedom gathered from Fraser Institute data
20 Emerging Markets from The Economist were used
Excluded Hong Kong due to its convergence with China in 1999, and excluded Czech Republic, Russia, and Taiwan for lack of data
Measures economic productivity through the use of energy
M = (GNP/E) [(GNPCAP) + (ECAP) ]
M = Modernization Score
GNP = Gross National Product
E = Energy Consumption
GNPCAP = Per Capita GNP
ECAP = Per capita Energy Consumption
GNP = $14.72 T
E = 99.305 Q Btu
GNPCAP = $47,988
ECAP = 323.8 M Btu
M = 4.8
GNP = $313 B
E = 3.4 Q Btu
GNPCAP = $11,207
ECAP = 121.7 M
M = 1.1
U.S. Score is 4.4 Times Venezuela’s
Durables show accelerated growth of consumption over time
Technology/new products growing at faster rates
Modernization variables growing across time
Model predicates that consumption is dependent upon the modernization score of the country (Irwin)
Model uses all nine variables of societal modernization
Derivative of model two and uses factor analysis to group the variables into factors to reduce the dataset.
-Societal Modernization derived from Income and Energy
-All results statistically significant
-Showed highest correlation with Washing machines and Dishwashers
-Results likely skewed by the high price and power consumed by Dishwashers and Washing machines.
-Modernization score had a positive relationship with durable consumption in emerging markets
-Correlation increased due to the increase in independent variables
-Beta coefficients showed mixed results due to multicollinearity.
-Provides some illogical results.
-Grouped Urbanization, Energy Consumption, and Income into Factor One: Industrialization
-Grouped Working Females, Credit Availability, Telephone Lines, and Economic Freedom into Factor Two: Openness
-Grouped Education and Life Expectancy into Factor 3: Quality of Life
-Factors 1,2,and 3 explained 38,21, and 21% of the variance respectively.
Industrialization Significant in all six regression models
-Openness Significant in all but Refrigerators and Washing machines
- Quality of Life significant in all but dishwashers