Global Markets

1. Three Main Markets

The global economy is centered around three main markets—not just physically but also economically. Remember, it’s a connected world, so physical geography, at least as far as the markets go, tends to mean less and less. These are the three main markets:

• North America
• Europe
• Asia

2. The World Bank

The World Bank is an international banking organization connected to the United Nations. It is focused on developing poorer nations. In fact, to quote the World Bank:

The World Bank does a lot of work as an agency of the United Nations. It examines per capita income and the wealth of nations, and it helps develop poorer nations based on their own economic standing.

term to know

World Bank

An international banking organization connected to the United Nations and focused on developing poorer nations.

3. Per Capita Income

The World Bank divides countries into different categories based on per capita income, which is defined as the average income of a group. In the World Bank’s case, this is calculated by dividing the gross national income of a country by the number of people living in that country. This determines how the World Bank divides countries into the different categories:

• High-income countries, such as the United States or Canada, are countries that make $12,616 or more per year in per capita income. This means that each person in the country makes at least this amount of money.
• Upper-middle-income countries are defined as countries that have a per capita income of $4,086 through $12,615. This category includes countries like Bosnia and Herzegovina.
• Lower-middle-income countries have a per capita income between $1,036 and $4,085. Bangladesh is representative of countries that fall into this category.
• Low-income countries are often referred to as developing countries. These are countries where the per capita income is below $1,035. This category includes countries like the Democratic Republic of the Congo.

IN CONTEXT

The per capita income of a low-income country may look shockingly low to someone who lives in a high-income country, but that doesn’t mean there’s no opportunity for international trade. For example, people thought that cell phones would be too much for the developing world because, if you think about it, for someone making only $1,035 every year, a cell phone must seem like an incredibly lavish expense. It would simply be too much.

But now, because of development within those countries, cell phone sales are huge. This, in turn, has sparked other developments in infrastructure within the country, thus improving the quality of life for the people there and raising the per capita income as a result.

These countries have also become more connected to the outside world. Now, not only are they capable of being connected to the outside world, but companies are able to reach previously untapped markets as a result. People in low-income countries know about the other opportunities that exist in the world. This is driving change within these countries and also raising the standard of living.

term to know

Per Capita Income

The average income of a group.