Emerging markets have become the global hub for aids that drive economic growth and may well become the key drivers of global growth.
Earlier considered to be lucrative places for obtaining natural resources, cheap labor and inexpensive manufacturing, the emerging markets have achieved the status of becoming major players in the global competitive landscape.
If we take into consideration the current statistics and figures of growth and economic development, then it is safe to estimate that the coming years would exhibit a 70% global growth with almost 40% of the growth being contributed by China and India. The IMF has expressed that the performance of the emerging markets could outperform the developed economies in terms of GDP and Purchasing Power Parity by as early as 2014. This is an impressive performance by the emerging economies which is further strengthened by the fact that they account for nearly 50% of global FDI inflows and 25% outflows.
One of the fastest growing trends that has been witnessed over the past decade is the emergence of new leaders in emerging markets that not only provide critical competition in home grounds but are also making substantial outbound investments in other economies. These power giants would eventually become a disruptive force in the global arena with stiff competition being provided to others. The key driving force which enables companies from emerging markets to come up with cost effective and innovative designs to products stems from the fact that the local markets in which they operate are more than often deprived of convenient facilities. This means that they need to work with whatever they have and with whatever they can manage with. The outcome of operating with such limited support systems is the emergence of an entrepreneurial culture that is infused with innovation in strategic implementation and greater flexibility in adapting to the demands of their customers. One of the most profound examples of this is the Nano, manufactured by Tata Motors, India. This car is priced at USD 2,900 internationally which is less than 50% of the costs of any automobile in the world. The mere presence of this car in the global market goes on to speak loads about the progress being made by businesses in emerging economies and markets.
Another key factor to be considered is the estimated growth in population numbers which would not only add to the customer base but would also result in the increase in the combined purchasing power of the middle class segment of the population to more than USD 56 trillion by the year 2050. These estimates represent global implications wherein the majority of the demand (more than 80% estimated) emanating from the Asian countries. In keeping with the expected as well as the current changes, there would be immense requisites for developing or upgrading the physical and soft infrastructure so as to accommodate the demands of the increasing numbers of urban middle class members.
While emerging markets seem to be getting prominence in the global business scenario, it would be wrong to interpret their presence on the international forefront as being the only ones to be able to reap the benefits. The developments in emerging countries have helped to escalate the position of middle class members in their own regions which in turn have become lucrative new markets for developed countries.
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