Global Economic Structures and Business Classification

Posted on Dec 13, 2025 in Geography

Business Classification and Enterprise Types

Defining Business Types

  • Small and Medium Companies (SMEs): Usually refers to smaller businesses.
  • Companies/Enterprises: Generally refers to bigger businesses.

Classification Criteria

According to Size (Employees)

  • Small: Less than 50 employees.
  • PYMES (Pequeñas y Medianas Empresas): 50 to 250 employees.

According to Capital Ownership

  • Public companies
  • Private companies

According to Social Organization

  • Public Licensed Companies / Sociedad Anónima (S.A.)
  • Limited Companies (Sociedad Limitada – S.L.)
  • Cooperatives

Economic Functions

  1. Provide labor and purchase goods (income).
  2. Pay salaries and sell goods (satisfy needs).
  3. Infrastructures, public services.

Geoeconomic Areas and Global Trade

Major Trading Blocs (Developed Economies)

  1. North America, European Union, and Japan.
  2. Characterized as developed economies.
  3. Dominated by the tertiary sector (services).

Emerging Economic Powers

  1. BRICS: Brazil, China, India, Russia, South Africa.
  2. MINT: Mexico, Indonesia, Nigeria, Turkey.
  3. High GDP but lower GDP per capita (the average annual income received by families).
  4. Dominated by the secondary sector (industry).

Developing Countries

  1. Sub-Saharan Africa.
  2. Some countries of Latin America and Southeast Asia.
  3. Dominated by the primary sector (agrarian activities).

Economic Systems

Capitalist System

  1. Market economy.
  2. Governed by the Law of Supply and Demand.
  3. Answers the three fundamental economic questions based on profit maximization:
  • Which products? (Determined by demand)
  • How many? (Determined by the market)
  • Who to provide it for? (People who can afford it)
Goal: Businesses seek the biggest profit.

Socialist System

  1. Planned economy.
  2. Economy controlled by the state, which answers the three fundamental questions.
  3. State ownership of companies.
  4. Focus on social equality.
  5. Examples: North Korea (more centralized); China, Cuba (less centralized/reforming).

Mixed System

  1. Market economy plus state intervention, resulting in a Welfare State.
  2. Both the market and the state answer the three fundamental questions.
  3. Focus on the redistribution of wealth.
  4. Located mainly in modern Europe.

Economic Globalization

Economic Globalization consists of the growing integration of national economies into a global market economy, in which almost all areas on Earth are interconnected. Infrastructures and public services are key components of this interconnectedness.

Causes of Globalization

  • Advances in telecommunications.
  • Improvements to means of transport.
  • The spread of the capitalist system.

Promoters of Globalization

  1. Multinationals (Big Entities): They seek the total liberalization of the economy.
  2. International Organizations:
    • International Monetary Fund (IMF)
    • World Bank (WB)

The Global Operation of the Economy

The global economy operates through three main processes: production, exchange, and consumption.

Advantages of Globalization

  • Increases employment where multinational subsidiaries are located.
  • Reduces production costs and lowers product prices.
  • Increases competition between businesses, which leads to greater product quality.

Disadvantages of Globalization

  • Increases economic inequality between developed and underdeveloped countries.
  • Favors large businesses.
  • Multinationals interfere economically in underdeveloped countries.
  • Harms the environment.
  • Encourages industrial offshoring from developed countries.