How Is Economic Development Important For Global Management?

The level of economic development varies widely around the world. Developed countries, also known as industrialized nations, are those that have a relatively high per capita income fast measured by the total national production of goods and services divided by total population) and a high degree of industrialization. Countries in this category include the United States, Japan, Canada, Australia, and Western European nations. In contrast, less-developed countries (LDCs), also known as developing countries and Third World nations, have a relatively low per capita income and a lower degree of industrialization. LDCs include African, South American, and some Asian nations. LDCs such as Taiwan, South Korea, and Hong Kong have been driving for extremely rapid economic growth; as a result, they export large numbers of manufactured goods. These countries have become known as the newly industrialized countries (NlCs).

For the global manager, the degree of industrialization can affect the organization's ability to obtain natural resources, which may be abundant but largely untapped in LDCs. Also, the labor pool in LDCs tends to be large but less literate than in developed countries, so managers may have difficulty hiring skilled employees. Finally, income level plays a major role in determining how large a market a country will be for an organization's goods and services: the low per capita income in LDCs limits the ability to buy products such as sophisticated electronics or automobiles but opens the market for other products such as basic consumer goods.