Growing Economies (Edexcel A Level Business): Revision Note

Potential for increased profits as businesses enter new markets and gain more customers

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

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

Reduced costs of production, as businesses can benefit from lower labour costs and cheaper raw materials in emerging economies 

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

Increased trade opportunities as demand for goods and services increases

Access to quality public services as more tax revenue is generated, so the government can improve the quantity and quality of public services

Increase in investment because, as the economy grows, businesses want to expand, so they are more likely to invest

There may also be an increase in foreign direct investment (FDI), as businesses want to benefit from growing economies

GDP per capita is calculated by taking the total output (GDP) of a country and dividing it by the number of people in that country

High GDP per capita is associated with a high standard of living

It is important to look at the GDP per capita over a period of time to see whether there has been an improvement

GDP per capita can also be a useful indicator to compare the growth in two countries

The health of a country's citizens is important to businesses that 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, the infant mortality rate, access to healthcare and access to clean water

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

• According to the OECD’s 2016 International Adult Literacy Survey, the differences in average skill levels among OECD countries explain 55% of the differences in economic growth

• Information about literacy rates is important, as this will determine the quality of the workforce as well as the customers businesses will be selling to

The Human Development Index (HDI) combines the factors of life expectancy, education and income to determine the quality of development of citizens within a country

Specifically, the HDI looks at life expectancy, mean years of schooling and gross national income (GNI) per capita

The HDI was created by the United Nations and is measured between 0 and 1 (1 being the highest)

The problem with using the HDI as a measure of development is that:

• It does not account for inequalities within a country

• There is a lack of reliable data in some countries