Chapter 4Chapter 4Geopolitical Analyses of Geopolitical Analyses of

Regional MarketsRegional Markets

John S. Hill

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

OverviewOverviewGeopolitical Analyses of Regional

Markets

North America

Latin America

Western Europe

Eastern Europe

Middle East and Africa

Asia

Regional Markets: Geopolitical Analyses

Geographic CharacteristicsHistorical & Cultural PerspectivesCommercial Characteristics

Regional Development in the Worldwide Context

Chapter OutlineChapter 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

The Importance of Geopolitical The Importance of Geopolitical

StudiesStudies 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

World and Regional Analyses: Gross Domestic Products and PopulationsWorld and Regional Analyses: Gross Domestic Products and Populations  1998 GDP

Billions of $

AverageGDP per Capita

($)

Range per Capita ($)

Population Projections(Millions)

 2000 2010 2020

Africa $4681.5%

$672 $100 (Ethiopia) to $3,730 (Mauritius)

6969.7%

1,009 1,230

Middle East $4211.4% 

$2,661$280 (Yemen) to $17,870 (UAE)

2144.0%

   

Asia$7,80225.5%

$2,210 $210 (Nepal) to $32,350 (Japan)

3,12258.8%

4,075 4,495

North America 

$10,64534.8%

$25,138$19,170 (Canada) to $29,240 (U.S.)

2905.5%

330 358

Latin America

$1,8326.0%

$3,404 $410 (Haiti) to $8,030 (Argentina)

4668.8%

583 642

Western Europe

$8,49627.8%

$17,220$3,160 (Turkey) to $39,980 (Switzerland)

4438.3%

523 521

Eastern Europe

$6092.1%

$3,543 $370 (Tajikistan) to $9,780 (Slovenia)

2394.5%

307 317

Australasia $2750.9%

$17,584 $14,600 (NZ) to $20,640 (Australia)

210.4%

33 37

Totals $30,548(100%)

    5,309(100%)

6,862 7,601

NORTH AMERICANORTH AMERICA

Geographic Characteristics

NORTH AMERICANORTH AMERICA

GeographyGeographically large (Canada #2, US #4)Canada’s latitude gives cold climate and

population concentrations in southUS’s climate varies from cold north to sub-

tropical south; benign topographyGood natural resource base—agriculture,

minerals and energy

NORTH AMERICANORTH 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)

NORTH AMERICANORTH 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

LATIN AMERICA LATIN AMERICA

Geographic Characteristics

LATIN AMERICALATIN AMERICA

GeographyGeographically largeProximity to equator results in hot, tropical

climate over much of region (rain forests)Excellent agriculture, minerals, and energy

LATIN AMERICA 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

LATIN AMERICA 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

WESTERN EUROPE WESTERN EUROPE Geographic Characteristics

WESTERN EUROPEWESTERN 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

WESTERN EUROPEWESTERN EUROPE

GeographyNorthern latitude means temperate rainy

climate; good for agricultureGeographically compact (trade,

communications, infrastructure)Extensive coastlines (naval expertise)

WESTERN EUROPEWESTERN 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 reach17th century – British, German, Belgian, and Dutch banking

systems establish financial infrastructuresBy 1914, region was the center of world commerce1930s depression highlights needs for social welfare

systems and mixed economies1950s-70s: de-colonization and trade bloc formed

WESTERN EUROPEWESTERN 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.

EASTERN EUROPE 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

EASTERN EUROPE 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

EASTERN EUROPE 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

MIDDLE EAST AND AFRICA 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

MIDDLE EAST AND AFRICA 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

MIDDLE EAST AND AFRICA 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)

ASIA ASIA Geographic Characteristics

ASIAASIA

GeographyLarge 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

ASIAASIA 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

ASIAASIA 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

Key PointsKey Points

Geopolitical studies

North America Latin America Western Europe Eastern Europe Middle East and

Africa Asia

Key PointsKey PointsGeopolitical 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.

Key Points (Americas)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.

Key Points (Western Europe)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.

Key Points (Eastern Europe)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.

Key Points (ME & Africa)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).

Key Points (Asia)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.

Key PointsKey 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.