Demographics and World Commerce

Demographics and World Commerce

Why are some countries wealthy while others boarder on poverty? What are the contributing factors that impact global commerce? Both world demographics and topography have their respective relationships with regional and world commerce.

Large countries in the mid-altitudes with ample technology and fertile environments will experience higher economic success as compared to those smaller countries with insufficient technology and infertile environments. J. Vernon Henderson writes, “High-income regions are almost entirely concentrated in temperature zones, 50% of world GDP is produced by 15% of the world’s population and 54% by countries occupying 10% of the worlds land area. The poorest half of the world population produces 14% of world GDP and 17 of the poorest 20 nations are in tropical Africa.” (p. 81-105)

Dissemination of ideas and technology impact global commerce as well. The transition from the industrial age to the information age has impacted commerce much as it has societies in general. Advances in telecommunications, satellites, and computer-based information processing promise to create fundamentally new ways of communicating. The technology creating the most change in commerce would have to be the Internet. An example of the Internets impact on commerce was best described by Vincent Johnson (2005) as: “Specifically, in the late 1990’s, trade finance was rapidly going “paperless” … which was earth chattering. A typical export arrangement goes something like this: (1) Japanese buyer opens a letter of credit (LC) with an international bank based on instructions from US supplier (price, product, delivery, etc.), (2) international bank wires this LOC to US bank, (3) US banks accepts LC and notifies US companies local bank, (4) US company ships products and creates shipping documents per LC instructions, (5) the US company or our export company submits documents to both international banks and the buyer, (6) once documents are accepted by both banks, the Japanese buyer claims product from port and the US company gets paid. Until recently, this process operated almost exclusively through original paper documents and signatures (with the only exception being the wire of the original LC) and could take 25 days. Today, it can happen almost exclusively electronically and the whole process time is reduced вЂ" a most importantly, with no effect on the LCs main function of insurance and payment risk hedging.” The final outcome of the current revolution is unpredictable, but its global impact on commerce will depend on how the revolution creates more efficient information dissemination opportunities.

Let’s take a look at relationships among ideas, events, social climate, and commerce. Ideas and technology are not disseminated solely by electronic means. Fellman-Getis-Getis (2002) states, “Diffusion is the process by which an idea or innovation is transmitted from one individual or group to another across space.” (p. 56) An example of this is Relocation Diffusion, in which ideas are brought to a new culture by migrants. Such ideas could include improved farming techniques, which could improve crop productivity, and ultimately improve regional economics by introducing larger export quantities to the world market. Socially speaking, and perhaps economically speaking, countries with flourishing higher education systems tend to succeed economically as compared to countries without. Presumably, the United States ranks as one of these benefiting countries-based on its 95% literacy rate and a world leading $11.75 trillion dollar Gross Domestic Product.

Perhaps two of the more significant events occurring in world history that impacted global economics were the Great Depression and World War II. . Davidson et al in their book Nation of Nations state “As Germany struggled to recover during the Great Depression, so did all of Europe”. (p. 750) While discussing World War II, the authors go on to say “War debts imposed at Versailles shackled Germany’s economy.” (p. 750) Where-as in the United Stated; “The Government relied on large firms such as Ford and General Motors because they had experience with large-scale production. Thus, war contracts helped large corporations increase their dominance over the economy.” (p. 767)

c. The study of demographics relates to the distribution of population and other characteristics. According to the Britannica Student Encyclopedia (2005), “Although the word demography was not in use until about 1880, the science originated in the second half of the 17th century with the work of John Graunt in London. It also includes population changes-movement from place to place, trends in fertility rates, and birth- and death rates.” (Article 208217) A review of CIA statistical data available from The World Factbook (2005) shows the following demographic and economic information for one or more countries on five major continents with coastal boarders:

Birth Rate* Death Rate* Net Migration* Population Growth Rate GDP

Algeria 17.13 4.6 -0.37 1.22% $212.3 Billion

Australia 8.81 7.44 3.91 0.87% $611.7 Billion

Brazil 16.83 6.15 0.03 1.06% $1.492 Trillion

China 13.14 6.94 -0.4 0.58% $7.262 Trillion

Germany 8.33 10.55 2.18 0% $2.362 Trillion

United States 14.14 8.25 3.31 0.92% $11.75 Trillion

* Indicates per 1,000

One can only speculate the future trends of regional demographics, but based on these statistics alone, one could hypothesize that Algeria’s high birth rate, low death rate, negative migration rate, and high population rate, will certainly lead to overpopulation in a country already considered to be a third world country. Given the amount of attention the Chinese economy is getting in American media, one could also speculate this countries $7.62 trillion dollar GDP will soon rival that of the United States estimated to be $11.75 trillion. Should these demographic statistics hold true for the foreseeable future, it would be my prediction that the United States will continue to demand its place at the top of the free market world. Interesting of note is China’s negative Net Migration. This potentially indicates the possibility of a reduction in the labor force, possibly in certain key