[COMPANY NAME]

[Company address]

ECONOMIC PAPER

[Document subtitle]

Contents
Abstract............................................................................................................................................1
Introduction......................................................................................................................................1
Data Overview.................................................................................................................................3
Literature Review...........................................................................................................................11
Table for Comparative review.......................................................................................................12
Summary & Conclusion................................................................................................................20
References......................................................................................................................................21
Appendices....................................................................................................................................22

Abstract
This economic paper examines the determinants of foreign investment decision in Zimbabwe and
Bolivia. The main objectives of this paper is to analyses the variables of macroeconomic of
Zimbabwe and Bolivia from 2010 to 2014 and how these variables influence the investment
decision of NIKE Company. In the first part of my paper we discussed the detailed introduction
of NIKE Company, its financial performance and stock price analysis. In the second part of my
paper the discussion is about to macroeconomic variables of Bolivia and Zimbabwe. And finally
in the last part of my paper Im providing the professional judgment about whether the future
investment of NIKE Company will be beneficial in Zimbabwe or Bolivia country.

Introduction
Nike was founded in 1964 by the Phil Knight and Bill Bowerman as a blue ribbon sports. Nike is
being a manufacturing of sportswear and gear and enjoys possessing more than 47% of the
market share across the globe become the market leader. Nike brand is well known in the world.
Nike is mainly engaged in the design, manufacturing, development, marketing and sales of the
equipment, apparel accessories, footwear, and services. Nike is one of the largest supplier of the
athletic shoes in the world. Bowerman is a Nike co-founder saw endless possibilities for human
achievements by improving and made innovations in sports. The success story of the Nike is also
related to its innovative design, wise productive and marketing strategies. The company
headquarter is in the Portland metropolitan area near Beaverton, Oregon. Nike being the public
company employed more than 44,000 people worldwide. The first pair of Nike shoes made by
the Nike founder Bowerman for his athlete student that won the two gold medals at the 1960
summer Olympics. Bowerman started his business in 1964 and sold 1300 pair of shoes. He
opened a retail store in 1966. Then 1971 the Bowerman expands his business as sales are
increasing rapidly. In 1976, the company hired the John Brown and partners that were first
advertising agency members. After the continuous success, the Nike attained a 50% market share
in the US athletic shoe market and went public in December 1980. Weiden and Kennedy made
an ad for Nike and remains the Nike primary ad agency. In the 1980s and 1990s the company
expanded its product line throughout the world. In the 2000s, the Nike diversify their
investments and divesting some of its subsidiaries. On December 19, 2013, Nike quarterly profits
increases as the company get the global orders for merchandise. To promote and advertise their
design and technology, the Nike pays top athletes in many sports to use their products. The Nike
is organized into four different regions where they sell their products that are US, Asia-Pacific,

America and Europe, Middle East and Africa. Now recently the company recognizes the new
regions that it want to diversify that are Eastern/Central Europe, japan, North America, Western
Europe, japan and greater china. Nike has offices situated in 45 countries outside the United
States and has over 700 shops around the world. The Nike most of the factories are located in the
Indonesia, Taiwan, India, Thailand, Vietnam, Pakistan, Malaysia and Philippines. Phil Knight is
the company existing chairman. Mark Parker is the existing president and CEO of the Nike
Company. (Marketrealist.com. (2015)
Financial Performance
The company revenue in 2013 was US $25.3 billion. The companys total assets were US
$15.465 billion in 2013. The companys highly recognized and most famous trademark is now
Just Do It. in 2010 the Nike also made the variety of jersey collection that teams wear in the key
matchups and at any time while playing. The universities that use these jerseys are Miami,
Alabama, Boise, and Florida etc. The company introduced self-lacing shoe in 2015 that will
release in 2016 officially. Nike delivers the sustainable growth of the earnings to shareholders.
The company want to decouple the profits in the future by constrained use of resources. The
Company also want to integrate sustainable in the environment. The Companys main aim to
grow their earnings to $36 billion in the financial year 2017. (Transworld Business, (2013)
Stock Price Analysis
Nike, Inc. is Public a Company and their stock is traded in New York Stock Exchange (NYSE).
Under the symbol of (NKE). The following graph shows the increasing trend of stock price
which reflects that the investors are confident with the financial performance of Nike, Inc. The
increasing trend of stock price from January 2014 to September 2015 is due to these factors. (i)

The overall performance of Nike, Inc. is comparatively good with its competitors. (ii) Petrol
prices was decreased in worldwide. (iii) The Company paying attractive ROE of 26.71% on Nov
30 2014 and announcing attractive dividend for its shareholders etc. (Ycharts.com)

Stock Price Analysis

140
120
100
80
Close

60
40
20
0

Date

http://finance.yahoo.com/q/hp?s=NKE+Historical+Prices

Data Overview
In data overview, the key variables of macroeconomics for Bolivia and Zimbabwe are explain in
the form of table and Graph. So through graph and comparison table we can easily determine
which country is best for future investment. (Data.worldbank.org)
Mean

Bolivia

Zimbabwe

GDP per capita,

PPP (constant
2011
international $)
GDP per capita,
PPP (constant
2011

Median

Maximum

Minimu
m

Standard
deviation

5840.44

5595.18

6319.53

5405.75

368.37

1588.71

1523.62

1697.95

1388.97

131.14

international $)
Bolivia

Zimbabwe

Bolivia

Zimbabwe

Bolivia

Zimbabwe

Bolivia
Zimbabwe

Bolivia

Zimbabwe

Bolivia

Zimbabwe

GDP per capita

growth (annual
%)
GDP per capita
growth (annual
%)

3.68

3.53

5.12

2.45

0.95

6.05

8.21

9.69

0.81

4.23

Inflation,
consumer prices
(annual %)
Inflation,
consumer prices
(annual %)

5.68

5.72

9.81

2.50

2.66

2.15

2.45

3.92

-0.22

1.85

Inflation, GDP
deflator (annual
%)
Inflation, GDP
deflator (annual
%)

8.45

6.91

14.57

5.96

3.61

2.45

3.52

4.09

-1.83

2.43

Real interest rate

(%)
Real interest rate
(%)

2.02

3.52

4.76

-3.19

3.22

Unemployment,
total (% of total
labor force)
Unemployment,
total (% of total
labor force)

2.82

2.70

3.30

2.60

0.32

5.40

5.40

5.50

5.30

0.08

108.86

107.15

122.13

100.00

9.01

Real effective
exchange rate
index (2010 =
100)
Real effective
exchange rate
index (2010 =
100)

Bolivia

Zimbabwe

Foreign direct
investment, net
inflows (% of
GDP)
Foreign direct
investment, net
inflows (% of
GDP)

5.72
3.32

3.59

2.86

3.08

0.21

1.99

1.75

0.78

3.53

1) GDP per capita, PPP (constant 2011 international $)

The GDP per capita is specifically convenient when we are evaluating the relative performance
of one country to another. GDP per Capita, PPP can be defined as the rates of purchasing power
parity that the GDP based on PPP can be converted into international dollars. Moreover the
purchasing power parity of an international dollar has the identical PPP over gross domestic
product as the dollar of U.S. has in the United States. The data of GDP per capita based on PPP
are in constant in international dollars for 2011. The GDP per capita for PPP in Bolivia was
previous recorded at 6319.53 US dollars in 2014 and the GDP per Capita, PPP for Zimbabwe.
The GDP per capita for purchasing power parity of Bolivia and Zimbabwe is equivalent to 35%
and 10% of the world's average. (Data.worldbank.org)

GDP per Capita, PPP

7000.00
6000.00
5000.00
4000.00
3000.00
2000.00
1000.00
0.00
2010

2011

2012

2013

2014

Bolivia GDP per capita, PPP (constant 2011 international $)

Zimbabwe GDP per capita, PPP (constant 2011 international $)

The Graph of GDP per capita reflects that the GDP per capita of Bolivia was much better than
the Zimbabwe because according to the data of World Bank, the GDP per capita, PPP for Bolivia
was more than Zimbabwe. Moreover, the average GDP per capita, PPP in Bolivia and Zimbabwe
are 5840.44 USD and 1588.71 USD respectively from 2010 until 2014. From 2010 to 2014, the
maximum and minimum values for Bolivia was 6319.53 and 5405.75 whereas the maximum and
minimum GDP per capita for Zimbabwe was 1697.95 and 1388.97. Hence all this data reflects
that the GDP per Capita, PPP was much better than the Zimbabwe from 2010 to 2014.
(Data.worldbank.org)
2) Real GDP per capita Growth
From 2010 to 2014 the maximum and minimum Real GDP per Capita Growth for Bolivia and
Zimbabwe were 5.12, 2.45 and 9.69 and 0.81 respectively. The Following Graph of GDP per
capita growth for Bolivia has been shown the increasing trend and for Zimbabwe shown
decreasing trend in the last five years. The mean GDP per capita growth of Bolivia was higher
and standard deviation was lower than Zimbabwe during the last five years.

Real GDP per capita Growth

12.00
10.00
8.00
6.00
4.00
2.00
0.00
2010

2011

2012

2013

2014

Bolivia GDP per capita growth (annual %)

Zimbabwe GDP per capita growth (annual %)

In 2014 the GDP per capita growth decline from 5.12 to 3.78. Moreover the GDP per capita
growth of Zimbabwe continuously shown decreasing trend from 9.36 to 0.81 which reflect that
the social, political and economic conditions becomes worst in Zimbabwe during last five years.
(Data.worldbank.org)
3) Real Interest Rate
Real interest rate is an interest rate which is received by the investor after adjusting inflation that
is measured by the GDP deflator. From 2010 to 2014 the maximum and minimum interest rate
for Bolivia and Zimbabwe were 4.76, -3.19 and 15, 9 respectively. The high real interest rate of
Zimbabwe will increase the cost of borrowing, increase incentive to save rater to investment,
increase in interest payment of government debt and finally affect both firms and consumers.

Real interest rate

20.00
15.00
10.00
5.00
0.00
2010

2011

2012

2013

2014

-5.00
Bolivia Real interest rate (%)
Zimbabwe Real interest rate (%)

The mean real interest rate for Bolivia and Zimbabwe from 2010 to 2014 were 2.02% and
12.40%. Which reflects that the low mean interest rate of Bolivia due to low cost of borrowing
and investor prefer to invest money rather to save it which is good for the economic progress for
Bolivia. (Data.worldbank.org)
4) Inflation GDP deflator
Inflation is a continuous or persistent increase in the general price level. The annual mean
Inflation GDP deflator of Bolivia and Zimbabwe were 8.45% and 2.45% respectively.

Infl ation GDP defl ator

16.00
14.00
12.00
10.00
8.00
6.00
4.00
2.00
0.00
2010
-2.00
-4.00

2011

2012

2013

2014

Bolivia Inflation, GDP deflator (annual %)

Zimbabwe Inflation, GDP deflator (annual %)

High inflation means that money does not keep its value, because purchasing a good tomorrow
will require more money than today. The inflation rate of Bolivia was much higher than
Zimbabwe. If an economy is suffering from high inflation, it may be that the countrys financial
department looks to halt the high level of growth that occurs. This can be done through some of
the

following

policies:

Increase

taxes,

Reduce

subsidies

and

Wage

freezes.

(Data.worldbank.org)
5) Real effective exchange rate
The real effective exchange rate is the effective nominal exchange rate divided by a price
deflator or index of costs. The exchange rate is the price of one currency expressed in terms of
another currency. To achieve stable exchange rates between countries in part through adjusting
for the balance of payments. In order to boost economic growth, a central bank may decide to
manipulate exchange rates to increase the likelihood of exports.

Real eff ective exchange rate

140
120
100
80
60
40
20
0
2010

2011

2012

2013

2014

Mean

Bolivia Real effective exchange rate index (2010 = 100)

Zimbabwe Real effective exchange rate index (2010 = 100)

The mean, maximum and minimum real effective exchange rate of Bolivia from 2010 to 2014
was 108.86, 122.13 and 100 respectively. Moreover, a high exchange rate of Bolivia means that a
currency is worth more of the foreign currency compared to a time when it is worth less of the
same foreign currency. The data of real effective exchange rate of Zimbabwe from 2010 to 2014
is not given in any website. (Data.worldbank.org)
6) Unemployment rate
The unemployment rate is regularly used as a proxy for the health of the economy. This is found
by dividing the number of unemployed people in an economy by the number of people in the
labor force. Typically the unemployment rate means that the number of labor that are not an idol
and not working. The average unemployment rate of Bolivia and Zimbabwe from 2010 to 2014
were 2.82% and 5.40% respectively. If % of unemployment is high than its mean that the country
needs to hire more workers to increase supply, then the cost to the country will be comparatively
low, compared to if the economy was at full employment, and wages would be high.

Unemployment rate
6
5
4
3
2
1
0
2010

2011

2012

2013

Bolivia Unemployment, total (% of total labor force)

Zimbabwe Unemployment, total (% of total labor force)

The unemployment rate of Zimbabwe was more than 5% as well as higher than the Bolivia. So
due to high unemployment rate in Zimbabwe the level of incomes, consumer demand and
investment is low. (Data.worldbank.org)
7) Inflation Consumer Prices
It is the change in annual percentage to the average consumer which acquire goods and services
That may be changed after yearly intervals. The mean inflation consumer prices of Bolivia and
Zimbabwe from 2010 to 2014 were 5.68% and 2.15%.

Infl ation Consumer Prices

12.00
10.00
8.00
6.00
4.00
2.00
0.00
2010
-2.00

2011

2012

2013

2014

Bolivia Inflation, consumer prices (annual %)

Zimbabwe Inflation, consumer prices (annual %)

The Graph indicates that the annual inflation consumer price of Bolivia was higher than the
Zimbabwe that means the prices of products and services was increased in Bolivia. However in
case of Zimbabwe the inflation consumer price reflects decreasing trend that means the prices of
products and services were decreased during the last five years. (Data.worldbank.org)
8) Foreign direct investment
Foreign direct investment is the net inflow of investment to attain permanent management
curiosity other than the investors in the enterprise operating economy. The balance of payment
show that it is the sum of short-term and long-term capital, equity capital and reinvestment of
earnings. This series shows net inflows in the reporting economy from foreign investors. The
average foreign investment from 2010 to 2014 for Bolivia and Zimbabwe were 3.32% and 2.86%
of their countrys GDP. From 2010 to 2013 the graph shows the upward trend of Bolivia as
compared to Zimbabwe which means that the foreign investors prefer to invest their capital
especially in 2013 in Bolivia rather to invest in Zimbabwe. However in 2014 the foreign direct
investment for Bolivia was decreased from 5.72% to 0.21% which may be due to overall global
economic crises in the world. (Data.worldbank.org)

Foreign direct investment

7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
2010

2011

2012

2013

2014

Bolivia Foreign direct investment, net inflows (% of GDP)

Zimbabwe Foreign direct investment, net inflows (% of GDP)

Literature Review
Monetary Policy
Bolivia was the only country which has the biggest hyperinflation in the economy of the world
history during 1984 to 1985. The prices were increase to 20,000 percent or even 60,000 percent.
But after the great social and economic struggle of Bolivian government with the help of Jeffrey
Sachs, the great economist, Bolivia has gain its currency shored up and have capital outflows
from the economy. According to latest statistics, Bolivian standard of living is improving day by
day, they have US $5,100 of per capita in 2012 which was measured in GDP. They have
increasing trend of economic growth and decreasing trend of inflation. In 2012, Bolivia have a
surplus budget of about 1.5% of GDP and it has experiencing surplus budget since 2005. (Loza
Telleria, G.)
Zimbabwe needs a big monetary reforms in their economy to get back their economic position as
it was earlier, they have three option whether to pick a crawling peg or adaptation of South
African Rand or the adaptation of currency board. Mr. Mugabe and his party was the defaulters

that make the Zimbabwean monetary health very worse. US scholar Steve Hanker suggest the
same currency board as was in the Rhodesia in 1940s, however this suggestion was difficult to
implement but this does not mean that monetary reforms cannot take place. This board basically
demands from Zimbabwean government to have sufficient foreign reserves. Monetary can also
be reformed by the adaptation of Rand which would give the Zimbabwe the reputation of Rand
without to have sufficient foreign reserves and may increase a substantial increase in Zimbabwe
with respect to money. The other method which may boost up Zimbabwe economy in respect of
monetary system, the adaptation of Crawling Peg, however this method also not require the
sufficiency of foreign reserves but it requires the confidence of Zimbabwe people and foreign
investors.(Freytag, A & Draper, P)

Fiscal Policy
The fiscal policy of Bolivia as well shows deficit trend as well, in 1970s to 1980s there occur
high hyperinflation in the economy which grew fiscal deficit speedily and prices of commodities
increases, and according to latest stats, NPE start reforms to reduce fiscal deficit by decreasing
government expenditure and government liquidation to CBF. NPE rationalized the two costly
operations the Comibol and YPFB. In the early 1980s Zimbabwe announces its first fiscal policy
which reduces the rate of growth instead of increment. Zimbabwe was widely supported by the
IMF, World Bank and other financial institution during 1980s and 1990s, which results in the
increased debt obligations and in 1999 it was considered as a defaulter. Zimbabwe as well adopt
the program of EASP which reduces the budget deficit and tax ratio from 35% to 33%.
According to latest statistics, 2014 budget shows that Zimbabwe have very little fiscal leg-room

and this room can be increased by the measures which the government should adopt in the sector
of mining to improve worst fiscal obligations to treasury. (Simon, M. (2015))

Table for Comparative review

Averages Variable Data from 2010 to 2014

Bolivia

Zimbabwe

General government final consumption expenditure (% of 13.74

15.18

GDP)
Government expenditure on education, total (% of GDP)
Population, total

6.98
10239412.6

1.97
14587783.6

Gross capital formation (% of GDP)

Gross capital formation (annual % growth)
Tariff rate, applied, weighted mean, all products (%)
Growth rate of the money supply M2 (thousands)
Trade (% of GDP)
Current account balance (% of GDP)
CPIA macroeconomic management rating (1=low to 6=high)
Time required to start a business (days)
Time spent dealing with the requirements of Gov. regulations
Time required to get electricity (days)
CPIA transparency, accountability, and corruption
Access to electricity (% of population)
Internet users (per 100 people)
Fixed telephone subscriptions
CPIA property rights and rule-based governance rating

0
18.31
10.52
4.2325
55900000
81.13
3.47
3.60
49.00
28.50
42.00
3.50
85.35
32.74
872109.80
2.50

17.08
15.02
0
2600000
92.70322845
-30.48
2.3
87.6
2.5
113.6
1.5
38.68128
16.536
334057.4
1.6

9) General government final consumption expenditure (% of GDP)

The General government final consumption expenditure contains all current expenditures of
government for buying of services, compensation of employees and goods. These expenditures
also includes security and national defense expenditures. However these expenditures does not

include expenditures incurred on government military that are portion of the government
investment development. (Data.worldbank.org)
10) Government expenditure on education, total (% of GDP)
The general government expenditure on education includes the transfer of funds from
international sources to government. The General government are normally refers to regional,
central and local governments. From 2006 to 2012, Zimbabwe government spend 2.5% of GDP
on its education, whereas Bolivia government spend 6.9% of GDP on education in 2011 and
6.4% in 2012. These stats clearly shows that Bolivia spend more on education per capita than
Zimbabwe. (Data.worldbank.org)
11) CPIA transparency, accountability, and corruption in Bolivia & Zimbabwe
According to CPIA transparency, accountability and corruption analysis the mean of Bolivia and
Zimbabwe from 2010 to 2014 was 3.5 and 2.5 respectively. Moreover In 2013, Afro barometer
report shows that the percentage of corruption in Zimbabwe is 81%, which has increased 43%
during 2002 and 2012. Zimbabwe is one the most corrupt nation of South Africa and in world
corrupt countries ranking, Zimbabwe stands in 21st position and overall score 161 0ut of 175,
whereas the ranking of Bolivia in world corrupt countries ranking is 106 in 2013 which was 118
in 2011. These above stats clearly shows that Bolivia is safer than Zimbabwe in term of
corruption. (Data.worldbank.org) & (LANGA, 2014)
12) Population
The population of Bolivia and Zimbabwe are also a contributing element to the performance of
the economy of their nation. The mean average population for Bolivia and Zimbabwe from 2010
to 2014 recorded as 10239412.60 and 14587783.6. Moreover in every country many young

people and gone to school, colleges and universities. According to record of Wikipedia in 2013
the 63.1% people of Bolivia age was 15 to 64 and only 6.1 people age was 65 or over. Moreover
according to Wikipedia record in 2010, 56.9% people age was 15-64 and 4.2% people age was
65 or more. The population ratio for both countries was good for future economic progress in
their countries. (Data.worldbank.org)
Tariff rate, applied, weighted mean, all products (%)
Weighted mean applied tariff is the average of applied rates which are effective and weighted by
The import share of that product which is related to partner country. Harmonized system of trade
are used to classify data at six- or eight-digit level. To define commodity groups and import
weights the data of Tariff line were corresponding to (SITC). To the possible extent, specific
rates have been included in the calculations of weighted mean tariffs but only after conversion
from specific rates to their ad valorem rates. To calculate import weights the statistics of United
Nations Statistics Division's Commodity Trade database are used. The most favored national rate
will be used in the absence of effectively applied rate. The weighted average tariff rate of
Bolivia is 4.23 however the tariff rate of Zimbabwe from 2010 to 2014 was not given in any
website. (Data.worldbank.org)
13) Current account balance (% of GDP)
It is the sum of net services and goods which are exported by the country, is the sum of net
Secondary and net primary income. In 2014, Zimbabwe recorded current account deficit which
was 23.10% of GDP, which averaged -9.27% from 1977 to 2014 and according to 2013 it was
$576 million deficit. In 2013, Bolivia recorded current account balance of 3.83% of GDP which
is $1.012 billion. These stats shows the strength of Bolivia over current account balance which is
good. (Data.worldbank.org)

14) Trade (% of GDP)

Trade is the sum of exports and imports of goods and services which was measured as a share of
gross domestic product (GDP). In 2015, Bolivia recorded $67.22 million of trade surplus in June
2015 and averaged of $35.80 million from 1998 to 2015, whereas Zimbabwes trade balance is in
deficit from 2013 and total deficit reached to $6.3 billion in 2014. In terms of trade Bolivia is
strong. (Data.worldbank.org)

15) Macroeconomic management

It is the framework which assess the monetary policy, exchange rate policy and aggregate
demand (AD) policy. According to CPIA macroeconomic management rating, Zimbabwe rates to
2.5 in the rating, whereas in the above mentioned rating Bolivia stand with 3.5 in the rating. So
in term of macroeconomic management Bolivia is better than Zimbabwe. (Data.worldbank.org)
16) An annual growth of money supply M2
It is the measure of money supply that contains checking deposits M1, near money and cash. In
M2 the near money contains money market mutual funds, other time deposits and savings
deposits. Moreover these liquidity are low and not as appropriate as a medium of exchange.
However they can be converted quickly into checking deposits and cash. The average growth of
M2 of Bolivia and Zimbabwe are 55900,000 and 2600,000 respectively. There is low annual
growth in money in Zimbabwe because Zimbabwe is facing worse hyperinflation in the economy
from the past 5 years. (Tradingeconomics.com, 2015)
17) Time required to get electricity

It is the No. of days to acquire a permanent electricity connection that measures the duration of
median capture which indicates as a necessary practice rather than required law, by the electrical
experts, to complete the procedure. According to statistics of 2011 to 2015, there will be 106
days requires to get electricity in Zimbabwe whereas Bolivia requires 42 days to get electricity,
so in term of electricity requirement in days, Bolivia is better than Zimbabwe.
(Tradingeconomics.com, 2015)
18) Access to electricity (% of population)
It means the percentage of population which have access to electricity. The data electrification is
collected from international sources, national surveys and from industry. According to statistics
of 2011 to 2015, there is 85.35% population of Bolivia which have access of electricity whereas
there is 38.68% population of Zimbabwe that have access of electricity. So in term of access to
electricity Bolivia is better than Zimbabwe. (Data.worldbank.org)
19) Internet users (per 100 people)
Internet users are those persons who have used the technology of internet from any part of the
world in the past one year. Internet can be used via a computer and mobile phone etc. In 2014,
32.74 percent of the population of Bolivia is thoroughly accessed with internet whereas the
19.89% population of Zimbabwe is thoroughly accessed with internet facility and earns a lot for
Zimbabwe. (Data.worldbank.org)
20) Time spent dealing with the govt. regularities
It means the requirement of government regulations which is the part of senior managements
time. During a typical week which is spent according to the requirements of government
regulations e.g. taxes, customs, licensing and registration etc. According to the stats of 2010,

Bolivia spent 28.5% of senior management time with regulations, whereas Zimbabwe spent 2.5
% of senior management time. (Data.worldbank.org)
21) CPIA property rights and rule-based governance rating
The Property rights and rule-based governance is the extent to which the activities of private
economy is facilitated by the effective legal system and rule-based government structure in
which the contract rights and property is reliably enforced and respected. Total population is
based on the actual definition of population, which counts all residents of the country whether
they have citizenship or have legal status in the country except the refugees which are not the
permanent citizens of the shelter country but are generally considered as a part of the population
of the region, shall not be counted as a total population. The values shown are midyear estimates.
According to CPIA property rights and rule based governance rating, Zimbabwe rates with 1.5,
which was consistent throughout from 2009 to 2013 whereas according to above mentioned
rating Bolivia rates with 2.5 which was consistent throughout from 2005 to 2013. This rating
clearly shows great strength of Bolivia over property rights and rule based governance.
(Data.worldbank.org)
22) Gross capital formation (% of GDP)
The Gross capital formation is also known as gross domestic investment that comprises of
expenditures on fixed assets additions of the economy with addition of net changes in the
inventories level. The average gross capital formation for Bolivia and Zimbabwe from 2010 to
2014 was 12.52% and 17.08%. It means that the sale and purchase of fixed assets in Zimbabwe
was higher than Bolivia during the last five years. This will indicate that the people of Zimbabwe
are more interested for purchase and sale of fixed assets. However the trend of gross capital
formation (% of GDP) for both countries were not consistent. (Data.worldbank.org)

23) Gross capital formation (Annual % Growth)

The mean annual gross capital formation from 2010 to 2014 for Bolivia and Zimbabwe was
10.52 and 15.02. The maximum and minimum percentage for Bolivia and Zimbabwe from 2010
to 2014 was 23.53, -4.53 and 68.82, -53.73 respectively. The trend of annual gross capital
formation (% growth) for both countries were not consistent. (Data.worldbank.org)
24) Time required to start a business
It means that time which is required by the entrepreneur to complete the legal procedures to start
the business legally. Only those fastest procedures should be choose by the entrepreneur that
accelerate at additional cost, but independent of other cost. According to statistics of 2011 to
2014, there is 49 days requires to start a business in Bolivia, whereas there is 90 days required to
start a business in Zimbabwe, so these stats show that there will be hurdles for starting business
in Zimbabwe and condition of Bolivia is good in terms of business opening.
(Data.worldbank.org)
25) Fixed telephone subscriptions
It means the sum of all active numbers of analogue fixed telephone lines, fixed wireless local
loop (WLL) subscriptions, ISDN voice-channel equivalents, Voice-over-IP (VoIP) subscriptions
and fixed public payphones. According to 2013 report, Zimbabwe has 2.15 of fixed telephone
subscription per 100 inhabitants. But on the other side Bolivia has 8.2 of fixed telephone
subscription per 100 inhabitants. So, according to this stats Bolivia has wide range of telephone
subscription.
26) Governance effectiveness

In 2013, the percentage of governance effectiveness of Bolivia and Zimbabwe is -0.4% and
-1.1%. Hence the government of Bolivia is more efficient as compared to the government of
Zimbabwe. (CompareAllCountries.com, 2013)
27) Quality of port infrastructure
According to 2011 to 2014 statistics, the quality of port infrastructure in Bolivia stands with
Points 2 whereas in Zimbabwe it stands with points 3.6. So, in term of quality of port
infrastructure Zimbabwe has a better condition than Bolivia. (Indexmundi.com, 2015)
28) Is the country Landlocked or no
A landlocked country or state is an independent state that totally surrounded by land, or whose
beaches only lie on closed seas. Both the countries Zimbabwe and Bolivia are landlocked
countries. (Morais, C. (2015)

Summary & Conclusion

After analysis of key and other macroeconomic variables of Bolivia and Zimbabwe I suggest to
the Nike, Inc. that they must invest their capital in Bolivia country. Because all the key factors of
macroeconomics is in favor of Bolivia country. The GDP per capita, Inflation rate,
Unemployment rate, interest rate, monetary policy and fiscal policy of Bolivia country is more
favorable to Nike, Inc. as compared to Zimbabwe. The mean GDP per capita growth of Bolivia
was higher than Zimbabwe during 2013 and 2014 which shows that the economic growth
performance of Bolivia was much better than Zimbabwe. The high real interest rate of Bolivia
Country will enhance the confidence of investors. Moreover the low unemployment rate in
Bolivia increase the level of incomes, consumer demand and investment.

There will be 106 days requires to get electricity in Zimbabwe whereas Bolivia requires 42 days
to get electricity, so in term of electricity requirement in days. In 2014, Zimbabwe recorded
current account deficit which was 23.10% of GDP, which averaged -9.27% from 1977 to 2014
and according to 2013 it was $576 million deficit. In 2013, Bolivia recorded current account
balance of 3.83% of GDP which is $1.012 billion. These stats shows the strength of Bolivia over
current account balance which is good. From 2006 to 2012, Zimbabwe government spend 2.5%
of GDP on its education, whereas Bolivia government spend 6.9% of GDP on education in 2011
and 6.4% in 2012.
And finally, after analysis all the macro economic variables for both countries Im suggesting to
the Nike, Inc. that they do not invest their capital in Zimbabwe due to these reasons: The real
interest rate Zimbabwe was lower than Bolivia from 2012 to 2014. The High unemployment rate
in Bolivia decrease the level of incomes, consumer demand and investment. The decreasing
trend from 2010 to 2014 of Zimbabwe as compared to Bolivia shows that the foreign investors
prefer to invest their capital in Bolivia rather to invest in Zimbabwe. The GDP per capita growth
of Zimbabwe was lesser than Bolivia. The Monetary and fiscal policy of Zimbabwe was weaker
than Bolivia. And finally the political conditions of Zimbabwe was not encourage the foreign
investment.

References
Marketrealist.com,. (2015). Traditionally Innovative: The History Of NIKE - Market Realist.
Retrieved 19 November 2015, from http://marketrealist.com/2014/12/traditionallyinnovative-the-history-of-nike/

Transworld Business,. (2013). Nike Reports 2013 Revenues Climbed 8% | Transworld Business.
Retrieved 19 November 2015, from http://business.transworld.net/features/nike-reports2013-revenues-climbed-8/#AAemKe9tJIplVbMW.97

Data.worldbank.org, (2015). Data | the World Bank. Retrieved 30 October 2015, from
http://data.worldbank.org/

Finance.yahoo.com, (2015). NKE Historical Prices | Nike, Inc. Common Stock - Yahoo! Finance.
Retrieved 30 October 2015, from http://finance.yahoo.com/q/hp?s=NKE+Historical+Prices

Freytag, A., & Draper, P. (2015). The future of monetary policy in Zimbabwe | VOX, CEPR
Policy
Portal.
Voxeu.org.
Retrieved
28
February
2009,
from
http://www.voxeu.org/article/future-monetary-policy-zimbabwe

Ycharts.com, (2015). Nike Return on Equity (TTM) (NKE). Retrieved 30 October 2015, from
https://ycharts.com/companies/NKE/return_on_equity

NewsDay Zimbabwe, (2014). Zimbabwe: One of the most corrupt countries - NewsDay
Zimbabwe. Retrieved 3 November 2015, from
https://www.newsday.co.zw/2014/12/04/zimbabwe-one-corrupt-countries/

Amadeo, K. (2015). What Is GDP Per Capita? About.com News & Issues. Retrieved 30 October
2015, from http://useconomy.about.com/od/glossary/g/Gdp-Per-Capita.htm

Countrystudies.us, (2015). Bolivia - ECONOMIC POLICY. Retrieved 19 November 2015, from

http://countrystudies.us/bolivia/46.htm

Simon, M. (2015). EFFECTIVENESS OF FISCAL POLICY IN ECONOMIC GROWTH: THE

CASE OF ZIMBABWE. Retrieved from
http://www.ijeronline.com/documents/volumes/Vol%203%20Iss%206/ijer
%202012%20v3i6%20nd%20(9).pdf

Loza Telleria, G. (2015). Monetary Policy in Bolivia. Retrieved from

http://www.bcra.gov.ar/Pdfs/BCRA/Jornadas2010_Loza_Telleria_en_Ingles.pdf
CompareAllCountries.com,. (2015). Compare Zimbabwe and Bolivia Government effectiveness
index (-2.5 weak; 2.5 strong) | CompareAllCountries.com. Retrieved 19 November 2015,

from
http://www.compareallcountries.com/Zimbabwe/Bolivia/wb_government_effectiveness/

Indexmundi.com,. (2015). Bolivia - Quality of port infrastructure. Retrieved 19 November 2015,

from http://www.indexmundi.com/facts/bolivia/quality-of-port-infrastructure

Morais, C. (2015). Landlocked Countries - Geolounge. Geolounge. Retrieved 19 November

2015, from http://www.geolounge.com/landlocked-countries/

Tradingeconomics.com,. (2015). Bolivia Money Supply M2 | 1998-2015 | Data | Chart | Calendar

| Forecast. Retrieved 19 November 2015, from
http://www.tradingeconomics.com/bolivia/money-supply-m2

Tradingeconomics.com,. (2015). Time required to get electricity (days) in Bolivia. Retrieved 19

November 2015, from http://www.tradingeconomics.com/bolivia/time-required-to-getelectricity-days-wb-data.html

Appendices
Country

Series Name

2010

2011

2012

2013

2014

Bolivia

GDP per capita, PPP

(constant
2011
international $)
GDP per capita
growth (annual %)
General government
final
consumption
expenditure (% of
GDP)
Government
expenditure
on
education, total (%
of GDP)
Population, total

5405.7
5

5595.18

5792.55

6089.18

6319.53

2.45

3.50

3.53

5.12

3.78

3.68

13.83

13.79

13.46

13.87

..

13.74

7.60

6.89

6.44

..

..

6.98

102387
62

103999
31

105618
87

10239
412

Bolivia
Bolivia

Bolivia

Bolivia

991824 100782
5
38

Avera
ge
5840.4
4

Bolivia

Bolivia

Bolivia
Bolivia
Bolivia

Bolivia

Bolivia

Bolivia
Bolivia

Bolivia
Bolivia
Bolivia

Bolivia

Bolivia

Bolivia
Bolivia

Bolivia

Gross
capital
formation (% of
GDP)
Foreign
direct
investment,
net
inflows (% of GDP)
Inflation,
GDP
deflator (annual %)
Inflation, consumer
prices (annual %)
Gross
capital
formation (annual %
growth)
Tariff rate, applied,
weighted mean, all
products (%)
Real
effective
exchange rate index
(2010 = 100)
Real interest rate (%)
Growth rate of the
money supply M2
(thousands)
Trade (% of GDP)
Current
account
balance (% of GDP)
CPIA
macroeconomic
management rating
(1=low to 6=high)
Time required to
start
a
business
(days)
Time spent dealing
with
the
requirements of Gov.
regulations
Time required to get
electricity (days)
CPIA transparency,
accountability, and
corruption
Access to electricity
(% of population)

17.01

19.56

17.67

19.01

..

18.31

3.17

3.59

3.92

5.72

0.21

3.32

8.78

14.57

6.91

6.01

5.96

8.45

2.50

9.81

4.59

5.72

5.78

5.68

7.15

23.52

-4.53

15.96

..

10.52

5.36

3.68

3.66

4.23

..

4.2325

100

101.88

107.15

113.14

122.13

108.86

1.04
39500,
000

-3.19
41000,0
00

3.95
51000,0
00

4.76
610000
00

3.52
790000
00

2.02
55900
000

75.51
4.45

82.53
2.24

85.10
7.29

81.39
3.44

..
-0.05

81.13
3.47

3.5

3.5

3.5

3.5

3.6

49

49

49

49

49

49

28.5

..

..

..

..

28.5

42

42

42

42

42

42

3.5

3.5

3.5

3.5

3.5

3.5

80.2

..

90.5

..

..

85.35

Bolivia
Bolivia
Bolivia

Zimbab
we
Zimbab
we
Zimbab
we

Zimbab
we

Zimbab
we
Zimbab
we
Zimbab
we
Zimbab
we
Zimbab
we
Zimbab
we
Zimbab
we
Zimbab
we
Zimbab
we

Internet users (per 22.4

30
100 people)
Fixed
telephone 851203 878483
subscriptions
CPIA property rights 2.5
2.5
and
rule-based
governance rating

35.34

36.94

39.02

32.74

880371

874381

876111

2.5

2.5

2.5

87210
9.8
2.5

GDP per capita, PPP

(constant
2011
international $)
GDP per capita
growth (annual %)
General government
final
consumption
expenditure (% of
GDP)
Government
expenditure
on
education, total (%
of GDP)
Population, total

1388.9
7

1523.62

1648.75

1684.23

1697.95

1588.7
1

9.36

9.69

8.21

2.15

0.81

6.05

11.75

16.47

15.86

15.66

16.16

15.18

1.97

..

..

..

..

1.97

145654
82
13.53

148980
92
13.03

152458
55
12.53

14587
783.6
17.08

139738 142555
97
92
capital 23.89
22.39
(% of

Gross
formation
GDP)
Foreign
direct
investment,
net
inflows (% of GDP)
Inflation,
GDP
deflator (annual %)
Inflation, consumer
prices (annual %)
Gross
capital
formation (annual %
growth)
Tariff rate, applied,
weighted mean, all
products (%)
Real
effective
exchange rate index
(2010 = 100)
Real interest rate (%)

1.75

3.53

3.20

2.97

..

2.86

4.09

3.53

2.96

3.52

-1.83

2.45

..

3.28

3.92

1.63

-0.22

2.15

61.11

2.84

-53.73

68.82

-3.94

15.02

..

..

..

..

..

..

..

..

..

..

11

13

15

14

12.4

Zimbab
we
Zimbab
we
Zimbab
we
Zimbab
we
Zimbab
we
Zimbab
we
Zimbab
we
Zimbab
we
Zimbab
we
Zimbab
we
Zimbab
we
Zimbab
we

Growth rate of the 140000 200000

money supply M2 0
0
(thousands)
Trade (% of GDP)
96.33
110.93

290000
0

340000
0

330000
0

26000
00

91.14

83.11

82.00

92.70

Current
account
balance (% of GDP)
CPIA
macroeconomic
management rating
Time required to
start
a
business
(days)
Time spent dealing
with
the
requirements of Gov.
Time required to get
electricity (days)
CPIA transparency,
accountability, and
corruption
Access to electricity
(% of population)
Internet users (per
100 people)
Fixed
telephone
subscriptions
CPIA property rights
and
rule-based
governance rating

-25

-28

-38.7

-35.3

-25.4

2.5

2.5

2.5

30.48
2.3

86

86

86

90

90

87.6

..

2.5

..

..

..

2.5

125

125

106

106

106

113.6

1.5

1.5

1.5

1.5

1.5

1.5

36.9

..

..

..

11.5

15.7

40.4625
6
17.09

18.5

19.89

38.681
28
16.536

379000 356000

301650

304162

329475

1.5

1.5

1.5

1.5

http://data.worldbank.org/s

33405
7.4
1.6