While major advanced economies are expected to grow at a rate of 5.4% by 2021, most emerging and developing economies in Asia and Africa will see growth rates of more than 8%. The rapid pace of social change and growth in these countries means that they are prone to high volatility. These markets are characterized by a lack of reliable data sources, poor credit histories, and an unstable domestic policy environment. Natural disasters and poor governance have contributed to the high volatility of these markets. Fortunately, these natural disasters often lay the groundwork for additional commercial development.
While the economic growth of many emerging countries has slowed, the overall performance of these countries has been strong. The Chinese economy grew by nearly 7% last year, despite the subprime mortgage crisis, and Indian markets have remained the most dynamic in the world. The Asian financial crisis forced many developing market firms to adapt. Their labor costs are significantly lower and they are more resilient to sudden shocks. The growing political independence of Big Ten nations has encouraged multinationals to focus their efforts on these markets.
In contrast, the countries of India, China, and Turkey have tended to have different business environments. In China, public sector corporations dominate the economy, while private firms are limited in access to capital. In India, meanwhile, the Chinese diaspora controls many foreign corporations. Although there are similarities, there are also differences that should be noted when evaluating these countries. The world’s largest importer of computer software is located in the latter country.
China, India, and Brazil are all examples of BEM countries. They are all highly competitive and offer high returns on investments. The only BEM country without a democratic foundation is Indonesia. While pressures for an open political environment are mounting in Indonesia, a political crisis in the country could destabilize the entire region and international financial system. Further, India has a large and educated workforce, and it is one of the top exporters of computer software in the world.
However, there are also advantages of investing in these countries. First, they are often low-cost and offer high-quality products and services. Third, they often have lower labor costs. While Western firms may be more efficient, the competition in the West may not be as favorable for emerging markets. These factors reduce the demand for goods from these countries and can also result in trade friction. Nevertheless, a successful strategy is crucial in establishing a successful presence in emerging markets.
The biggest drawback of the BEM is the lack of a democratic foundation. In Indonesia, for example, the government does not have a constitution. Moreover, many of the governments are not transparent enough. In order to attract investors, the country should have a democratic foundation. In addition to being an open economy, it should also have strong laws and institutions. Its political structure should be conducive to business. The country should also have a strong economy, with strong financial institutions and a strong market.