The post crisis scenario at the global level is marked by adjustments being made as major entities inclusive of governments, institutions and business organizations are working towards redefining their identity.
While the economic recession has no major impact on the emerging markets, they are nonetheless left with the requirement of developing as well as upgrading their infrastructure and educational systems for being able to cope up with the increasing demands of the new middle class population.
In light of these needs, the governments all over the globe are faced with the requirement for strengthening their financial position and securing their current levels of financial integrity. Additionally they are required to ensure the delivery of services not only in an efficient and effective manner, but the services also need to be made economic in nature to fully obtain their benefits.
The private sector holds significance for any economy owing to its contribution levels in the growth and development of the respective region. The growth of the public sector needs to be done in an economic manner for sustainability and generation of employment opportunities.
The efforts of the government are clearly visible in the following initiatives:
In light of the rising debt-GDP ratios, there are immense efforts being made by the developed countries for reducing these values and organizing their finances.
Emerging markets possessing adequate surplus need to invest it for developing an effective safety nest for sustaining as well as promoting economic growth. The importance of safety nets in the economy may be judged from the fact that in certain markets, economic prosperity cannot be assured without their presence.
The investments made by the Tax Administration authorities of emerging markets also need to be improved such that the investments make their way into the right sectors in the right form and at the right time. PPP (Public Private Partnerships) are most likely to become major investment drivers in such markets.
Studies conducted by Standard & Poor indicate that public spending for developed economies with respect to median age is expected to rise from just over 17% of GDP in current times to over 27% of GDP in 2050. Emerging markets, however, reflect much less variations in these values with the change expected to be from 11% to 17%. Median age related spending, in addition to immigration, would affect future government spending in a significant manner.
Sovereign Wealth Funds are expected to become one of the most powerful sources for availing capital in the near future. Despite the drop in their valuation in light of the recent recession, their value is expected to increase over the years from USD 3.5 trillion as per 2010 data to more than USD 8 trillion as estimated for 2015.
State owned enterprises will continue to be popular means of safeguarding strategic industries and also assuring adequacy of critical infrastructure in most regions.
Leave a Reply