Role of Derivatives in Causing the Global Financial Crisis
The previous articles in the module have discussed how the global financial crisis has been caused due to a combination of factors starting with the collapse of the housing market in the US and then due to the integration of the global economy rapidly spread to other parts of the world. An aspect that was […]
The Pharma Sector and Intellectual Property Rights: Pros and Cons
The Case for Patents The Pharma sector is often caught in the fight over whether the enforcement of IPR or Intellectual Property Rights should be followed or whether the sector exists for alleviating the health concerns of the poor and the needy thereby ensuring affordable drugs to the masses. Before we launch into the discussion […]
Six Sigma – Introduction to Measure Phase
The mention of the Measure phase of the Six Sigma module brings into mind pictures of statisticians performing complex operations on data to derive meaning out of it. While this is true to some extent, the complexity of the process is highly over-rated. True, that there is a tremendous amount of statistics involved. However, in […]
Change and Risk Management in ERP Implementation
An ERP system is a process and not an end in itself. Perfunctory Implementing of ERP system will not boost efficiency. Reasons for failure of an ERP project such as lack of commitment from management and employees, lack of communication, knowledgeable employees not available for the project, are mostly organizational issues and have nothing to […]
Quality Control Techniques
Introduction Quality of product and services determines success or failure of the organization. Consumers expect the company to maintain high-level of quality and consider it an important aspect of satisfaction. Quality management, therefore, becomes very important as far as any organization is concerned. Quality management can be accomplished through various quality control techniques. Quality assurance […]
At the start of the 1970s a widely held belief in the United States and in Europe was about how there were no markets outside of their regions. The implication was that the Third World countries were not worthy of foreign investment as they were steeped in backwardness, immersed in poverty, and unable to produce anything of value.
The realization that these third world countries were now transforming themselves into emerging markets started in the 1980s, which began to attract the attention of a few interested investors like George Soros and Warren Buffett.
This trickle of foreign investment into the emerging markets turned into a flow by the time the 1980s ended and indeed, by the end of the millennium, it had turned into a flood. There are many reasons why the emerging markets attracted a lot of attention and some of them would be discussed here.
The first and foremost reason why the emerging market companies attracted foreign capital was because these companies focused on competing globally instead of only locally. Unlike the western companies that primarily started out as local based ones and then to tap the raw materials turned into foreign conquerors, the emerging market companies from the very outset set their sights on the global stage.
Next, these emerging market companies ensured that they diversified into as many markets as they could by bolstering their presence there and remaining among the top three market gainers in those countries.
The key lesson for western companies here is that these emerging market companies focused on the big picture and on entering as many markets as they could without inhibitions.
The third reason why emerging markets transformed themselves is that they had the advantage of demography.
In other words, as many of their workers were young and educated, they could create as many jobs as they could and still have workers vying for employment. Next, the emerging markets opened up their economies to foreign capital in a way that ensured that foreign investors would flock to these countries in droves.
Moreover, the emerging markets grew at a fast pace and the scorching rates of growth contrasted favorably with the growth rates of the stagnant west that was saturated.
The most important reason why emerging markets transformed themselves from backwaters of the global economy to the front-runners was that they invested in human capital by making rapid strides in education, healthcare, and social services.
Finally, the current slowdown has not affected the emerging markets largely as they followed a judicious mix of openness and protection from headwinds and hence, were able to insulate themselves from the vagaries of the global economy. This has added another dimension to the success of the emerging markets as they are now not only fully integrated into the global economy but also able to withstand the shocks and downturns better than the developed countries.
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Cross Border Mergers and Acquisitions and Some Recent Trends in this Field
February 12, 2025
