4.1.1 Growing economies

• Gross Domestic Product (GDP) – shows the size of the economy, the higher the GDP the greater the size of the potential market
• GDP per capita – this show the average income per person – the higher the income the greater the

  potential to export to the country, the lower the value the better to produce products there (unless skilled labour is required)
• Economic growth – show the increase in output per year – a very high growth rate may be above 5% per

  year, a high value is good if you are looking to sell to the country or are a business locating there e.g. Tesco
• Employment patterns – this shows the make up of the workforce e.g. how many work in the agriculture

  sector compared to manufacturing e.g. China specialising in manufacturing
• Human Development Index (HDI) - this rates the skills & education of a workforce (normally a rating out

  of 1. 0.9 would be very high 0.7 average 0.5 very low. The type of worker required would depend on the

  type of product being produce e.g. a low skilled workforce maybe fine for making trainers
• The growth rate of a country is measured by the annual change in its gross domestic product (GDP)Emerging economies are economies that have increasing growth rates but relatively low income per head (per capita)

  E.g. India, China and Brazil are considered to be emerging economies
• UK growth tends to be lower than emerging economies

  A key factor why emerging economies are growing at a faster rate than the UK economy is because of the growth of the manufacturing sector

  The UK economy has seen a decline in the manufacturing sector as businesses choose to manufacture in emerging economies due to lower labour costs and access to raw materials

  China is the world’s largest manufacturing economy and exporter of goods
• Emerging economies have a growing middle class with increasing incomes which allows their citizens to spend more on domestic goods and imported goods from abroad

  This increases the profitability of international firms who sell their goods and services in these emerging economies 
• The Impact of Economic Growth on Businesses

  Increased profits as businesses enter new markets and gain more customers

  Customers likely to have income elastic demand leading to increased sales and revenues/profits 

  Reduced costs of production as there are lower labour costs and cheaper raw materials in emerging economies 

  Increased trade as demand for goods and services increases

  There may also be an increase in foreign direct investment (FDI) as businesses want to benefit from growing economies
• The Impact of Economic Growth on Individuals

  Reduced unemployment as there is more demand which requires more labour to increase output

  Increased average incomes as individuals now have rising incomes due to employment which increases the standard of living 

  Access to quality public services as more tax revenue is generated.
• There are four key indicators used to assess the economic growth of emerging economies

  Businesses will consider these indicators when deciding which markets to invest in for future expansion

  Gross Domestic product

  GDP per capita

  Literacy

  Health

  Human development index
• Health 

  The health of a countries’ citizens is important to businesses who want to invest in emerging economies as this will have an impact on the quality of the workforce 

  Key indicators to consider are average life expectancy, infant mortality rate , access to healthcare and access to clean water
• Literacy 

  Literacy refers to the percentage of adults within an economy who can read and write