EMNE attractiveness and risks Flashcards
(13 cards)
What makes emerging economies attractive to investors according to EMPI?
Emerging economies offer an enticing proposition for investors and firms alike. According to the Emerging Market Potential Index (EMPI), several factors drive their attractiveness.
Emerging economies offer an enticing proposition for investors and firms alike. According to the Emerging Market Potential Index (EMPI), several factors drive their attractiveness.
First, market size and growth are central; a booming urban middle class and rapid GDP expansion make countries like China and India key consumption hubs.
Give an example of how India leverages its labor pool.
India’s IT/BPO sector has leveraged its vast, skilled, low-cost labour pool to become a global leader, exemplified by firms such as Infosys and Wipro.
How do Brazil and Russia contribute to the attractiveness of emerging economies?
Similarly, countries like Brazil and Russia offer abundant natural resources that attract resource-seeking investments.
How are emerging markets becoming more open to international business?
Moreover, emerging markets are becoming increasingly receptive to foreign direct investment (FDI) and global trade, further enhancing their attractiveness.
What role does China play in global supply chains?
China’s evolution into the “world’s factory” stands as a testimony to how emerging economies have integrated into global supply chains, combining low production costs with increasing sophistication in manufacturing.
Despite opportunities, what challenges do emerging markets present?
However, alongside these opportunities lie significant risks. Ghemawat’s CAGE framework highlights the barriers posed by cultural, administrative, geographic, and economic distances.
What are some cultural barriers in emerging markets?
Culturally, differences in language, norms, and business practices—such as the importance of ‘face’ in China or the caste system in India—can hinder market entry.
What are some administrative challenges in emerging economies?
Administratively, many emerging markets suffer from high corruption, opaque regulatory frameworks, and the dominance of state-owned enterprises (SOEs)
What example illustrates administrative risk in emerging economies?
For example, according to World Bank rankings, Russia ranked 182nd out of 183 for contract enforcement, reflecting severe institutional weaknesses.
What are the geographic challenges for businesses in emerging economies?
Geographically, poor infrastructure and extended logistics chains further complicate business operations.
What are the economic risks in emerging markets?
Economically, state capitalism and volatile markets create uncertainty, especially in countries where political intervention in business is prevalent.
What is the final conclusion about emerging economies’ opportunities and risks?
Thus, while emerging economies offer high rewards, they equally present formidable risks that demand nuanced, context-sensitive entry strategies.
