Business Differences in Developing Countries
Although the United States continues to be a world leader in business, many countries still have different types of economies, organizations, and ways of doing business. Developing countries often still have some of the traditional factors that developed countries may not experience. Here, Jordan Sudberg discusses business differences in developing countries.
1. Economic Growth in Developing Countries
Strictly speaking, the term “economy” does not refer to a country’s entire system of activity but only to the set of economic activities that generate revenues. Sudberg says that due to this fact, GDP is often the chosen metric for performance in national economic statistics. Sudberg says GDP is the total monetary value of all final goods and services produced. In calculating GDP, it is necessary to determine how much has been spent on consumer or capital goods (investment). However, GDP does not include government expenditures.
2. Business Environment in Developing Countries
Sudberg says that some of the unique aspects of doing business in developing countries are their business environments. The availability and costs of reliable data on markets, labor, infrastructure, and other relevant factors vary tremendously. In addition, the reliability of government statistics may also be questionable. The labor market structure also differs from traditional societies in developed countries, with a greater reliance on self-employed workers as opposed to full-time wage earners.
3. Labor Market in Developing Countries
The labor market has many characteristics that are different from the traditional labor markets of developed countries. Jordan says that in developing countries, it is common to have greater formal or informal non-wage incentives such as bonuses and promotional opportunities. The country’s personnel management practices also have a great deal of variety. Jordan says that job rotation and training, in-service training, and job mobility are often seen as proper staff motivation and development methods. In addition, the pattern of hiring is frequently an essential aspect of labor market activity. A significant proportion of the developing country’s labor force is self-employed. There may be substantial differences in the number of formal procedures governing such hiring, as there is less legal jurisprudence or other written records in developing countries.
4. Trade in Developing Countries
Traditional trade theories developed in developed countries emit most of the non tradable. Jordan says he refers to those items that cannot be exported or imported. However, Jordan says these are the most important and significant markets in developing countries. Because of this, development economists have started to create new trade theories for those interested in doing business in developing countries. Business differences in developing countries cover a great deal of these issues.
5. Regulation and Licensing in Developing Countries
Jordan says that the nature and scope of government regulations differ enormously from country to country. Furthermore, there may also exist a wide variation in the extent to which business practice is regulated by law and the degree to which various regulations are enforced. Jordan says that the licensing system is a critical aspect of doing business in developing countries.
Jordan Sudberg says that many critical factors in doing business in developing countries are the same as traditional businesses in developed countries. However, Jordan says that the way of doing business can differ significantly. Jordan says that most developing country enterprises have a much more informal, personal relationship with their customers.