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The Future of Emerging Markets Analysis

The Future of Emerging Markets Analysis

1. Introduction

Emerging markets are financial markets in a developing country. Governments of emerging markets are trying to liberalize their stock markets. Times and circumstances change, and what was a developing country in the past may be a developed country today. It was only in the 1990s that people began to question whether the emerging markets themselves formed a distinctive category. Recently the term “emerging economy” is much more popular than “emerging markets”. However, these two terms are interchangeable. Emerging markets now represent 352 million people with $1.4 trillion in annual consumer spending. This is double the consumer market in India and just behind that of China. It is forecast that the total consumer market will grow to approximately $2.6 trillion by 2020. The emergence of these markets can be attributed to some factors, e.g. the establishment of free and open market and political institutions and also a new consensus around economic management and models. Until now, there is no one standard definition of emerging markets among the academic society. The relevant criteria include the level of the country’s industrialization, the state of the country’s technology, the size of the country’s foreign exchange reserves, the extent of the country’s trading activities, the country’s credit rating, the distribution of the country’s income, the country’s financial market, and the country’s political and social institutions. Types of investment in emerging markets, including early stage and start-up financing, return on investment, strategy focusing on the technology sector, and the type of investors. I think it is a very nice reading. It provides a wide range of opinions regarding the definition and relevance of emerging markets. Also, it gives a brief description of this term and provides an investor’s guide on how to invest in the emerging market. I found that the information in the reading is relevant to the lecture content. It is a good reading.

1.1. Definition of Emerging Markets

On the other hand, emerging markets are also defined as being more globalized than ever before. This implies that national economies are becoming increasingly interlinked and integrated on a global scale, especially in areas such as trade, financial flows, and innovations. Notably, the rise of globalization has been facilitated by the advancement in digital technology and the spread of the Internet. For instance, mobile banking and e-commerce are becoming increasingly popular in emerging markets, as they offer innovative solutions to the lack of infrastructure and conventional payment systems. The governments of these economies also increasingly recognize the significance of fostering innovation and attracting foreign direct investment, to enhance the competitiveness of the domestic industries in the global arena.

Second, emerging markets are characterized by industrialization. Industrialization involves a shift from an agrarian-based economy, where the majority of the workforce is focused on agriculture and producing food, to a manufacturing-based economy, where the manufacturing industry plays a significant role in generating jobs and economic growth. For example, the GDP composition in India shows that primary industries like agriculture and farming account for 18%, while secondary industries, such as manufacturing and building, account for 29%. Additionally, services industries account for 53%.

First, emerging markets are defined by rapid economic development. This entails GDP growth rates above 5% to 7% on average, over the medium term. According to the International Monetary Fund data, China and India have an average annual GDP growth of around 7%. In comparison, the United States and the United Kingdom have an average annual GDP growth of around 2 to 2.5%.

Emerging markets – also known as emerging economies or developing countries – are nations in the process of rapid growth and industrialization. They have lower income per capita and less developed institutions in comparison with advanced economies, such as the United States, Germany, and Japan. These markets typically represent about 80% of the global population and account for about 75% of the world’s land mass. There are numerous definitions for the term “emerging markets”. However, most definitions share the same key concepts, which include rapid economic development, industrialization, and globalization.

1.2. Importance of Emerging Markets Analysis

What is “emerging markets analysis”? At a high level, it resembles a type of dynamic situation analysis. It is a tool that is utilized on an ongoing basis to not only assist companies and investors in evaluating the current situation in emerging markets and identifying potential problems but also to help them identify future opportunities within those markets. A great deal of common language speaks to the importance of emerging markets. In the preface, we read in the third paragraph about how some 85% of the world’s population lives in these developing areas. Then, we learn that “over the past 20, 30 or 20 years, these countries” made “a great economic leap”. And in the final line of this short section of the narrative, we learn that growth in these markets “will inevitably spawn new companies, competitors and therein potential investment opportunities”. First chapter one explains how using the PESTEL analysis tool helps in considering the changes in a global emerging market. PESTEL analysis provides an effective tool for strategic business planning within the emerging market. PESTEL is an acronym for Political, Economic, Social, Technological, Environmental, and Legal factors that can affect a market or area. The chapter outlines the importance of understanding the employment or income levels within the higher class system. Then, the chapter explains also that political factors within the analysis refer to government policy and the business implications as a result. In particular, critical infrastructure and how the industry is supported are thought out when using the PESTEL method. The chapter highlights the importance of considering linkages between data sets when considering the impact of a potential change in one of the PESTEL areas. “Linkages” are important when looking at the impact of a change in the market environment. Further, the analysis explains and justifies why a more decentralized nation could lead to disparities in resource allocation within areas.

2. Factors Influencing Emerging Markets

2.1. Economic Factors

2.1.1. GDP Growth

2.1.2. Inflation Rate

2.1.3. Exchange Rates

2.2. Political Factors

2.2.1. Government Stability

2.2.2. Regulations and Policies

2.2.3. Corruption Levels

2.3. Social Factors

2.3.1. Demographic Trends

2.3.2. Consumer Behavior

2.3.3. Cultural Influences

3. Challenges and Opportunities in Emerging Markets Analysis

3.1. Volatility and Uncertainty

3.2. Lack of Transparency

3.3. Potential for High Returns

3.4. Market Entry Barriers

3.5. Cultural and Language Barriers

4. Analytical Tools for Emerging Markets Analysis

4.1. SWOT Analysis

4.2. PESTEL Analysis

4.3. Porter’s Five Forces Analysis

4.4. Market Research and Surveys

4.5. Data Analytics and Big Data

5. Case Studies of Successful Emerging Markets Analysis

5.1. China’s Economic Rise

5.2. India’s Technology Sector

5.3. Brazil’s Agriculture Industry

5.4. South Africa’s Mining Sector

5.5. Mexico’s Automotive Industry

6. Future Trends in Emerging Markets Analysis

6.1. Technological Advancements

6.2. Sustainable Development

6.3. Globalization and Trade Agreements

6.4. Shifts in Consumer Behavior

6.5. Political and Economic Reforms

The Future of Emerging Markets Analysis

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