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Hello, and welcome to this tutorial on global markets. Now as always with these tutorials, please feel free to fast forward, pause, or rewind as many times as you need in order to get the most out of the time that you're going to spend here. Global Markets.
Let's take a look at what we're going to be covering in this lesson. Basically it's how markets flow around the world. The key terms we're going to be using in this lesson are World Bank and per capita income.
Now the global economy is centered around three main markets, not just physically, but also economically. Remember, it's a connected world. So physical geography, at least as far as the markets go, tends to mean less and less. They are North America, Europe, and Asia.
Now just because the world revolves around these markets, doesn't mean that they are the only game in town. They're the only picture. We're going to talk about the World Bank.
Now the World Bank is an international banking organization connected to the United Nations. And it's focused on developing poorer nations. In fact, to quote from the World Bank, "we offer developing countries, through policy advice, research and analysis, and technical assistance, our analytical work often underpins World Bank financing, and helps inform developing countries on their own investments."
Now the World Bank does a lot of work as an agency of the United Nations. They look at per capita income. They look at the wealth of nations. And they help develop poorer nations based on their own economic standing.
Now the World Bank's divides countries into different categories based on per capita income. Now per capita income is defined as the average income of a group. Now in the World Bank's case, they're going to be using gross national income divided by the number of people living in that country. And that's going to come up with how they divide countries into different categories.
For instance, high income countries, such as the United States or Canada are countries that make $12,616 or more per year, per capita income. That's each person in the country is making at least this amount of money. Upper middle class income countries are defined as countries that have a per capita income within the country of $4,086 through $12,615. Now these are countries like Bosnia and Herzegovina.
Lower middle income countries are countries where the per capita income is between $10,036 and $4,085. Now countries like this, countries that fall into this category, could be represented by Bangladesh. And lastly have low income countries. And these are often referred to as developing countries. These are countries where the per capita income is below $1,035.
Now these are countries like the Democratic Republic of the Congo. Now just because the per capita income looks shockingly low to someone who may live in a high income country, that doesn't mean there's not opportunity there for international trade. For example, people considered cellphones would be too much for the developing world. And if you think about it, someone making only $1,035 every year, a cellphone must seem like an incredibly lavish expense. It would simply be too much.
But now, because of development within those worlds, cellphone sales, mobile phone sales are absolutely huge. And that sparked other development in infrastructure within that country, which is improving the quality of life for the people there, and raising the per capita income as a result. They've become more connected to the outside world.
Now not only are they capable of getting connected to the outside world, but companies are able to reach previously untapped markets as a result. Now these people know about the other opportunities that are out there. This is driving change within the country, and it's also raising the standard of living. Pretty neat, huh?
Let's recap what we've learned today. We looked at how markets flow. That global rotation of wealth around the world. And how the World Bank not only helps with developing countries, by providing advice and financing, but also how it categorizes those countries into various classes based on per capita income.
I want to thank you for spending some time with me today. I hope you had a good time, and I'll see you next time.
An international banking organization connected to the United Nations and focused on developing poorer nations.
The average income of a group.