According to the World Bank, the five biggest emerging markets are China, India, Indonesia, Brazil and Russia. Other countries that are also considered as emerging markets include Mexico, Argentina, South Africa, Poland, Turkey, and South Korea. Department of Commerce estimates that over 75 percent of the expected growth In the world trade over the next two decades will come from the more than 130 developing and newly industrialized countries; a small core of these countries will account for more than half of that growth.
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Commerce researcher also predict that imports to the countries identified as big emerging markets, with half of the world’s population and accounting for 25 percent of the industrialized world’s GAP today, will by 2010 be 50 percent of that of the industrialized world (Cater et al, 2006). World Bank has estimated that If current trend continue, by 2020 the Chinese economy could be larger than that of the united States, while the economy of India will approach that of Germany (Economist, 1994).
According to Bridgewater (et al, 2002), emerging markets, such as China, which had the fastest growing, and India, the second fastest growing GAP in the world, represented attractive investment opportunities. That is to say, they are the world’s fastest growing economies. The second feature of emerging markets, beyond the opportunity they represent for business growth and high returns, is that they entail greater risk that do mature markets. In other words, the strong growth potential of many emerging market economies is accompanied by volatility and high risks (Hit et al, 2000).
Although market potential in emerging markets is high, this may be realized only in the long term, but in the short term, international entrants face high levels of uncertainty and turbulent market conditions (Bridgewater et al, 2002). In brief, merging markets are difficult places to do business. There are often complex regulations and difficult bureaucracies. Information is scare and enforcing contracts takes time. To put it more simply, they entail volatility and risk. C) High population: The market potential of these big markets in terms of population size is immense.
As mentioned before, these countries constitute approximately 75 % of the global population. For instance, China’s overall population exceeds 1. 3 billion, about one- fifth of the world’s population. D) Regional economic drivers and major political importance: Big emerging markets are regional economic powerhouses with large populations, large resource bases, and large markets. Their economic success will spur development in the countries around them; but if they experience an economic crisis, they can bring their neighbors down with them.
Within their regions, they have also major political importance. Furthermore, they are critical participants in the world’s major political, economic, and social affairs. They are seeking a larger voice in international politics and a bigger slice of the global economic pie. ) Have undertaken significant programs of economic reform: Emerging markets have embarked on economic development and reform programs, and have begun to open up their markets and emerge onto the global scene.
They are characterized as transitional, meaning they are in the process of moving form a closed to an open market economy while building accountability within the system. That is to say, they are transitional societies that are undertaking domestic economic and political reforms. They adopt open door policies to replace their traditional state interventionist policies that failed to produce sustainable economic growth. F) Large markets: markets (Kettle et al, 2005).