Introduction to Information Technology (IT) Strategy
Introduction: What is IT Strategy and Why it is Important As the joke goes, A person who is sitting in front of a computer and not knowing what to do has been described as Intel Inside and Idiot Outside. Similarly, organizations that do not have an IT strategy in place are akin to clueless organizations […]
Rational Approach to Project Management in Organizations
The evolution of organization theories from mechanistic to people based ones has influenced the approaches taken by managers in organizations towards the firm as well as organizing people. While the earlier decades of the 20th century witnessed the rise of the mechanistic of the rational approaches, since the 1970’s and particularly in the last decade […]
How Chinese Corporations Are Going Global?
China has seen rapid development in the past two or three decades. It has become the export powerhouse of the world. However, Chinese companies were always considered to be the cheap imitators. Chinese companies were earlier contractors for American and European countries who provided cheap labor to assemble their high tech products. However, this has […]
Six Sigma – Definition and its Origin
Six Sigma is a data-based methodology to improve performance by reducing variability. It requires thorough understanding of product and process knowledge and is completely driven by customer expectations. In other words, it is a methodology to achieve 3.4 defects per million opportunities. It can also be used to bring breakthrough improvements in the process. It […]
Why is HealthCare Expensive in the United States ?
The American healthcare system has become so expensive that it is now a make or break issue in national politics. It was a major bone of contention and regularly featured in Donald Trump vs. Hillary Clinton debates. Some people are for Obamacare whereas there are others vehemently against it. Healthcare has begun to arouse deep […]
It is debatable whether the reforms in emerging and developing markets drive the entry of international businesses into those markets or whether the international businesses with their strategies drive reforms in these markets. Of course, the bottom line requirement for any international business to enter the emerging markets is that the market economy in that country must be open to foreign investment. Hence, this is the b basic requirement that drives the entry of the international business. However, many emerging markets stop at this reform and do not make their economies friendly to foreign investors beyond a certain extent.
In other words, once a country allows foreign businesses in some sectors, it does not automatically follow that it would open all the sectors to international businesses.
On the other hand, many international businesses once they gain entry into developing countries push for further liberalization of the economy in terms of investment friendly policies related to profit repatriation, increase in stake of the international business in the joint ventures, tax breaks, and convertibility of the local currency.
Indeed, as the experience of India shows, the country initially opened up some sectors to foreign investment, then stopped shy of full convertibility and is now at a stage where it is taking a gradated approach to opening up its economy.
Further, the entry of the multinationals in India was accompanied by these companies putting pressure on the government to liberalize the economy further and hence, in the case of India it can be said that both aspects of the question posed in the topic are true.
However, the case of China is different. It went in for full liberalization and made its investment climate so friendly that multinationals just started to flock to the country.
Further, the reforms in China were not halfhearted like in the case of India. Moreover, the Chinese government was free to implement reforms unlike India that is hamstrung by political considerations and the fact that policy paralysis has set in because of bad governance. Of course, this is not to say that one example is better than the other and vice versa because each country has its own set of factors in the political economy of development.
Apart from these considerations and drivers, it needs to be mentioned that once the genie is out of the bottle, it is difficult to undo the reform process. This has been the experience of countries like the Maldives where once foreign investment was allowed by a particular government, it was not possible for the successor government to go back on its commitment. This is also the case with India where despite opposition to foreign investment, the broad policy framework is supportive of foreign investment.
Finally, as mentioned earlier, the specifics of development are unique to each country because of historical, cultural, societal, and political factors apart from the baseline factor of economics. Hence, the approach to reforms and which aspect drives the other has to be done in a manner that suits the country.
Your email address will not be published. Required fields are marked *
Cross Border Mergers and Acquisitions and Some Recent Trends in this Field
February 12, 2025
