Globalisation and Growing Economies (9BS0 4.1.1)
Economic power is shifting towards emerging economies in Asia, Africa and Latin America. This topic covers the growth of the BRICS and MINT countries, the indicators used to measure growth, and the implications for UK and global businesses.
The growing economies
Emerging economies are countries moving from low income towards industrialised status, usually with fast GDP growth, rising middle classes and increasing world-trade shares. The acronyms BRICS (Brazil, Russia, India, China, South Africa) and MINT (Mexico, Indonesia, Nigeria, Turkey) capture the most-watched examples.
India is currently the standout: the world's most populous country at over 1.4 billion people, growing at roughly 6.5% a year in 2024 — far ahead of the UK's growth of about 1%. China remains the manufacturing giant, and its firms now expand outward: carmaker BYD sold about 4.27 million vehicles in 2024 and has entered the UK and European markets, competing directly with established Western brands.
For business, growing economies mean new customers, new competitors and new supply-chain options — often all three at once, as the BYD example shows.
Indicators of growth
Comparing economies requires indicators, each with strengths and blind spots.
| Indicator | What it shows | Limitation |
|---|---|---|
| GDP growth rate | Speed of economic expansion | Ignores distribution and informal economy |
| GDP per capita | Average income per person | Averages hide inequality |
| Literacy rates | Workforce skill potential | Says little about higher-level skills |
| Health measures | Productivity and demand for services | Slow to change |
| Human Development Index | Combines income, education, life expectancy | Composite hides individual weaknesses |
Businesses read these differently by purpose: a retailer targets GDP per capita and its growth (customers who can pay); a manufacturer weighs literacy and health (a productive workforce); an investor watches trends over levels, since fast-improving indicators signal tomorrow's markets. Using several indicators together prevents costly misreadings of single statistics. Exam answers gain marks by pairing whichever indicator they use with its limitation.
Implications for businesses
Growing economies reshape strategy in three ways. First, markets: rising disposable incomes create demand for branded consumer goods, financial services and education. Unilever earns close to 60% of its turnover in emerging markets, with brands adapted to local incomes — small, affordable pack sizes in India and Indonesia turned low average incomes into an enormous revenue base.
Second, competition: emerging-market firms move up the value chain from suppliers to rivals. BYD's arrival in Europe pressures established carmakers on price and technology simultaneously.
Third, supply: growth changes cost structures — wages in coastal China have risen for years, pushing labour-intensive production towards Vietnam, India and Bangladesh.
Risks travel with the rewards: political instability, currency volatility, weaker intellectual-property protection and infrastructure gaps. Strong exam answers weigh the growth opportunity against these risks for the specific business in the case.
Key terms
Practice questions
Explain one reason why a UK consumer-goods business might target an emerging economy such as India. [4 marks]
Model answer guidance: India combines a population of over 1.4 billion with GDP growth of around 6.5% in 2024, so its middle class is expanding quickly. Rising disposable incomes create first-time buyers of branded goods, offering growth a mature UK market cannot match. Unilever demonstrates the prize, earning close to 60% of turnover in emerging markets. Early entry also builds brand loyalty before rivals arrive.
Explain one limitation of using GDP per capita to assess a country's attractiveness as a market. [4 marks]
Model answer guidance: GDP per capita is an average that hides how income is distributed. A country can post a modest average while containing tens of millions of affluent urban consumers, or a high average driven by a narrow elite with a poor majority. A premium brand targeting India's cities would find far more viable customers than the national average implies. Businesses therefore need distribution data and city-level figures alongside the average.
Discuss the possible effects on established European carmakers of competition from emerging-economy manufacturers such as BYD. [8 marks]
Model answer guidance: BYD's scale — about 4.27 million vehicles sold in 2024 — and its battery cost advantages let it undercut European electric cars, squeezing rivals' margins and market share, especially at the affordable end. Established firms may be forced into faster innovation, cost restructuring or partnerships. However, incumbents keep advantages: brand trust, dealer and service networks, and design heritage, while tariffs may blunt the price gap. The net effect depends on segment — premium brands are partly insulated, but volume producers face direct pressure on their core models.
Assess the usefulness of indicators such as literacy rates and the HDI to a business choosing between two emerging economies for expansion. [10 marks]
Model answer guidance: Literacy and HDI reveal things GDP misses: a literate, healthy population supports both a capable workforce and long-run demand growth, so these indicators help forecast a market's trajectory rather than its snapshot. HDI's breadth guards against being dazzled by oil-driven GDP in economies with weak human foundations. However, the indicators are national averages that hide regional variation, lag behind change, and say nothing about regulation, corruption or ease of doing business — often the factors that actually sink market entry. They are useful for shortlisting countries, but the final decision needs specific research into the industry, region and institutions concerned.
Evaluate whether the growth of emerging economies is more of an opportunity than a threat for UK businesses. (20) [20 marks]
Model answer guidance: Emerging-economy growth offers UK firms enormous opportunities: new consumer markets as incomes rise, demonstrated by Unilever drawing nearly 60% of turnover from these regions; cheaper and increasingly skilled production locations; and investment flowing both ways. Services, education and premium brands — UK strengths — are exactly what growing middle classes demand. However, the threat side is real: emerging-market firms become formidable competitors, as BYD's 4.27 million vehicle sales and European entry show, and low-cost imports pressure UK manufacturers at home. Whether opportunity outweighs threat depends on the firm: exporters of differentiated goods and services gain most, while undifferentiated manufacturers competing on price face the greatest danger. On balance the opportunity dominates for UK plc overall, because its comparative advantages lie in sectors emerging demand favours — but individual businesses must reposition away from head-on cost competition to capture it.
Examiner tips
- Memorise two anchor statistics: India ~6.5% growth and 1.4bn people; BYD ~4.27m vehicles in 2024 — instant application marks.
- Always name which indicator of growth you are using and state its limitation in the same paragraph.
- In evaluation, split effects by type of business: exporter, importer, manufacturer and service firm are affected differently.
In The Business School simulation your students make these exact decisions in a live market against rival firms — every choice mapped to the specification. Free teacher demo, no installs, students join with a PIN.