An introduction to the importance of the big emerging markets
Characteristics of emerging markets
That's because they don't have enough power to influence these movements. It would also free up capital for much-needed investments in the emerging world—in infrastructure, health, and education, for example. It appears that emerging markets lie at the intersection of non-traditional user behavior, the rise of new user groups and community adoption of products and services, and innovations in product technologies and platforms. This means that millions of poor people are finding it more difficult to get ahead. They will complain and return any item with a defect, and delay their consumption until the next model comes out, and are ever more informed by means of the Web and other sources. The possibility for some economies to fall back into a not-completely-resolved civil war or a revolution sparking a change in government could result in a return to nationalization , expropriation and the collapse of the capital market. It reduces risk by diversifying your investments into a basket of emerging markets, instead of just one. In spite of technological progress, most developed economies have reached a point where they find it very difficult to achieve any economic growth. Let us start with the immediate challenges. Not all emerging markets are good investments. In the short run, however, it will lead to slower growth, and this slowdown creates spillover effects—through trade and lower demand for commodities, and amplified by financial markets. It is not surprising, therefore, that many emerging economies have built up their own large safety buffers of foreign exchange reserves.
And, as we illustrate in the second part of this book, there is no shortage of opportunities to develop businesses that generate healthy profits. Throughout most of the s and s, the Japanese stagnation was discussed mainly as an aberration, not as a warning sign.
They must have little debt, a growing labor market, and a government that isn't corrupt.
In fact, the subsidizing of corn ethanol products in the U. As ofthe rest of the world, the South, or the Third World, as these countries were rather disparagingly referred to for many years, already generates a higher share of global wealth than the developed world.
Emerging stock markets
Safer capital flows A stronger monetary system should include a framework for safer capital flows. From the point of view of emerging markets, the current international monetary system is less supportive than it should be. These 85 percent matter to the global economy more than ever, and they matter to you more than ever—because of strong linkages through trade, finance, economics, geopolitics, and personal connections that you experience every day. We have written this book to aid those who are willing to take a leading attitude and drive creation and to inspire those who are desperately trying to avoid some of the inevitable, destructive aspects of change, to stop clinging on to old ideas and strategies that are no longer relevant when faced with the shifts we have described. Over the generations, this can change the very fabric of a society, and if a population is not entirely trusting of change, it may fight back hard to stop it. Emerging markets, by contrast, benefit from younger populations, unsaturated markets, and great scope to catch up and converge with richer economies. Some of the most prestigious developed economy firms, such as Land Rover, Arcelor, and Volvo, survive thanks to emerging market investors. China has embarked on an ambitious rebalancing of its economy—from industry to services, from exports to domestic markets, and from investment to consumption. They are also vulnerable to commodities swings, such as those of oil or food. So how can the safety net be strengthened? What exactly is the safety net? Between and , for example, global capital flows increased more than fold, compared with an eight-fold expansion in global trade. The introduction and impact of, say, fast food and music videos to some local markets has been a by-product of foreign investment. The suggestions we received hinted, much to our surprise, that theory had to be advanced from a Europe- or U. It is also moving towards a more market-oriented financial system.
Whether that country is in Europe or in South America should make no difference, making the traditional "blocs" of categorization irrelevant. Both emerging and advanced economies need to play their part to promote faster and more sustainable convergence.
The axes of the world economy are changing in irreversible ways.
based on 25 review