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MARKET POTENTIAL INDICATORS


Market Potential Indicators for Emerging Markets - 2007
December 11, 2006 Global marketing is becoming more and more important along the years with the increasing trend in internationalization. Having too many choices, marketers face the challenge of determining which international markets to enter and the appropriate marketing strategies for the countries they are planning to penetrate. The focus of this study is ranking the market potential of 27 countries identified as an "Emerging Market" by The Economist magazine. The Emerging Economies comprise more than half of the world's population, account for a large share of world output and have very high growth rates which means enormous market potential. They can be distinguished by the recent progress they have made in economic liberalization. Promising opportunities for trade is opening as their need for capital equipment, machinery, power transmission equipment, transportation equipment and high-technology products is substantial and is increasing rapidly. An indexing study is made by MSU-CIBER to help the companies to compare the Emerging Markets with each other on several dimensions. Eight dimensions are chosen to represent the market potential of a country over a scale of 1 to 100, and they are given weights to contribute to the overall market potential index. The following table contains the indices and rank of each country for each of these dimensions and the overall market potential index. An explanation of these dimensions, their weights in the overall index, and the variables that are used to construct those dimensions is presented next. What's New in 2007: Three new countries have been added to the 2007 edition: Pakistan, Saudi Arabia, and Taiwan. The first two countries were recently added to the list of Emerging Markets by The Economist. Taiwan was previously excluded from the study due to lack of sufficient data. This year, due to the kind assistance of Taipei Economic & Cultural Representative Office (TECRO) we have been able to put together the necessary data to once again include Taiwan in our analysis. Notes: 1. The most recent version of the Market Potential Indicators can always be found on globalEDGE at http://globaledge.msu.edu/ibrd/marketpot.asp. 2. We also keep an archive of the Market Potential Indicators for the previous years. To find these archives, please visit the Publications section of our MSU-CIBER web site. 3. To sort the table by any dimension, click on the column heading.
Overall Market Potential Index Rank Index 1 100 2 96 3 93 4 79 5 78 6 75 7 73 8 64 9 55 10 46 11 37 12 35

Market Size Countries CHINA HONG KONG SINGAPORE TAIWAN ISRAEL S. KOREA CZECH REP. HUNGARY INDIA POLAND TURKEY MALAYSIA Rank Index 1 100 24 1 27 1 12 5 25 1 7 12 23 2 26 1 2 44 14 5 9 8 20 3

Market Growth Rate Rank Index 1 100 20 23 18 27 6 57 12 45 16 30 9 48 24 14 3 63 27 1 7 55 2 70

Market Intensity Rank Index 25 23 1 100 9 59 11 57 2 79 5 63 13 55 3 76 22 37 10 58 12 57 26 19

Market Consumption Capacity Rank Index 12 59 13 54 11 62 4 82 2 99 3 97 1 100 7 77 6 80 10 67 19 42

Commercial Infrastructure Rank 16 2 6 1 3 5 4 7 25 8 12 10 Index 45 97 83 100 94 90 91 78 17 71 51 53

Economic Freedom Rank Index 27 1 6 79 10 71 8 76 3 86 7 78 2 93 4 83 17 44 5 82 16 45 20 39

Market Receptivity Rank Index 22 3 2 75 1 100 5 23 4 26 10 13 9 15 8 16 27 1 14 7 18 5 3 30

Country Risk Rank Index 13 49 2 90 1 100 3 87 5 63 4 65 6 63 8 62 16 39 9 58 20 27 11 53

http://globaledge.msu.edu/ibrd/marketpot.asp (1 of 3)03/13/2007 5:11:35 PM

globalEDGE (TM) | market potential indicators for emerging markets - 2006

RUSSIA MEXICO THAILAND CHILE ARGENTINA SAUDI ARABIA EGYPT PAKISTAN INDONESIA PHILIPPINES BRAZIL S. AFRICA PERU VENEZUELA COLOMBIA

3 5 17 21 15 13 16 10 6 11 4 8 22 18 19

34 12 4 2 5 5 4 6 12 5 25 8 2 4 4

15 25 11 19 10 4 14 5 13 21 26 17 22 8 23

38 9 46 25 48 59 43 57 45 22 2 28 20 51 20

23 8 18 17 4 27 14 6 21 7 20 15 16 24 19

30 60 44 44 65 1 50 62 38 60 39 49 46 27 42

16 21 14 23 20 9 5 8 18 24 25 15 17 22

53 27 54 13 39 70 81 72 47 13 1 53 52 17

9 15 20 13 11 14 21 26 27 22 17 24 23 19 18

54 48 38 51 53 48 36 2 1 29 44 22 23 39 41

25 11 15 1 14 22 26 23 21 19 13 9 12 24 18

5 63 49 100 49 15 3 10 37 42 55 75 62 5 44

19 6 7 12 25 11 17 26 15 13 24 20 23 16 21

4 18 18 10 2 11 5 1 6 10 2 4 3 6 4

17 12 15 10 27 7 18 25 24 23 19 14 22 26 21

35 52 43 57 1 62 29 10 13 17 28 44 19 4 20

13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

35 32 31 26 21 18 18 15 15 14 14 10 9 3 1

Rankings over the past 5 years 2007 Countries Rank CHINA 1 HONG KONG 2 SINGAPORE 3 TAIWAN 4 ISRAEL 5 S. KOREA 6 CZECH REP. 7 HUNGARY 8 INDIA 9 POLAND 10 TURKEY 11 MALAYSIA 12 RUSSIA 13 MEXICO 14 THAILAND 15 CHILE 16 ARGENTINA 17 SAUDI ARABIA 18 EGYPT 19 PAKISTAN 20 INDONESIA 21 PHILIPPINES 22 BRAZIL 23 S. AFRICA 24 PERU 25 VENEZUELA 26 COLOMBIA 27 2005 Rank 3 1 2 999 5 4 7 6 9 8 15 13 11 10 12 14 21 999 16 999 19 20 18 22 17 23 24 2004 Rank 4 1 2 999 5 3 7 6 8 9 15 14 12 11 13 10 19 999 16 999 17 18 20 22 21 24 23 2003 Rank 5 1 2 999 4 3 7 6 9 8 14 13 15 10 12 11 23 999 19 999 16 20 17 21 18 22 24 2002 Rank 5 1 2 999 4 3 7 6 10 8 14 17 13 11 12 9 15 999 21 999 22 19 16 20 18 23 24

Dimension Market Size Market Growth Rate Market Intensity Market Consumption Capacity Commercial Infrastructure

Weight 10/50 6/50 7/50 5/50 7/50

DIMENSIONS AND MEASURES OF MARKET POTENTIAL Measures Used


q q q q q q q q q q q q q q

Urban population (million) -20051 Electricity consumption (billion kwh) - 20042 Average annual growth rate of commercial energy use (%) - between years 1999-20031 Real GDP growth rate (%) - 20051 GNI per capita estimates using PPP (US Dollars) - 20051 Private consumption as a percentage of GDP (%) - 20051 Percentage share of middle-class in consumption/income (latest year available)1 Telephone mainlines (per 100 habitants) - 20053 Cellular mobile subscribers (per 100 habitants) - 20053 Number of PC's (per 100 habitants) - 20053 Paved road density (km per million people) - (latest year available)1 Internet hosts (per million people) - 20053 Population per retail outlet - (latest year available)4 Television sets (per 1000 persons) - (latest year available)1

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globalEDGE (TM) | market potential indicators for emerging markets - 2006

Economic Freedom Market Receptivity Country Risk

5/50 6/50 4/50

q q q q q

Economic Freedom Index - 20065 Political Freedom Index - 20066 Per capita imports from US (US Dollars) - 20057 Trade as a percentage of GDP (%) - 20051 Country risk rating - 20068

Data used are those available for most recent year. 1 Source: World Bank, World Development Indicators - 2006 2 Source: U.S. Energy Information Administration, International Energy Annual - 2004 3 Source: International Telecommunication Union, ICT Indicators - 2005 4 Source: Euromonitor, European Marketing Data and Statistics - 2006 Source: Euromonitor, Asian Marketing Data and Statistics - 2006 5 Source: Heritage Foundation, The Index of Economic Freedom - 2005 6 Source: Freedom House, Survey of Freedom in the World - 2005 7 Source: U.S. Census Bureau Foreign Trade Division, Country Data - 2005 8 Source: Euromoney, Country Risk Survey - 2006
For more information on methodology index, refer to:

"Measuring The Potential of Emerging Markets : An Indexing Approach" - S. Tamer Cavusgil Business Horizons, January-February 1997, Vol. 40 Number 1, 87-91.

Archive of Market Potential Indicators

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