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Emerging Markets

Is your ‘emerging market’ securely fashionable?

Sina Odugbemi's picture

Traders crowd the post that handles Morgan StanleySo-called ‘emerging markets’ might as well be styles of frocks and blouses in the world of haute couture; they are in and out of fashion with similar unpredictability. One moment a market is all the rage; the next moment it is in the pits of despond. It is an all too familiar if sorry tale. You know that an emerging market is in fashion via the global business press, especially when reporters, pundits, analysts as well as paid boosters and carnival barkers, all produce pieces on the market displaying breathless admiration: What a wonderful place to be this is! What astonishing prospects!

If the emerging market is particularly blessed it will feature in one of the fancy acronyms of the day: BRICS, MINTS, the Breakout Nations, etc. Investment bankers are proving fecund when it comes to dreaming up these meaningless acronyms (if they did not have such real-world consequences!). For once an emerging market is deemed ‘hot’, money flows into it. Investors and hustlers pile in. People who express doubt, urge caution or circumspection are drowned out by the frenzy of adoration and boosterism.

Eventually, inconvenient facts that are too significant to ignore begin to emerge regarding the much-fancied emerging market.

Weekly wire: The global forum

Roxanne Bauer's picture
World of NewsThese are some of the views and reports relevant to our readers that caught our attention this week.

A simple solution for better economic performance - empower women
The Nation
Christine Lagarde, the managing director of the International Monetary Fund and one of the world's most influential women, made an interesting remark last weekend.  "We have estimates that, if the number of female workers were to increase to the same level as the number of men, GDP in the United States would expand by 5 per cent, by 9 per cent in Japan, and by 27 per cent in India," she told the inaugural summit of the Women's 20 (W-20), a new grouping launched by the G20, in Turkey.  She said that aside from boosting gross domestic product, getting more women into secure and well-paid jobs raises overall per-capita income.

Dealing with digital in media development —7 things to consider
Deutsche Welle Akademie
When colleagues from DW Akademie asked me to contribute some reflections on media development, I found myself in the difficult position of having to find a common ground for the term. Between regular Facebook updates sent by a friend working with a local radio station in Southern Sudan, a conversation I had here in Malmö/Sweden with a recently arrived Syrian refugee who used to work for state television, or the daily discussions about media, globalization and development that we have in our academic environment, it is difficult to find common ground.   But then again, when all these impressions and reflections sink in, some broader issues emerge. I have summarized them under the following seven points:

Weekly wire: The global forum

Roxanne Bauer's picture

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

What Future For Emerging Markets?
Foreign Policy
Long before the current market debacle, I was confronted with a fundamental question about emerging markets. As I was finishing off my course at the Yale School of Management on “The Future of Global Finance” this past May, a student came up to me. “You have gone to great lengths to emphasize the role of emerging markets in a changing monetary system, “ he said, “ but everything I have been reading says that the era of the Brazils, the Indias, the Turkeys, the Indonesias as up-and-comers is history. Even China seems to have lost its luster. Have you been looking backwards and not forward?”

How Africa can benefit from the data revolution
The Guardian
The UN has estimated that across the world more people have access to mobile phones than to toilets. It is of course distressing to imagine what this means for many people’s exposure to disease and access to clean water, but the choice of mobile phone for the comparative statistic actually offers a great deal of hope. The mobile phone is part of a phenomenon where a new infrastructure is emerging, one that could bring the economic changes that enable those toilets to be built.  Our modern infrastructure is based on information. Since the 1950s, investment in data storage and distribution by companies and countries has been massive. Historically, data was centralised a single database. Perhaps one for representing the health of a nation, and another database for monitoring social security. However, the advent of the internet is showing that many of our existing data systems are no longer fit for purpose.

How to Reverse the Post-Crisis Slowdown of Growth in Emerging Economies?

Aristomene Varoudakis's picture
Growth in emerging economies has slowed over the past three years, something being discussed with urgency at the G20 meetings in Istanbul, Turkey. Part of the slowdown is cyclical, but a significant part reflects sluggish potential growth. Using new empirical evidence, this column argues that ambitious structural reforms can fully offset the slowdown of potential growth in emerging economies. Reforms that remove barriers to open markets and improve access to finance play a key role in revitalizing total factor productivity growth and boosting private investment.

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?
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.