Emerging Markets’ Growth Fuels Confidence to Claim Bigger Say in Global Policy Making

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TOPIC- Emerging Markets’ Growth Fuels Confidence to Claim bigger Say in Global Policy Making


SUBMITTED TO: SUBMITTED BY:
MR.Gurdeepak Singh GURBAJ SINGH
MBA-(A)



INTRODUCTION
Emerging markets are nations with social or business activity in the process of rapid growth and industrialization. Currently, there are around 28 emerging markets in the world, with the economies of China and India considered being the largest.
India ranks among the well known emerging markets in the global economic scenario. Since the economic liberalization policies were undertaken in the 1990s, emerging market India has really prospered which has helped to boost the Indian economy to a great extent.
In simple terms, emerging market is used to evaluate the socio economic scenario of the country in terms of the growth of the market and industrial development. According to the recent survey, there are around 28 emerging markets in the world out of which India ranks in the second place.
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.

The recent economic development has also put a positive impact on the various sectors. There has been a significant development in the 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.

ROLE OF EMERGING MARKETS IN THE GLOBAL WORLD IN DIFFERENT FIELDS
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.

THE ROLE OF DEVELOPING COUNTRIES IN WORLD TRADE:
Developing countries are already playing an increasing role in world trade. In 2006, they accounted for 30 percent of world exports, up from 19.5 percent in 1996.2 The share of exports held by the BRIC economies (Brazil, Russia, India, and China) more than doubled, rising from 6 percent to 12.4 percent. China accounted for a significant portion of this rise—its claim of world exports nearly tripled from 2.7 percent to 7.6 percent. On the other hand, India, which also stands out as a large economy, did little to contribute. Its share of world exports remains very low, at little more than 1 percent in 2006.
As trade between developing and industrial countries grows and cross-border capital mobility increases, the developing countries will have a greater impact on the global economy. Although public debate has focused on possible adverse effects on the industrial economies, analysis suggests that the latter will benefit from growing integration.
The developing countries' economic prospects have long been heavily dependent on the industrial economies. But the share of world output, trade, and capital flows that can be attributed to developing countries has been increasing over the past two decades. As a result, "reverse linkages" - the impacts of developing countries on industrial countries - are becoming more significant.
Growth of the developing countries' output and trade - and of their share of world output and trade - has accelerated over the past five years (Charts 1 and 2). If this trend continues, over the next 10-15 years, developing countries can be expected to play a much greater role in the world economy - and have a much larger impact on industrial countries. Although the rising importance of developing countries in the international economy has so far been due to a relatively small number of countries, the recent acceleration of growth in the developing world has been broadly based, and this trend is expected to continue.

Exports:
In contrast, the export share of industrialized countries fell, with the United States’ share decreasing from 13.9 percent to 9.5 percent. Japan’s decline was particularly stark; its share fell from 8.6 percent—significantly more than the total share of the BRIC—to 5.4 percent, less than China’s share alone.
The importance of developing countries as a source of import demand has grown as well, reflecting increases in foreign exchange availability and purchasing power, a rapidly growing middle class, and a great appetite for imported goods. The EU’s imports to China rose more than four times from 1996 to 2006, while its imports to Russia, SSA, Eastern Europe, and Central Asia more than tripled. Developing countries also imported 38 percent of U.S. total exports in 2006, up from 31 percent in 1996. On the other hand, imports to Japan and other industrialized countries from the EU grew a relatively meagre 31 percent and 81 percent, respectively.

ARTICLE RELATED TO TOPIC:
Jun 18th 2009 from the print edition

THE inaugural summit of the BRICs—Brazil, Russia, India, China—came and went in Yekaterinburg this week with more rhetoric than substance. Although Russia’s president, Dmitry Medvedev, called it “the epicenter of world politics”, this disparate quartet signally failed to rival the Group of Eight industrial countries as a forum for economic discussion.
But that should be no surprise: to realize how disparate they are, consider that Russia and Brazil are big commodity exporters, whereas China is a big commodity importer; China is a proponent of the Doha trade round, India a sceptic; India and China vie for influence in the Indian Ocean, Russia and China compete in Central Asia.
Instead, the really striking thing is that four countries first lumped together as a group by the chief economist of Goldman Sachs chose to convene at all, and in such a high-profile way. And that when they met, they discussed topics such as reforming the IMF; their demand for more say in global policy-making; and, in the case of China, Brazil and Russia, a plan to switch some of their foreign-currency reserves out of dollars and into IMF bonds.
REFERENCE:
: http://www.economist.com/node/13871969
: http://www.fas.org/sgp/crs/misc/RL34742.pdf
: http://gppreview.com/2010/01/01/the-world-in-2010-the-top-ten-economic-and-financial-issues/