U.S. Exporters: Sell to the 86 Percent - Global Trade Magazine
  May 12th, 2016 | Written by

U.S. Exporters: Sell to the 86 Percent

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  • Only 14 percent of the world population lives in developed countries with per capita GDP of at least $10,000 a year.
  • The majority of the population in the developing world live in China, India, and Africa.
  • Many in the developing world live without 24-hour electricity but most use mobile phones.

There are roughly seven billion people inhabiting planet Earth. Of these, one billion live in developed countries and six billion live in the rest of the world.

U.S. business seeking to expand their markets should engage with the six billion, said Vijay Mahajan, a professor of business at the University of Texas at Austin.

“I define developed countries as those with a per capita gross domestic product of at least ten-thousand U.S. dollars a year,” said Mahajan, who spoke at the think tank Atlantic Council’s Global Strategy Summit in Washington last week.

“That’s the 14 percent,” he added. “The rest of the world is the 86 percent.”

U.S. businesses should not underestimate their clout in the global economy. “The U.S. makes up three percent of the world population and commands 15 percent of world GDP,” said Mahajan. “If we sneeze, someone loses a job in Bangladesh.”

Making it from the 86 percent to the 14 percent is not easy, Mahajan noted. South Korea managed that feat in the 1980s, but since then, economic “sustainability became an issue for them,” he said. Mexico and Malaysia are currently approaching the $10,000 GDP per capita threshold.

What might engagement with the 86 percent look like? One fact to consider is that the majority of the 86 percent live in China, India, and Africa.

Something else to think about is how people of the 86 percent actually live. Many live without 24-hour electricity service, but most—65 percent in India, for example—use mobile phones.

Understanding how technology is changing in these countries and how people actually use technology will teach companies in the developed world how to better reach these potential markets.

“In many parts of India, the mobile phone is the only reliable mode of entertainment in town,” said Mahajan.

U.S. entrepreneurs are already using the entertainment channel of mobile technology to promote brands in India. One such company was sold after three years to Twitter for $30 million.

“The 14 percent can engage with the 86 percent,” said Mahajan. “And there is money to be made.”