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Emerging Markets

New Voices in Investment: How Emerging Market Multinationals Decide Where, Why, and Why Not to Invest

Gonzalo Varela's picture

Emerging market multinationals (EMMs) have become increasingly salient players in global markets. In 2013, one out of every three dollars invested abroad originated from multinationals in emerging economies.

Up until now, we have had a limited understanding of the characteristics, motivations, and strategies of these firms. Why do EMMs decide to invest abroad? In which markets do they concentrate their investments and why? And how do their strategies and needs compare to those of traditional multinationals from developed countries?

In a book we will launch tomorrow at the World Bank, “New Voices in Investment,” we address these questions using a World Bank and UNIDO-funded survey of 713 firms from four emerging economies: Brazil, India, Korea, and South Africa.

Media (R)evolutions: The Cloud and the Connectivity Revolution

Roxanne Bauer's picture
New developments and curiosities from a changing global media landscape: People, Spaces, Deliberation brings trends and events to your attention that illustrate that tomorrow's media environment will look very different from today's and will have little resemblance to yesterday's.

For many people, "the cloud" is a nebulous term, but it simply refers to software and services that operate on the Internet instead of directly on a computer. Dropbox, Netflix, Flickr, Google Drive, and Microsoft Office 365 (a/k/a Outlook) are all cloud services-- they do not need to be installed on a computer.

According to a report by Gartner, one third of digital data will be in the cloud by 2016. Cloud computing is an attractive option for many entrepreneurs, businesses, and governments in developing countries that seek to service large populations but which require an alternative to heavy ICT infrastructure. Moreover, as mobile apps and PC software are increasingly tied to the cloud, its adoption is likely to increase.  

The High Density of Brazilian Production Chains

Otaviano Canuto's picture

International trade has undergone a radical transformation in the past decades as production processes have fragmented along cross-border value chains. The Brazilian economy has remained on the fringes of this production revolution, maintaining a very high density of local supply chains. This article calls attention to the rising opportunity costs incurred by such option taken by the country.
 
Moving Tectonic Plates under the Global Economic Geography

In recent decades, international trade has gone through a revolution, with the wide extension of the organization of production in the form of cross-border value chains. This extension was a result of the reduction of tariff and non-tariff barriers, the incorporation of large swaths of workers in the global market economy in Asia and Central Europe, and technological innovations that allowed modularization and geographic distribution of production stages in a growing universe of activities. International trade has grown faster than world GDP and, within the former, the sales of intermediate products has risen faster than the sale of final goods.

Weekly Wire: The Global Forum

Roxanne Bauer's picture

These are some of the views and reports relevant to our readers that caught our attention this week.

Could Mobile Phones Save Millions From Illiteracy?
Forbes
According to UNESCO, the answer is yes. Or at least, they could help. The United Nations Educational, Scientific and Cultural Organization periodically publishes detailed report about mobile phones usage in some of the poorest regions of the world. This time, for the study Reading in the Mobile Age, the organization tried to understand not only if people in developing countries use mobiles at all, but also, if they use them in a way that could help fight illiteracy. The research found out that, while mobile phones are still used primarily for basic communication, they are also, increasingly, a gateway to long-form text. Often, for millions, the only chance of reading a text where books are almost unknown.


Press Freedom at the Lowest Level in a Decade
Freedom House
While there were positive developments in a number of countries, most notably in sub-Saharan Africa, the dominant trends were reflected in setbacks in a range of settings. The year’s declines were driven by the desire of governments— articularly in authoritarian states or polarized political environments—to control news content, whether through the physical harassment of journalists covering protest movements or other sensitive news stories; restrictions on foreign reporters; or tightened constraints on online news outlets and social media. In addition, press freedom in a number of countries was threatened by private owners—especially those with close connections to governments or ruling parties—who altered editorial lines or dismissed key staff after acquiring previously independent outlets.

Media (R)evolutions: The Mobile Wallet’s Global Popularity

Roxanne Bauer's picture

New developments and curiosities from a changing global media landscape: People, Spaces, Deliberation brings trends and events to your attention that illustrate that tomorrow's media environment will look very different from today's, and will have little resemblance to yesterday's

An estimated 2.5 billion people  in lower- to middle-income countries lack access to formal financial services, limiting their ability to benefit from economic opportunities and raise their income levels. Nevertheless, with more than 1 billion of these people owning a mobile phone, mobile money services, also known as mobile wallet, offer a possible solution by allowing individuals to pay for goods using a mobile phone instead of currency or credit cards. Already, there are around 220 services in 85 countries, and more continue to emerge.




 

Emerging market sovereign bonds: Does it cost more to issue a bond under the English law?

Dilip Ratha's picture

It seems it does. During 2008-2012, post-crisis, launching under English law increased spreads by more than a third on average. In other words, by choosing the UK law, a nation rated B+ (for example, Ecuador, Ghana, Greece, Pakistan and Zambia) apparently paid 7.7% interest rate per annum instead of 6 percent, and a nation rated BB (for example, Bangladesh, Nigeria, Serbia or Vietnam) paid nearly 5.7% instead of 4.5% (figure 1). Such an increase in spread is equivalent to a rating downgrade of 3 notches or more.

India: From BRICS to Fragile ‘n’ (and Back!)

Poonam Gupta's picture

India has covered a long distance in what seems like a short time. Once proudly reckoned as one of the BRICS countries, it is now making frequent headlines in the international financial press as one of the financially fragile countries (fragile 5, fragile 8, edgy eight etc.). Like many other emerging markets in the world, India is feeling the pinch of the global liquidity retrenchment and rebalancing on its exchange rate and capital flows.  Several observers have rationalized the investors’ behavior on account of the hard data on the Indian economy: growth has decelerated (from 8.9 % two years ago to 4.5 percent in fiscal year 2013), current account deficit is reigning high, inflation remains stubbornly high, and savings and investment rates have been falling. And all of this is happening amidst an upcoming national election, when elections anywhere invariably are associated with political and economic uncertainty.

What would it take for India to regain its place in a more revered acronym soon, rather than a less flattering fragile ‘n’ ensemble?

Calibrating 2014

Otaviano Canuto's picture
The global economy looks poised to display better growth performance in 2014. Leading indicators are pointing upward – or at least to stability – in major growth poles. However, for this to translate into reality policymakers will need to be nimble enough to calibrate responses to idiosyncratic challenges.

Walking on the Wild Side – Monetary Policy and Prudential Regulation

Otaviano Canuto's picture

Global financial integration and the linkages between the financial and the real sides of economies are sources of huge policy challenges. This is now beyond doubt, after what we saw in the run-up to and the unfolding of the 2008 global financial crisis. As a consequence, the established wisdom regarding monetary policies and prudential regulation has been subject to a deep critical review, including a demise of the belief that they should be maintained as fully independent functions.

Elephants and Macro-Financial Linkages

Otaviano Canuto's picture
Global financial integration and the linkages between the financial and the real sides of economies are sources of huge policy challenges. This is now beyond doubt, after what we saw in the run-up to and the unfolding of the 2008 global financial crisis.

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