Optical Character Recognition and E-Invoicing
Automation of business processes has become the single objective of every multinational corporation. Automation saves a lot of money in the long run. It also streamlines the process and makes it more robust. In the recent past, two technologies have helped companies automate their accounts payable departments. These two technologies are optical character recognition and […]
Factors affecting Inventory Operations
Inventory management operations are increasingly being outsourced to third party service providers, thereby ensuring that the investments and costs in managing the inventories are reduced. This is a welcome trend provided the companies focus on overseeing and reviewing both inventory management as well as inventory operations periodically to ensure proper controls are maintained and processes […]
Finland’s Failed Universal Basic Income Experiment
The Scandinavian countries are often seen as role models for welfare states. These countries are known for having very high taxation rates. However, many experts claim that these countries also have mechanisms to ensure that the money collected as taxes is plowed back to the people. Lately, Finland has been in the news for experimenting […]
Database Concepts and its Application in HRIS
Information Technology is the application of computers and techniques to restore retrieve and manipulate data often within an organization. To facilitate the functioning of HR and make it more proactive, IT and HR have been merged to form HRIS. In short, one can describe HRIS as an online solution for the entry, tracking of data, […]
Business Process Improvement – Training Requirements
Business Process Improvement Projects have become a common tool for Organizations to help review their business operational processes from time to time and to bring about necessary improvements. Organizations as well as their processes as well as their markets, customers and products keep changing. In current times, technology is playing vital role in the way […]
The previous articles have discussed how international businesses need supporting ecosystems and business friendly policies if they are to succeed in emerging markets. Of particular importance is the role of governments in deciding whether they would allow international businesses to setup their operations and encourage them to grow and succeed.
Often, the governments of many countries do not have a choice but to welcome international businesses as they need the “hard cash” or the Dollars, as they are also known. For instance, the difference between exports and imports is known as the Current Account Deficit or CAD.
Since many emerging markets (except China which has a positive CAD) have deficits that need to be financed with Dollars. Then, the governments can either borrow these Dollars at high rates or finance the deficit through FDI or Foreign Direct Investment and Equity flows into the stock markets from FIIs or Foreign Institutional Investors.
Apart from this, the domestic industry might not have the capabilities to succeed in a particular sector nor the expertise to develop that sector. Therefore, FDI becomes necessary for the growth of that sector.
Moreover, opening up of the economy is needed for admission into the WTO or the World Trade Organization, which means that in order to export to other countries, emerging and developing market economies have to open up. These are some of the reasons why many governments in developing countries encourage foreign investment and allow international businesses to setup operations in their countries. However, whether the successive governments continue the same policies or not depends on a host of factors that include the ideological bent of the governments, the compulsions of politics, and the fact that foreign investment might not have succeeded in kick starting the economy as planned.
The key aspect here is that many governments of the emerging economies often welcome the international businesses with open arms because of the reasons listed above. However, midway through the process, some of them develop cold feet because of policy paralysis, and the factors listed above.
It needs to be understood that allowing international businesses to enter into the emerging economies must be bipartisan meaning that there must be broad consensus on the issue from all stakeholders. Only then would the international businesses thrive in the emerging market economies.
Further, the competition for foreign capital is so intense that any let up in the process adversely affects the economy and hence, the process must be continued and the international businesses given due encouragement.
Finally, the examples of China, Brazil, South Africa, and Vietnam (which is still emerging) illustrate the need for consensus on opening up of the economies and following through the process.
On the other hand, the examples of India and Russia are the other way around as these countries opened up their economies due to compulsions and then with open arms but failed to keep up the momentum. This means that the integration into the global economy would happen only when the reforms process is done wholeheartedly and without pauses or U-turns.
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Cross Border Mergers and Acquisitions and Some Recent Trends in this Field
February 12, 2025
