EMERGING MARKET GROWTH FUEL CONFIDENCE TO CLAIM BIGGER SAY IN GLOBAL POLICY MAKING
Introduction
Emerging markets are nations with social or business activity in the process of rapid growth and industrialization. Based on data from 2006, there are around 28 emerging markets in the world (data from 2010 says there are 40 emerging markets). The economies of China and India are considered to be the largest. Emerging market hedge fund capital i.e. privately offered investments that use a variety of nontraditional strategies to try to offset investment reached a record new level in the first quarter of 2011 of $121 billion.
In recent years, new terms have emerged to describe the largest developing countries such as BRIC that stands for Brazil, Russia, India, and China.
The recovery of world economy
Asia has rebounded and even Western countries will recover, but slowly; however, many structural problems remain: Financial markets remain weak and current labor laws in some Western countries are too rigid so that high unemployment levels are likely to persist for some years. Policymakers will have to strike a balance between supporting the economy and winding down stimulus measures. Further, plans to fix public finance (growing deficits and debts) will be developed, but may fall short of expectations and many countries will continue to live beyond their intergenerationally equitable and sustainable means.
But also the growth champions will face challenges: Qatar will see again double-digit GDP growth and continue to boost both its oil and gas sector and the shift towards education- and technology- intensive sectors. But the region must first regain confidence after the Dubai World debt appeared unsafe. China will probably start to tighten its monetary policy and reduce lending to prevent asset price but sees its growth rate increase to 9-10%.
China became the world’s largest automobile market already in 2009 with approximately 13.8m units (passenger cars and light trucks) sold, while US sales were around 10m for 2009. Both figures will rise in 2010.
Emerging Market Economies (EME) will see their voting power at both International Financial Institutions (IFI) increased by 3-7%.
Market GDP growth
According to the IMF, World Bank, and the United Nations’ GDP growth rates have varied widely for emerging markets over the last fifty years. We will focus on the past twenty years from 1990 to the present. In the 1990’s, we saw a secular decline in demand for oil and commodity prices that caused oil-producing developing nations to slow their growth. For example, Russia fell from 12% of total emerging market GDP in 1990 to only 3.3% in 2000. By the year 2000, the best GDP growth was found in China, Brazil, Mexico, India, Korea, Taiwan, Argentina, Hong Kong and Indonesia. China, after two difficult decades, had once again returned to the top of the rankings. Between the year 2000 and the present, emerging markets were dominated by the fast growth of China, which greatly increased its share of emerging market GDP from 15% to 24%. India, Indonesia, Brazil, Turkey, Russia, and Korea grew nicely, although at a slower rate. The following table shows some trends of GDP
| 1960 | 1970 | 2000 | 2009 | ||||
| china | 20.5% | Russia | 17.1% | china | 15.4% | China | 24.6% |
| Russia | 16.2% | china | 15.9% | India | 5.9% | India | 6.2% |
| India | 7.5% | India | 6.5% | Russia | 3.3% | Russia | 6.2% |
The main factors behind this booming emerging market are the economic liberalization and the perfect competition market, the high standard of living and per capita income, the development of medical facilities and infrastructure, the increase in foreign investments and so on. Over the few years, there has been a significant growth of the Indian market which has resulted in the high Gross Domestic Product (GDP). The average annual growth rate ranges between 6 to 7 %. The growth rate of GDP was around 6.7 % during the financial year 2008-09.
To boost the emerging market India, the government is also taking some positive steps. The main aim is to increase the growth rate to around 9 %. Due to the favorable emerging market, more and more industries are being set up and the customer base is also increasing. Currently, India is the 4th largest economic system in the world in terms of the purchasing power parity.
To boost the emerging market India, the government is also taking some positive steps. The main aim is to increase the growth rate to around 9 %. Due to the favorable emerging market, more and more industries are being set up and the customer base is also increasing. Currently, India is the 4th largest economic system in the world in terms of the purchasing power parity.
The recent economic development has also put a positive impact on the various sectors like agricultural, service and industrial sector in the country. Today, to complement the rapid pace of economic growth, the service sector contributes around 54 % of the annual Gross Domestic Product which is a good sign.
Emerging markets can boost India's exports
The Federation of Indian Export Organizations (FIEO) said if exports maintain an annual growth trend of 25 per cent, it can cross $500 billion by 2014-15 from $220 billion expected in 2010-11.
“Emerging markets in Asia, Latin America, Africa and Middle-East countries would play an important role to achieve this ambitious target. Out of the $500 billion exports, major chunk will be contributed by Asia with a share of $230 billion with ASEAN alone importing more than $100 billion from India.
The FIEO President also said that fluctuation in exchange rate hurts exporters and importers, so the government should consider full convertibility of Indian rupee to curb high volatility. Notably, India's exports grew by 29.5 per cent to $164.7 billion during April-December 2010-11. In December 2010, shipments grew by 36.4 per cent year-on-year. In 2010-11, the outbound shipments are expected to touch $220 billion.
Role in trade
Developing countries1 have become major players in global trade. Their relative weight has grown enormously, mainly due to China’s meteoric rise as an exporter. Though they partly reflect surging oil prices, increasing exports from the Middle East and North Africa (MENA), Eastern Europe, and Central Asia have further increased the weight of developing countries in world trade. GDP projections suggest that the share of world trade held by developing countries will expand further, more than doubling over the next 40 years and reaching nearly 70 percent by 2050.
Challenges and opportunities faced by emerging market economies
The emerging market forum has held a series of meetings for discussing the impact of ongoing financial crisis on emerging market countries and in United States financial crises began in 2007.
The global financial crisis really started to show its effects in the middle of 2007 and into 2008. Around the world stock markets have fallen, large financial institutions have collapsed or been bought out, and governments in even the wealthiest nations have had to come up with rescue packages to bail out their financial systems. A global financial meltdown will affect the livelihoods of almost everyone in an increasingly inter-connected world.
Problems faced by emerging markets
The virtual freezing up of the interbank markets & notwithstanding liquidity injections by the major central banks could have significant implications for the flow of credit through banking system and bond markets. There will also be political fallout that may affect financial and economic power relationship. And major financial institutions are facing unprecedented losses & where credit markets have been severely disrupted and impact of crises on real economy evident in the slowdown in United States and Europe. This effects present significant policy challenges but also opportunities for the emerging market economies. The policy challenges are further complicated by the volatility in food and commodity prices include crude oil etc.
Poverty
Concept of poverty by Anup shah
· Almost half the world — over 3 billion people — live on less than $2.50 a day.
· The GDP (Gross Domestic Product) of the 41 Heavily Indebted Poor Countries (567 million people) is less than the wealth of the world’s 7 richest people combined.
· Nearly a billion people entered the 21st century unable to read a book or sign their names.
· Less than one per cent of what the world spent every year on weapons was needed to put every child into school by the year 2000 and yet it didn’t happen.
· 1 billion children live in poverty (1 in 2 children in the world). 640 million live without adequate shelter, 400 million have no access to safe water, 270 million have no access to health services. 10.6 million died in 2003 before they reached the age of 5 (or roughly 29,000 children per day).
Conclusion
Though emerging countries face problems in proper development but these countries always aims to develop itself from all perspectives in the coming future .We believe one day our country is among the developed ones. As we see above there are many ups and downs in every field by emerging countries but simultaneously these economies focus to achieve their desired targets. Russia, china and India are the top emerging countries keep on constantly improving towards their development.
