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2011   Emerging Market’s Future   Business, Innovation, Entrepreneurship and Financing    Abstract:    Ever accelerating p...
ContentsIntroduction……………………………………..………………………………………………………………… …3The keys to Emerging Mark et‘s future growth……………………………..…...
INTRODUCTION:Local growth of and expansion in a business enterprise motivates a businessman, as an entrepreneur, tocome up...
countries in existing systems and the two lower groups provide for the distinction among developingcountries that all thre...
THE KEYS TO EMERGING MARKET’S FUTURE GROWTHThe following 4 pillars of factor-driven economies, six pillars of efficiency-d...
They substantiate their conclusions with the following data. TABLE 2: ACROSS THE BOARD EMERGING-MARKET COMPANIES GROW FAST...
FIGURE 2: GLOBAL DISTRIBUTION OF NET GOVERNMENT DEBTDATA SOURCES: IMFs Fiscal Monitor, International Financial Statistics ...
economic areas, the long-term risk on emerging markets‘ external balance sheets is shifting to the assetside.‖ Going into ...
FIGURE 4: Foreign Asse ts and Liabilities                          FIGURE 5: Current Account ImbalancesSource: Robert C. F...
GRAPH 1: ECONOMIST INTELLIGENCE UNIT’S GROWTH ENGINES                                                                     ...
GRAPH 2: GLOBAL MIDDLE-CLASS SP ENDING                 ($ million)                        Source: The Emerging Middle Clas...
MAP 2: WORLD WEALTH LEV ELS 2011                   Source: James Davies, Rodrigo Lluberas and Anthony Shorrocks, Credit Su...
___________________________________________________________________________________ILLUSTRATION 4: SIX IMPERATIVES FOR CAP...
BOX 1: THREE MAJOR AREAS OF REFORMS FOR STARTI NG BUSI NESS, GETTI NG CREDIT AND       OBTAINING ELECTRICIT Y CONNECTION  ...
expansion initiative and to deliver the jobs, goods, services, consumer choices and general prosperitythat are expected fr...
INNOV ATING THE INNOV ATION:Like 12 Pillars ―determinants‖ used by World Economic Forum‘s Global Competitiveness Report 20...
Recovery Sustainable – Lessons from Count ry Innovations. ―To sustain recovery,‖ study cautions,―several emerging and deve...
needs to be clearly understood before any remedial plan or process is initiated.ILLUSTRATION 6: CYCLE OF NINE SOCIAL AND E...
deprived peopl e who are at the receiving end across the globe. Consequently, creating artificial hurdlesin the flow of na...
ILLUSTRATION 7: P ROPOS ED FIVE-P OINT AGENDA FOR ENT REPRENEURAL PLATFORM    1: Resources                                ...
TABLE 6: HIGHLIGHTS OF DOING BUSINESS INDEX 2011 REFLECTING POSITIVE DEVELOPMENTSPERIOD        ECONOMIES          REFORMS ...
Bibliography1:     Lynge Nielson, ―Classif ication of countries based on their level of development: How it is done and ho...
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Emerging market's future

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Ever accelerating pace of globalization has opened a window of opportunity for innovative entrepreneurs to jump from spring board of their locally retained markets into promise lands of globally acclaimed high ranking business heavens. The other name of these business heavens is Emerging Markets. It is now a known fact that the growth advantage in emerging markets, if other things remain the same, is expected to translate into 62% of global growth. Multinationals expect about 70 percent of the world’s growth over the next few years to come from emerging markets, with 40 percent emanating from just two countries: China and India. In addition to growth rate advantage, expanding middle-class consumer base, impressive Doing Business regulatory reforms, more than half of $55 billion of global middle-class spending will come from Asia Pacific.

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Emerging market's future

  1. 1. 2011 Emerging Market’s Future Business, Innovation, Entrepreneurship and Financing Abstract: Ever accelerating pace of globalization has opened a window of opportunity for innovative entrepreneurs to jump from spring board of their locally retained markets into promise lands of globally acclaimed high ranking business heavens. The other name of these business heavens is Emerging Markets. It is now a known fact that the growth advantage in emerging markets, if other things remain the same, is expected to translate into 62% of global growth. Multinationals expect about 70 percent of the world‘s growth over the next few years to come from emerging markets, with 40 percent emanating from just two countries: China and India. In addition to growth rate advantage, expanding middle-class consumer base, impressive Doing Business regulatory reforms, more than half of $55 billion of global middle -class spending will come from Asia Pacific. Global financial and economic crisis has necessitated the emphasis on business regulatory reforms. Through its indicators World Bank and IFC‘s co-publication Doing Business Index 2011 has tracked changes to business regulation around the world, recording more than 1,500 important impro vements since 2004. ―Long-term success,‖ according to Deloitte‘s report Innovation in Emerging Markets - strategies for achieving commercial success, ―will take far more than simply making minor adjustments to existing products, lowering prices, or replica ting existing sales channels. Instead, a new set of competencies and organizational structures will be required to generate a continuing stream of innovative products and services tailored to the needs of consumers and industrial buyers in emerging markets .‖ Referring to challenges ahead ILO / International Institute for Labour Studies in one of their Studies on Growth with Equity titled Making Recovery Sustainable – Lessons from Country Innovations maintain that unemployment and inefficient income inequali ties are the principal factors explaining social unrest. ―The issue,‖ according to them, ―deserves urgent attention.‖ How these unemployment and income inequalities can be addressed? For that the global business entrepreneurs and financial institutions have to address a Cycle of Nine Social and Economic Evils by creating a powerful independent apolitical Entrepreneurial Platform for developing a genuine Global Natural and Human Resource Vision and Index as a take-off base for a Global Entrepreneurial Initiative with a Fi ve- Point Agenda. Why do I want the entrepreneurs and financial sector to focus their attention on the first two rings, illiteracy / ignorance and unemployment, of the cycle of social and economic evils? Is there room for any doubt that the fi rst casualty of social unrest is always economic activity? The trul y genuine social unrest that is invisible at present, if not addressed before it is visible, can and will surely turn all growth projections upside down. Tags: Emerging Markets, Busine ss, Innovation, Entrepreneurship, Financing Zahid Hussain Khalid Bureau Chief & Country Manager – Pakistan, ASiAMONEY Magazine 12/16/2011
  2. 2. ContentsIntroduction……………………………………..………………………………………………………………… …3The keys to Emerging Mark et‘s future growth……………………………..………………………………….….4Business Prospects and Growth Potential…………………………………………………………….………….9Importance of emerging-market cities…………………………………………..………………..………………12Starting and Doing B usiness…..…………..……………………………………………………..……………….13Innovating the innovation…………………...……………………………………………………….…………….17Entrepreneurship and Financing…..…………………………………………………………..………………….19TablesIncome thres holds for establishing stages of developments………………………………..………..…………3Across the board emerging-market economies grow fasterthan those from developed ones…………………………………………………………………..……………….5Annual wealth growt h rates by country, 2000 -09 and 2010-2011………………………………………………9Good practices around the world in making it easy to start a business………………..……..………………14Who made starting a business easier in 2009/10 -and what did they do………..……………………………15Highlights of Doing Business Index 2011 reflecting positive developments…………..……………………..21FiguresWorld government debt………………………………………………………………….……………………...…..6Global distribution of net government debt……………………………………………..…………………………6Foreign exchange reserves held by emerging markets………………………….……………………………...7Foreign assets and liabilities……………………………………………………………..…………………………8Current account imbalances……………………………………………………………………..…………………8Global distribution of GDP ……………………………………………………………………..…………………..10MapsFinancial and ec onomic hotspots around the world, 2010 and Q 1 2011………………………………………4World Wealth Levels 2011………………………………………………………………….……………………..12GraphsEconomic Int elligence Unit‘s growt h engines…………………..…………………………….…………………10Global middle-class spending.………………………………………….…………..….....………………………11BoxesThree major areas of regulatory reforms……………..………………………………….………………………13IllustrationsThree keys and twelve pillars of competitiveness…………………….……..………………….……………….5Three drivers of growth………………………………………………..…………………….……………………...5Dollarization of opportunities in emerging-market cities………………………….………….…………………12Six imperatives for capturing growth opportunity presented by emerging-market cities…….…………..…13Nine areas of regulatory reforms….………………..……………………………………………..……………...13Cycle of nine social and economic evils………………………………………………………….……………...18Five-point Agenda for proposed Entrepreneuri al Initiative……..………………………….…………………..20Emerging Market’s Future Page 2
  3. 3. INTRODUCTION:Local growth of and expansion in a business enterprise motivates a businessman, as an entrepreneur, tocome up with an innovative overseas business expansion plan that requires internal and / or externalfinancing. The companies in country focused pioneering and local competitive business cycles remainconfined to loc al / a single count ry market. Retentive business cycle encourages ambitious companies /entrepreneurs to start thinking and planning for crossing the borders and ent ering into competition inregional and global markets. However an extremely powerful innovative pioneering initiative breaks thebarriers of boundaries and local competitive / retentive business cycles to directly catapult a local brandinto a trans national brand in international markets, such as, Microsoft Windows, Apple appliances, Yahoo,Face Book, Google, Twitter, 800 CC Suzuki cars and now pot entially Tat a‘s Nano etc. etc. A country‘seconomic development and growth is nothing but the cumulative growth and expansion of itsmanufacturing, agriculture and service sectors.The ―economicians‖ have divided the countries / markets into following three, widely used and acceptedbut controversial, categories and two sub categories bas ed on income thresholds for establishing stagesof development: Under-developed, Developing and Developed. The transitory sub-categories fall betweenthe first and second and the second and third categories respectively upgrading consequently thecountries / markets from under-developed to developing and developing t o developed countries / marketsas illustrated below:TABLE 1 : INCOME THRESHOLDS FOR ESTABLISHING STAGES OF DEVELOPMENT STAGE OF DEVELOPMENT GDP PER CAPITA (IN US$) Stage 1: Factor Driven > 2000 Transition from stage 1 to stage 2 2000 – 3000 Stage 2: Efficiency Driven 3000 – 9000 Transition from stage 2 to stage 3 9000 – 17000 Stage 3: Innovation Driven > 17000 SOURCE: WORLD ECONOM IC FORUM – THE GLO BAL C OMPETITIVENESS R EPO RT 2010-2011Lynge Nielson in his working paper, ―Classifications of Count ries Based on Their Level of Development:How it is Done and How it Could be Done?‖ has questioned the system developed by UNDP, the WorldBank and the IMF arguing that their ―…existing taxonomies suffer from lack of clarity with regard t o howthey distinguish among country groupings. The World Bank does not explain why the thres hold betweendeveloped and developing countries is a per capit a income level of US $6,000 in 1987-prices and theUNDP does not provide any rationale for why the ratio of developed and developing countries is one tothree. As for the IMF‘s classification system, it is not clear what threshold is used.‖ He proposes ―analternative transparent methodology where data —rat her than judgment or ad hoc rules—determine thethresholds. In the dichotomous version of this system, the threshold bet ween developing and developedcountries—pitched at the average development outcome—lies well below existing thres holds used byinternational organizations.‖ He propos es the replacement of dichotomous version with trichotomousversion arguing, ―…the group of higher development countries is broadly equal t o the group of developedEmerging Market’s Future Page 3
  4. 4. countries in existing systems and the two lower groups provide for the distinction among developingcountries that all three institutions find warranted. The taxonomy can be implement ed using a variety ofdevelopment proxies. Multivariate proxies—such as the UNDP‘s HDI or a lifetime income measure —caneasily be incorporated into t his framework.‖ Markus Jaeger of Deutsche Bank Research in his reportcaptioned, ―The Great Risk Shift – or why it may be the time to rethink the developed-/emerging-marketsdistinction,‖ has also demanded, though in assessment of sovereign default risk context, justification for―…the fact that until very recently Greece and China c arried pretty much the same long -term foreigncurrency ratings. It looks odd that Greece with very limited macroec onomic flexibility due to EMUmembership and a public debt burden exceeding 100% of GDP should be rated at the same level asChina whose public debt amounts to a mere 25% of GDP and whose FX reserves exceed 45% of GDP.‖MAP 1: FINANCI AL AND ECONOMIC HOT SPOTS AROUND THE WORLD, 2010 AND Q1 2011 SOURCE: Capgemini Analysis 2011He has raised another point regarding emerging market credit metrics and qualitative improvement inmacroec onomic management. He argues ―… the distinction between Emerging Market-Developed marketobscures more than it enlightens. When the world‘s major economies were the largest ec onomies withthe highest degree of financial stability, the strongest external financial position (at least vis -à-vis lessdeveloped countries) and the highest per capita incomes, this distinction may have made sense. B utfollowing what may in the future be recalled as the ‗great risk shift‘ regarding ‗developed‘ and ‗emergingeconomies‘, it may be time to re-think old labels and traditional distinctions – and established views ofeconomic and financial risk.‖Emerging Market’s Future Page 4
  5. 5. THE KEYS TO EMERGING MARKET’S FUTURE GROWTHThe following 4 pillars of factor-driven economies, six pillars of efficiency-driven economies and two pillarsof innovation-driven economies are the keys to and areas of emerging market‘s future growth:ILLUSTRATION 1: THREE KEYS AND 12 PILLARS OF COMP ETITIV ENES Factor-Driven Efficiency-Driven Economies Economies Higher education and training Innovation-Driven Institutions Goods market efficiency Economies Infrastructure Labor market efficieny Business sophistication Macroeconomic environment Fianancial market development Innovation Health and primary Technological readiness education Market size SOURC E: WORLD ECON OMIC FORUM – THE GLOB AL COMP ETITIVEN ESS REP OR T 2010-2011A cursory look at 12 pillars of competitiveness and 3 keys indicates that the story of development andgrowth begins with institutional excellence and efficient infrastructure networks / linkages and takes off inreal sense with innovation. Institutions, infrastructure and innovation with support and use of other pillarstrigger national and transnational market expansion.Another equally import ant growth measure is Agility Emerging Mark ets Logistic Index 2011 that has beenbuilt up through three sub-indices: ‗The Market Size and Growth Attractiveness‘; ‗Market Compatibility‘;and ‗Connectedness‘. Sumit Dora, S ven Smit and Patrick Vigguerie have ―disaggregated growth ,‖ inMcKinsey Quart erly‘s strategy analysis Drawing a New Road Map for Growth, ―into three drivers: port foliomoment um, or the market growt h of the segments in a company‘s portfolio; M& A; and market sharegains.‖ They conclude: ―…c ompanies out -performing their peers on two or three of these drivers growfaster and ac hieve better ret urns than those that outperform on just one.‖ILLUSTRATION 2: THREE DRIV ERS OF GROWTH 1: Resilience Multi-f aceted growers have withstood the test of the f inancial crisis and the economic downturn--- and continued to outperf orm 2: Consistant Growth Companies f rom emerging markets are outgrowing competitors f rom developed ones at a startling pace 3: Expanding Market Share The smallest companies, with revenues of less than $1 billion, are growing by increasing their market share to a much greater extent than larger companies are.Emerging Market’s Future Page 5
  6. 6. They substantiate their conclusions with the following data. TABLE 2: ACROSS THE BOARD EMERGING-MARKET COMPANIES GROW FASTER THAT THOSE FROM DEVELOPED ECONOMIES Revenue growth rates segmented by geographic market * Compound annual growth rate (CAGR) By Location of Company Overall Growth Growth in Home Growth in Developed Market (for Growth in Emerging Markets (for Headquarters Market developed, other than home) emerging markets other than home) Emerging Market Companies 23.9% 17.9% 22.4% 30.7% Developed Market 10.7% 7.5% 11.7% 12.6% Companies Growth Rate Advantage in Emerging Markets 13.2% 10.4% 10.7% 18.1% *Based on growth-decomposition analysis of 2229 ma rket segments for 720 companies, spanning a numbe r of time frames be tween 1999 and 2008 SOURCE: McKinsey Quarterly – “Drawing a new roa d map for growth.” April 2011 The growth rate advantage in emerging market economies is a planned outcome of emerging market credit metrics and qualitative improvement in macroeconomic management , ―that,‖ according t o Markus Jaeger ―…the agencies have insufficiently taken into account.‖ Substantiating his argument he explains ―…a typical, top-tier EM today has ‗excess‘ FX reserves and does not suffer anymore from ‗foreign currency mismatches‘, which were at the epicenter of virtually every EM crisis of the past 15 years. Most emerging markets are also net external creditors. This has allowed the EM to overcome the ‗fear of floating‘ and adopt more flexible exchange rate arrangements, making them far less vulnerable to balance-of-payments shocks. Meanwhile, the EM that do maintain rigid exchange rate regimes have more than sufficient FX reserves to back them up (e.g. China). The EM, by and large, have also strengthened their commitment to public debt sustainability – for the most part, they already have low public debt ratios. Last but not least, many EM have independent central banks, which has instilled greater confidenc e in economic stability and sharply diminished traditional concerns about ―fiscal dominance‖. ___________________________________________________________________________________ FIGURE 1: WORLD GOVERNMENT DEBT Aggregate Debt (in trillion of US dollars ) Rate of Aggregate Debt to Aggregate GDP (in %) DATA SOURCES: IMFs Fiscal Monitor, International Financial Statistics and World Econom ic Outlook Note s: This figure shows the aggregate level of general government debt (upper panel) and the ratio of this variable to aggregate world GDP (low er panel) , with all variables converted to U.S. dollars at market exchange rates. In the upper panel, the data for advanced and emerging market economies add up to the w orld aggregates. In the low er panel, aggregate debt is expressed as a ratio of aggregate GDP for the respective group of countries. Net debt is used except for the following countries that report only gross debt data: Advanced Economies -- Czech Republic, Greece, Hong Kong SAR, Singapore, Slovak Republic and Slovenia; Emerging Market Economies -- Argentina, China, India, Indonesia, Malaysia, Pakistan, Peru, Philippines, Romania, Russia and Thailand. Emerging Market’s Future Page 6
  7. 7. FIGURE 2: GLOBAL DISTRIBUTION OF NET GOVERNMENT DEBTDATA SOURCES: IMFs Fiscal Monitor, International Financial Statistics and World Econom ic OutlookNOT ES: Other AE denotes other advanced econom ies and EM stands for emerging markets. Net debt is used except forthe following countries that report only gross debt data: Advanced Economies -- Czech Republic, Greece, Hong KongSAR, Singapore, Slovak Republic and Slovenia; Emerging Market Economies -- Argentina, China, India, Indonesia,Malaysia, Pakistan, Peru, Philippines, Romania, Russia and Thailand.________________________________________________________________________________________________________During ―the past twenty years, especially the post-2000 era,‖ according to Alan M. Taylor in his CFRreport captioned The Future of International Liquidity and the Role of China, ―…demand for reserves hasseen an explosive growth. Most of this growth has taken the form of demand for international reservesdenominated in U. S. dollars, and most has occurred in emerging markets. ‖ ―External liabilities‖ ofemerging markets according to Eswar Prasad ―are no longer dominat ed by foreign-currency debt andhave shifted sharply towards direct investment and portfolio equity. Their external assets areincreasingly concentrat ed in foreign exchange reserves. Given the trajectories of reserve currency FIGURE 3: FOREIGN EX CHANGE RES ERV ES HELD BY EMERGING MARKETSA: Total Foreign Exchange Reserves (trillion USD) B: Currency CompositionC: Share of Reserve s for Which Currency Composi tion is Known DATA SOURCES: IMF COFER Database, June 30, 2011; The People’s Bank of ChinaEmerging Market’s Future Page 7
  8. 8. economic areas, the long-term risk on emerging markets‘ external balance sheets is shifting to the assetside.‖ Going into further details Eswar Prasad ex plains, ―Among the emerging mark ets, China has alarge net asset position, Brazil has a significant net liability position and India has a small net liabilityposition. Large net liability positions are no longer the norm for emerging markets. More importantly,there has been a dramatic shift in the external liability structure of emerging markets during the pastdecade. Liabilities used to be dominated by debt but FDI and port folio equity have now become far moreimportant. These liabilities account for 70 percent of external liabilities for Brazil and China, 51 percentfor India and 56 percent for Russia (77 percent for South Africa). What is even more int eresting is that,on the asset side, foreign exchange reserves account for a large share of total external assets —47percent for Brazil, 69 perc ent for China, 68 percent for India and 37 percent for Russia (17 percent forSouth Africa).‖―Currency depreciations‖ another area of serious concern according to Eswar P rasad‘s assessment ―arefar less of a risk for emerging markets now than in the debt dominated era. First, the effects of suchcurrency devaluations are likely to be small since emerging markets no longer have large stocks offoreign currency-denominated external debt, either sovereign or corporate. The devastating balancesheet effects that brought some Asian economies to their knees during the Asian financial crisis of 1997-98 are less of a c oncern. Indeed, with many emerging markets now able to issue international debtdenominated in their own c urrencies, even debt is no longer as fearsome as it once was.Elaborating that further Alan M. Taylor maintains, ―…since 1990, the ratio of reserves to GDP in theadvanced count ries has held steady at about 4 percent, but the emerging markets‘ reserve ratio hasmore than quintupled, going from 4 percent to more than 20% of GDP. Since 1990, global holding ofinternational res erve assets have risen fully sixty-fold, from $200 billion t o roughly $12 trillion.‖ Hededuces from the trend, ―…reserve accumulation seems to have been motivated by a desire forinsurance against capital flight in a world of semi -fixed exchange rates.In particular, three main factors—financial openness, domestic financial depth (M2/GDP ), and the rigidityof the exchange rate—have conspired to drive up demand for res erves relative to GDP. He concludesthat there is little sign that emerging economies will give up their ‗fear of floating‘ and embrace flexibleexchange rates. In his working paper ―Role Reversal in Global Finance,‖ Eswar S. Parsad alsomaintains, ―…emerging markets are looking for more insurance against balanc e of payments crises evenas advers e debt dynamics in advanc ed economies increase the potential costs of self-insurance throughreserve accumulation.‖The liabilities of emerging markets have come to be dominated by FDI and portfolio equity flows, whiletheir assets are increasingly in the form of foreign exchange reserves. In tandem with the uphill flows ofcapital characterized in other studies, this implies a sharp role reversal between emerging markets andadvanced economies. Emerging markets have not only become net exporters of capital to the advancedeconomies but have also substantially reduced the risk emanating from the structure of their externalliabilities even as advanced economies‘ external liabilities continue to be dominated by debt .Emerging Market’s Future Page 8
  9. 9. FIGURE 4: Foreign Asse ts and Liabilities FIGURE 5: Current Account ImbalancesSource: Robert C. Feenstra and Alan M. Taylor, Inter- Source: IMF, RBNZ calculationsnational Econom ics (New York: Worth Publishers,2007), p. 411The emerging economies have survived the Great Recession in rem arkable shape and headed off on amore secure recovery track, which no one could have expected beforehand. Their gross asset to GDPratios are now far above anything seen during recorded history. Moreover, the process of cross -borderfinancial integration is potentially subject to a worrisome feedback. The larger these balance sheetconnections grow, the more vulnerable emerging economies are to a funding crisis. That vulnerabilitydrives emerging economies to accumulate more reserves, so expanding cross -border balance-sheetlinkages further and setting off t he next twist in the cycle. ―In light of the fiscal challenges,‖ SebastianBecker of Deutsche B ank Research seems hopeful in his paper, ‗Public Debt in 2020: A sustainabilityAnalysis for DM and EM countries,‘ ―many DM countries may introduce new or more effective nationaldebt limits, similar to those put in place by some EMs.‖BUSINESS PROSPECTS AND GROWTH POTENTIALIt is now a known fact that the growth advantage in emerging markets , if other things remain the same, isexpected to translate into 62% of global growth. Multinationals expect about 70 percent of the world‘sgrowth over the next few years to come from emerging markets, with 40 perc ent emanating from just twocountries: China and India. According to Bloomberg Business week ‘s 2010 ranking of the ―50 MostInnovative Companies,‖ 15 are Asian and, for the first time, 11 are from emerging economies. TABLE 3: ANNUAL WEALTH GROWTH RATES BY COUNTRY, 2000-09 AND 2010-11 2010-2011 2010-2011 2010-2011 High (>10%) Medium (5%-10%) Low (>5%) 002-2009 Australia, Brazil, Chile, Colombia, India, Czech Republic, Poland High (>10%) Indonesia, Malaysia, South Afric a Bulgaria, France, Hungary, Romania, Russia, Turkey 2000-2009 Canada, Korea, Mexico, Philippines, Egypt Austria, Belgium, Germany, Medium (5%-10%) Sw eden, Sw itzerland, Thailand Greece, Italy, Netherland, Portugal, UK 2000-2009 Argentina, Hong Kong, Japan, Saudi Taiwan, USA Low (>5%) Arabia SOURCE: JAMES DAVIES, RODRIGO LLUBERAS AND ANTHONY SHORROCKS, CREDIT SUISSE WEALTH DATABOOK 2011Emerging Market’s Future Page 9
  10. 10. GRAPH 1: ECONOMIST INTELLIGENCE UNIT’S GROWTH ENGINES SOURCE: Economist Intelligence UnitFIGURE 6: GLOBAL DISTRIBUTION OF GDPDATA SOURCES: IMFs Fiscal Monitor, International Financial Statistics and World Econom ic OutlookNOT ES: Other AE denotes other advanced economies and EM stands for emerging markets. GDP is measured at current pricesand converted to a common currency at market exchange rates.If this growth rate remains unc hallenged by natural and man-made circumstances than according to an rd―estimate,‖ by Wayne G. Borchardt, Jill S. Dailey and Paul F. Nunes published in 3 issue of AccentureOutlook in 2011: ―New global middle class will rise from approximately 1.8 billion househ olds in 2009 tonearly 4.9 billion in 2030.‖ This new middle class at present has annual household incomes between$5000 and $30,000 already representing ―…a surging mass market all by themselves, and these newlyempowered consumers shop eagerly for stylish and high quality goods.‖ The following graph from TheEmerging Middle Class in Developing Countries in a report by OECD Development Centre indicates thatin developing countries by 2030, global middle-class spending is expected to more than double,reaching more than $55 billion---and over half of that spending will come from Asia Pacific. Over the nextfive years,Emerging Market’s Future Page 10
  11. 11. GRAPH 2: GLOBAL MIDDLE-CLASS SP ENDING ($ million) Source: The Emerging Middle Class in Developing Countries, OECD Development Centre, 2010Wealth is one of the pillars of economic system - driving economic growth, the accumulation of capital,trends in consumption, asset prices and specific industries such as pharmaceutical and banking. CreditSuisse Research Institute estimates that global household wealt h totaled US D 231 trillion in mid -2011,equivalent to USD 51,000 per adult. From the viewpoint of their estimate, the financial crisis wouldappear to be more than a modest setback in a benign decade for household wealth accumulation, whichsaw aggregate wealth double from USD 113 trillion recorded for 2000. Part of the rise may be attributedto the rise in the adult population from 3.6 billion to 4.5 billion. The depreciation of the dollar against mostmajor currencies has also had a significant impact on dollar-denominated values. Nevertheless, sincethe start of the millennium, net worth per adult had still risen by 67% as of mid-2011 when measured incurrent dollars and by 36 percent when exchange rates are held constant.Credit Suisse Research Institute expects to see a big improvement in the position of emerging marketeconomies. Wealth in both China and Africa as whole is projected to rise by over 90%, but India andBrazil are forecast to do even better, with personal wealth more than d oubling by 2016. The case ofIndia is particularly striking. With total wealth of US D 4.1 trillion in 2011, India‘s household wealth iscomparable to the USA in 1916. But during the next five years India is projected to gain as much wealthas the USA achieved over the course of thirty years beginning in 1916. This is due t o increase in wealthper adult accompanied by a significant rise in the adult population. The case of Brazil is also noteworthy.With household wealth expected to reach US D 9.2 trillion by 2016 – a level comparable to the USA in1948 – the rise in wealth in the next five years should correspond to the gain in the USA over the 23-year period from 1925 to 1948. Total household wealth in China is currently US D 20.1 trillion, equivalentto that recorded for the USA in 1968. If recent trend continue, by 2016 China could reach the wealthlevel that USA achieved in 1990 – a jump of 22 US years in just five years.Emerging Market’s Future Page 11
  12. 12. MAP 2: WORLD WEALTH LEV ELS 2011 Source: James Davies, Rodrigo Lluberas and Anthony Shorrocks, Credit Suisse Wealth Databook 2011IMPORTANCE OF EMERGING MARKET CITI ESThe Boston Consulting Group in its report, Winning in Emerging -Market Cities – A guide to the World‘sLargest Growth Opportunities, presents the following population, infrastructure, housing andconsumption scenario:___________________________________________________________________________________ILLUSTRATION 3: DOLLARI ZATION OF OPPORTUNITIES IN EMERGING-MARKET CITI ES POPULATION INFRASTRUCTURE One-third of the world’s population---2.6 billion The infrastructure investment in HOUSING people---live in mega cities, cluster capitals, these cities is forecast at $30 Emerging markets will specialized hubs and horizon towns which are trillion to $40 trillion cumulatively require an estimated $13.8 located in the emerging markets. By 2030, the over the next 20 years. The trillion in housing number of emerging-market urban dwellers shortfall between needed investments from 2010 to will increase by another 1.3 billion. In contrast, infrastructure in emerging-market 2030, with a huge portion of cities in developed markets will add only 100 cities and available public funds is the demand coming from million new residents in the next 20 years. estimated to be in the Brazil, China, India and neighborhood of $11 trillion to $14 Mexico trillion through 2030 CONSUMPTION Emerging ma rket ci ties will a ccount for 30 percent of global pri va te consumption by 2015 a nd pri va te consumpti on is growi ng a t a ra te of 11 percent per yea r.___________________________________________________________________________________DATA SOURCE: WINNING IN EMERGING MARKET CITIES – A GUIDE TO THE WORL D’S LARGEST GROWTH OPPORTUNITIES, BOSTON CONSULTING GROUP, 2008Emerging Market’s Future Page 12
  13. 13. ___________________________________________________________________________________ILLUSTRATION 4: SIX IMPERATIVES FOR CAPTURING OPPORTUNITY PRESENT ED BY EMERGING-MARKET CITIES 1 Define growth plans on the 2 Specify the necessary go-to- 3 Develop true expertise and basis of specific target cities---the market models to enable profitable insight regarding consumer needs portfolio of emerging-market cities expansion into more and smaller across a range of city environments to be served now and in the future cities in emerging markets 4 Forge a game plan to profit 5 Develop talent and 6 Upgrade capabilities for organization plans at a city-by-city from infrastructure boom level over a five-to-ten-year time managing complexity and risk frame___________________________________________________________________________________SOURCE: WINNING IN EMERGING MARKET CITIES – A GUIDE TO THE WORLD’S LARGEST GROWT H OPPORTUNITIES, BOSTON CONSULTING GROUP, 2008STARTI NG AND DOING BUSINESSRegionally and globally resilient growth indicators and carefully assessed growth potential, therefore,attract the investors and before starting overs eas business operations they cautiously weigh the meritsand demerits of the available options in terms of business regulatory regimes in the countries under thconsideration. In their co-publication, 8 Annual Report Doing Business Index 2011: Making aDifference for Entrepreneurs, the World Bank and International Finance Corporation have rankedeconomies on the basis of the following 9 areas of regulation:ILLUSTRATION 5: NI NE AREAS OF BUSI NESS REGULATION Dealing Trading Starting a with Registering Getting Enforcing Paying Protecting Closing a constructio across Business property credit borders contracts taxes investors business n permitsGlobal financial and economic crisis has necessitated t he emphasis on business regulatory reforms.―Through its indicators,‖ according to Janamitra Devan, Vice President and Head of Network, Financialand Privat e Sector Development, The World Bank and IFC, ― Doing Business has tracked changes tobusiness regulation around the world, recording more than 1,500 important improvements since 2004.‖It is comparatively much easier to start business in OE CD economies than Sub-S aharan Africa andSouth Asia where starting business and property protections are weak est. In Finland and Si ngapore,efficient e-government systems have left less room for improvement in property law protection by law.Long-term judicial or insolvency reforms, as in Italy, shy away the cautious potential investors.Emerging Market’s Future Page 13
  14. 14. BOX 1: THREE MAJOR AREAS OF REFORMS FOR STARTI NG BUSI NESS, GETTI NG CREDIT AND OBTAINING ELECTRICIT Y CONNECTION •In the past year about 66% of •Today only 1.3% of adults in •According to World Bank developing economies made it low-income economies are surveys of businesses, easier to do business, up from covered by a credit bureau. managers in 108 economies only 34% of this group 6 years Many micro, small and consider the availability and before. Compelling results are medium size enterprises, reliability of electricity to be starting to show, as illustrated which typically have 95% of the second most important by Rwanda and Ghana, and their assets in movable constraint to their business these results have inspired property rather than real activity, after access to others. Exporting, for example, estate, cannot use those finance. requires 11 documents in the assets to raise funds to •The new data allow objective Republic of Congo but only 2 in expand their business. But comparison of the procedures, France. Starting a business still this is not so everywhere. time and cost to obtain a new costs 18 times as much in Sub- While only 35% of Sub- electricity connection across a Saharan Africa as in OECD Saharan African economies wide range of economies. high-income economies have laws encouraging the Some, such as Germany, (relative to income per capita). use of all types of assets as Iceland and Thailand, perform Many businesses in developing collateral, 71% of East Asian well: a business with economies might simply opt out and Pacific and 68% of OECD moderate electricity demand and remain in the informal high-income economies do. can get a connection in 40 sector. There they lack access Seventy low and lower- days or less. But in the Czech to formal business credit and middle-income economies Republic it can take 279 days, markets, and their employees lack centralized collateral in Ukraine 309 and in the receive fewer benefits and no registries that tell creditors Kyrgyz Republic 337. In 100 protections. Globally, 1.8 billion whether assets are already of 176 economies connection people are estimated to be subject to the security right of costs are insufficiently employed in the informal another creditor. All this transparent. sector, more than the 1.2 billion presents an opportunity for •These and other findings in the formal sector. changes that can promote the suggest that many growth of firms and governments and regulators employment. could ease a critical bottleneck for businesses by encouraging reforms around the electricity Getting Credit connection process. rdination could be a start. Obtaining Starting Business Electricity Connection DATA SOURCE: Doing Business Index 2011, World Bank/IFCSince 1990s Australia, Singapore and the United States hold public servants and judiciary account ablethrough performance-based systems. Case disposal rates in Malaysia have improved after theintroduction of performance index for judges in 2009.The detailed background research on size and growth prospects of economies / markets, number ofconsumers and dept h of their pockets, business environment and gradually but impressively improvingregulatory regimes provide a bas e for innovative national and transnational business growth andTABLE 4 : GOOD PRACTICES AROUND THE WORLD IN MAKING IT EASY TO START A BUSINESSPRACTICE ECONOMIES* EXAMPLESPutting Procedures online 105 Cape Verde, FYR Macedonia, Maldives, New Zealand, Puerto Rico, Saudi Arabia, SingaporeHaving no minimum capital requirement 80 Bangladesh, Belarus, Canada, Colombia, Mauritius, Tunisia, VietnamHaving a one-stop shop 72 Afghanistan, Azerbaijan, Italy, Jordan, Peru, Philippines, Riwanda*Among 183 countries surveyed Source: Doing Business Database, World Bank (2009f)Emerging Market’s Future Page 14
  15. 15. expansion initiative and to deliver the jobs, goods, services, consumer choices and general prosperitythat are expected from ethical innovative democratic capitalism. Here I desire a special mention ofBusiness Ethics, a manual for managing a responsible business enterprise in emerging marketeconomies published by Good Governance Program of U. S. Department of Commerce, InternationalTrade Administration in 2004. The report expects businesses around the world, ―to design andimplement business ethics programs to address the legal, ethical, social responsibility, andenvironmental issues they face. By addressing these issues in a systematic way, enterprises canimprove their own business performance, expand opportunities for growth, and contribute to thedevelopment of social capital in their markets. They can realize specific business benefits, such as:enhanced reputations and good will, reduc ed risks and costs, protection from their own employees andagents, stronger competitive positions, expanded access to capital, credit, and foreign investment,increased profits, sustained long -term growth, international respect for enterprises and emergingmarkets.‖The manual builds on three essential concepts: responsible business conduct, res ponsible businessenterprise and business ethics program based on business and professional ethics, organizationalethics, corporat e social responsibility and corporate governance.TABLE 5: WHO MADE STARTING A BUSINESS EASI ER IN 2009/10—AND WHAT DID THEY DO?Feature Economies Some HighlightsSimplified registration formalities Bangladesh, Brunei Darussalam, Chile, DR of Haiti, before the earthquake, eliminated the(seal, publication, notarization, inspection, Congo, Croatia, Grenada, Guyana, Haiti, requirement that the office of the presidentother requirements) India, Kazakhstan, Kenya, Kyrgyz Republic, or prime minister authorize publication of Lithuania, Luxemburg, Panama, Syrian AR, company statutes in the official gazette. Tajikistan, Zimbabwe Entrepreneurs can now publish them directly in the gazette. This cut start-up time by 90 days. Bangladesh replaced the requirement for buying a physical stamp with payment of stamp fees at a designated bank. It also enhanced its electronic registration system. Start-up time fell by 25 days.Introduced or improved online procedures Brazil, Brunei Darussalam, Chile, Croatia, Croatia made it possible for limited liability Ecuador, Germany, India, Indonesia, Islamic companies to file registration applications Republic of Iran, Italy, Malaysia, Mexico, electronically through the notary public. This Peru cut 1 procedure and 15 days from the start- up process.Cut or simplified post registration Brazil, Cape Verde, Arab Republic of Egypt, The Philippines introduced a one-stop shopprocedures (tax registration, social security Montenegro, Mozambique, Peru, for the municipal license and cut theregistration, licensing) Philippines, inspection by the mayor’s office, reducing Taiwan (China) start-up time by 15 days.Created or improved one-stop shop Cameroon, FYR Macedonia, Mexico, Peru, Peru created an online one-stop shop Slovenia, Tajikistan, Vietnam allowing an entrepreneur to receive confirmation of business registration and the tax registration number at the same time. This cut 3 procedures and 14 days from start-up.Abolished or reduced minimum capital Bulgaria, Denmark, Kazakhstan, Sweden, Zambia eliminated its minimum capitalrequirement Syrian Arab Republic, Ukraine, Zambia requirement. Syria reduced its requirement by two thirds. SOURCE: Doing Business DatabaseEmerging Market’s Future Page 15
  16. 16. INNOV ATING THE INNOV ATION:Like 12 Pillars ―determinants‖ used by World Economic Forum‘s Global Competitiveness Report 2011,Global Innovation Index 2011‘s ―…Innovation Input Sub-Index gauges elements of the national economythat enable innovative activities, grouped in five pillars: (1) Institutions, (2) Human capital and research,(3) Infrastructure, (4) Market sophistication, and (5) Business sophistication (almost same as in WEF‘sGlobal Competitiveness Report 2011). The Innovation Output Sub-Index captures actual evidenc e ofinnovation outputs, divided in two pillars: (6) Scientific outputs and (7) Creative outputs. ‖ I am sure thateveryone in this conference has thoroughly studied the GII 2011. Without going int o details, therefore, Ijust want to share an interesting observation of the authors of GII 2011 with you that convincingly pointsout that, ―…innovations are no longer restricted to R&D laboratories and to published scientific papers;these days, knowledge production is centered mostly around the firm where res earch is increasinglycontext-driven, problem-foc used, application-oriented, and interdisciplinary. New or signific antly improvedproduct, processes and methods in the provision of services; in business and organizational models; inlow-t ech industries; through creative imitation and technological catch-up; at the public level or at the levelof society, all constitute innovations.‖ ―Global manufacturers,‖ according to Deloitte‘s report Innovation in Emerging Markets - strategies for achieving commercial success, ―are focused intently on the opportunities to source, develop, manufacture, sell, and service their products in emerging markets. But long-term success will take far more than simply making minor adjustments to existing products, lowering prices, or replicating existing sales channels. Instead, a new set of competencies and organizational structures will be required to generate a continuing stream of inno vative products and servic es tailored to the needs of consumers and industrial buyers in emerging mark ets.‖ Deloitte‘s report has listed the following five challenges: rethinking value propositions, globalizing research, tailoring talent management , mastering the complexity of global value chains and managing risks. Accenture‘s report New pat hs to growth – The Age of Aggregation maintains that technological developments are driving three shifts in the competitive landscape that are ushering in the New Age o f Aggregation: converging business activities and players are blurring industry boundaries, rising incomes and the desire for affordable luxury are melding to create a new global middle class and Savvy new emerging -market players are redrawing the competitive map. Authors of the report suggest ―…the c ompanies must first redefine their business strategies to include the new markets and segments. They must then redraw their product/market matrix with an eye toward refining existing offerings and creating new ones, and work out the issues that surround expanded retail channels, logistics requirements and supply chain management considerations.‖ They further propose that ―Companies must also redraw positioning maps to take into account the entry of new c ompetitors from emerging markets and other industries and to incorporate the newly expanded set of customer values and demands that are surfacing as companies bring scattered market segments together.‖ Anot her as pect of the challenges ahead is pointed out by International Labour Organization / International Institute for Labour Studies in one of the Studies on Growth with Equity titled Making Emerging Market’s Future Page 16
  17. 17. Recovery Sustainable – Lessons from Count ry Innovations. ―To sustain recovery,‖ study cautions,―several emerging and developing countries need to consolidate the gains made in boosting domesticsources of growth in order to compens ate for weaker export markets in advanced economies. Well -designed employment and social policies can be instrumental in this respect. There is no o ne-size-fits-allstrategy for achieving this. Indeed, the obstacles to domestic growth vary across countries, requiring adifferent mix of infrastructure investment, wage and social protection policies and rural developmentinitiatives, including facilitating enterprise creation and expansion. ‖ The study refers ―to recent events incertain count ries in the Middle East and North African region that have highlighted the centrality ofemployment and balanced income developments for social cohesion – itself a key ingredient ofsustainable growth. Empirical evidence shows that unemployment and inefficient income inequalities arethe principal factors explaining social unrest. The issue deserves urgent attention, especially since thetrend rise in food prices is likely to exacerbate income inequalities.‖ENTREP RENEURS HIP AND FINANCI NGIn 2010, Global Entrepreneurship Monitor (GEM) surveyed 175, 000 people in 59 economies coveringover 52% of the world‘s population and 84% of the world‘s GDP. ―Some 110 million people bet ween 18and 64 years old,‖ according to the findings of the survey, ―were actively engaged in starting a business.Another 140 million were running new businesses they started less than 3⅟2 years earlier. Takentogether, some 250 million were involved in what GEM defines as early stage entrepreneurial activity.Out of these individuals an estimated 63 million people expected to hire at least five employees over thenext five years, and 27 million of these individuals anticipate hiring twenty or more employees in fiveyears. This illustrates the contribution of entrepreneurship to job growth across the globe.‖Entrepreneurship and financing are two areas that can be looked at for employment creation andbalanced inc ome developments for social cohesion. Governments, in present global economic and fiscalscenarios, can not go beyond facilitating policy support. There are two specific initiatives that need to befocused by entrepreneurs and financial institutions: creation of institutions for work integrated learningand subsequent employment creation in professional career corridors and re-packaging and heavilyadvertised global introduction of financial products for self-employment avenues. First is successfullydone in Germany with excellent res ults and being attempted in dozens of other countries. The second isscarcely available and rarely advertised. Investment in these t wo areas will equip the entrepreneurs withthe quality human resource that is an essential pre-requisite for success of and expansion in anybusiness any where in the world. But prior to that, it is necessary, first of all to address a vicious Cycle ofNine S ocial and Economic E vils: Illiteracy and Ignorance; Unemployment; Po verty; Deprivation; Disease;Crime and Corruption; Injustice and Violation of Human Rights; Political, Religious and EthnicPrejudices; Sectarianism and Terrorism.If one carefully looks at the formation of the cycle of social and economic evils he will note that the lastseven social and economic evils are nothing but the direct outcome of the first two evils, i.e. illiteracy /ignorance and unemployment. These social and economic evils are inter-connected and that connectionEmerging Market’s Future Page 17
  18. 18. needs to be clearly understood before any remedial plan or process is initiated.ILLUSTRATION 6: CYCLE OF NINE SOCIAL AND ECONOMIC EVILS Illiteracy and Ignorance Sectarianism and Terrorism Unemployment Political, Religious and Cycle of Nine Ethnic Prejudices Social and Poverty Economic Evils Injustice and Violation of Deprivation Human Rights Crime and Corruption DiseaseWhy do I want the entrepreneurs and financial sector to focus their attention on the first two rings of thecycle of social and economic evils? Is there room for any doubt that the first casualty of social unrest isalways economic activity? When crime and corruption, injustice and violation of human rights, political,ethnic and religious prejudices and sectarianism and terrorism paralyze cities and countries, the firstcasualty of that unrest is always business activity resulting in daily business losses of hundreds ofmillions of dollars per hour and per day in both developed and developing countries. Who suffers themost? The business community suffers the most excluding those who sell arms and ammunition andalso those who provide financial back up for such activities. If you look at the rarely discussed genuinereasons for pres ent economic crisis you will surely see the same evils working behind the scene. Thesituation in and around Iraq, the ongoing war on terror in and around A fghanistan, the unrest and armedconflicts across Africa, the real and artificial political upheaval in the middle-east are all directly orindirectly influencing the supply and prices of the commodities, products and services. This situation,wars, unrest and upheavals or engineered changes in political landscapes all are caused by the illiteracy/ ignoranc e and unemployment and other evils that follow the two. You may also add the inward lookingand self-centered educated strategists and policy makers into the list of culprits at the delivering end whoare taking undue advantage of the illiteracy / ignorance and unemployment of socially and economicallyEmerging Market’s Future Page 18
  19. 19. deprived peopl e who are at the receiving end across the globe. Consequently, creating artificial hurdlesin the flow of natural and human resourc es and making them expansive to the extent that a largenumber of people around the world are economically pushed below poverty line every day. There is avery import ant aspect of an emerging business survival philosophy that needs to be explored andseriously discussed further at platforms like these. And that philosophy necessitates the focus on those―economically (di s)advantaged consumers (too) who (cannot) shop eagerly for stylish and high qualitygoods.‖ In this I see a window of opportunity for innovative ent repreneurs to create a range of products,plan financial packages and show case low-cost services for socially and economically deprived peopleby consciously and scientifically addressing social and ec onomic exclusion that is the main reason forunrest both in the developing and the developed ec onomies. The message is to create room atconsiderably low-cost through innovative entrepreneurship and financial assistance for that socially andeconomic ally handicapped / deprived segment of t he consumer mix that has the potential to disturbeconomic progress, growth and development in emerging markets and geo-politically sensitive resource-rich economic zones. As a business rule, the entrepreneurs and financial institutions have to make surethat all market segments are taken into consideration at a planning stage so that the intentionally orunintentionally excluded segment does not resort to violent agitation at a later stage hindering theimplementation or expected outcome of the strategic business plan in any part of the world. This isactually what is ignored at present in sensitive economic zones around the globe creating uncert aintyand confusion in entrepreneurial, business and financial circles. How can these uncertainties andconfusion be addressed? The immediate remedial measures that need to be discussed arerationalization of profit margins, reduction in unrealistic gaps in pay scales and removal of regulatoryflaws. Another area of concern is the urgent need for balancing of consumer and commercial incomeand ex pens es to create room for personal and institutional savings and genuine profit margins. ―Thelevel of savings,‖ according to 2011 Global W ealth Report, ―is one obvious source of wealth differences,with increased savings translated int o greater aggregate wealth and a higher wealth -income ratio. Inpractice it is often difficult to identify the connection. Among G7 countries, the household saving rateshows substantial het erogeneity, ranging from as little as 2% in Japan to 16% in Italy and 17% inGermany. During the past 15 years, saving rates decreas ed in the UK, the USA, Italy, Japan andCanada, but remained unchanged in France and even ros e slightly in Germany.‖ This situation calls for―provision of more sophisticated financial instruments‖ and ―carefully engineered impact of financialinnovation on debts.‖ The declining saving rate is alarming for economic activity across the globe leadingto flawed economic and business growth projections and disappointing results.The entrepreneurs need to create an independent powerful apolitical entrepreneurial plat form fordeveloping a Global Natural and Human Resource Vision and Index as a take-off base for a GlobalEntrepreneurial Initiative with the following Five-P oint agenda that can be discussed, debated andreviewed:Emerging Market’s Future Page 19
  20. 20. ILLUSTRATION 7: P ROPOS ED FIVE-P OINT AGENDA FOR ENT REPRENEURAL PLATFORM 1: Resources 2: Performance Evaluation The proper evaluation of the natural and human resource A real and unbiased evaluation of the performance of the potential of the least developed and the developing social and economic indicators to determine the precise countries in general and “failed / fragile countries” in extent of their self-reliance and reliance on others particular 5: Accountability The mandatory authorization of International Court of Justice to try and punish the rulers, politicians, bureaucrats, top officers of the armed forces and business tycoons who are responsible for the creation and perpetuation of the “Cycles of National, Regional and Global Social and Economic Evils” through “Well-Conceived Structures and Systems of Inhuman Exploitation.” 3: Gap 4: Removal of Barriers The declaration of a Strategic Plan consisting of workable The creation of unhindered channels for the flow of options for the bilateral, regional and global human and natural resources from human and natural entrepreneurial cooperation to fill and / or narrow the resource rich countries to natural and human resource artificial bridgeable gap between natural and human poor countries. resource potential and social and economic performanceI propose to draw two short-term, mid-t erm and long-term maps of natural and human resources that areavailable and will be available in a given timeline. Based on real potential and actual performance , thehuman and natural resource efficiency and deficiency spots have to be marked on the map highlightingtheir flow from resource rich to resource poor countries. The proposed map will also indicat e the artificialbarriers of any nature in the flow of resources and the cost of barrier to the countries involved.If something is not done seriously on these lines than I have every reason to believe that economicunpredictability, uncertainty and crises after crises will make the world economically unviable!Emerging Market’s Future Page 20
  21. 21. TABLE 6: HIGHLIGHTS OF DOING BUSINESS INDEX 2011 REFLECTING POSITIVE DEVELOPMENTSPERIOD ECONOMIES REFORMS NATURE OF REFORMSJune 2009 117 216 Making it easier to start and operate a business. Strengthening transparency,May 2010 property rights and improving the efficiency of commercial dispute resolution and bankruptcy procedures. More than half of those policy changes eased start -up, trade and the payment of taxes2009/2010 16 --- Facing rising numbers of insolvencies and debt disputes, most of the Eastern European, Central Asian and the OECD high-income economies have reformed their insolvency regimes, including Belgium, the Czech Republic, Hungary, Japan, the Republic of Korea, Romania, Spain, the United Kingdom and the Baltic States focusing on improving or introducing reorganization procedures to ensure that viable firms can continue operating. Before, it was common for insolvent firms in many economies of Eastern Europe and Central Asia to be liquidated even if they were still viable.2009-2011 East Asia and --- Indonesia, Malaysia and Vietnam took the lead, easing start-up, permitting and Pacific property registration for small and medium-size firms and improving credit information sharing. Hong Kong SAR (China), after seeing the number of bankruptcy petitions rise from 10,918 in 2007 to 15,784 in 2009, is working on a new organization procedure.----------- Latin America, 25 In Latin America and Caribbean, 23 of the 25 reforms simplified administrative Caribbean, South processes. Many did so by introducing online procedures or synchronizing the Asia and Eastern operations of different agencies through electronic systems. In this way Brazil, Chile, Europe Ecuador and Mexico simplified start-up, Columbia eased construction permitting, and Nicaragua made it easier to trade across borders. In South Asia, where 5 of 8 economies introduced changes (7 in all), India continued improvements to its electronic registration system for new firms by allowing online payment of stamp fees. Across Eastern Europe the implementation of Eastern Union regulati ons encouraging electronic systems triggered such changes as the implementation of electronic systems in Latvia and Lithuania.2004-2011 140 296 The average time to start a company fell from 49 days to 34, and the average cost from 86% of income per capita to 41%.2006-2011 Georgia, >12 All made the largest strides in making their regulatory environment more favorable Rwanda, Belarus, to business Burkino Faso, Saudi Arabia, Mali, the Kyrgyz Republic, Ghana, Croatia and Kazakhstan2004-2011 China 14 Made it easier to do business, affecting 9 areas covered by Doing Business. In 2005 a new company law reduced what had been one of the world’s highest minimum capital requirements from 1,236% of income per capita to 118%. In 2006 a new credit registry started operating. Today 64% of adults have a credit history. In 2007, after 14 years of consultation, a new property rights law came into effect, offering equal protection to public and private property and expanding the range of assets that can be used as collateral.2004-2011 India --- India implemented 18 business regulation reforms in 7 areas. Many focused on technology—implementing electronic business registration, electronic filing for taxes, an electronic collateral registry and online submission of customs forms and payments. Changes also occurred at the sub-national level. In India, as in other large nations, business regulations can vary among states and cities. According to Doing Business in India, 14 of the 17 Indian cities covered in the study implemented changes to ease business startup, construction permitting and property registration between 2006 and 2009.1980s Hong Kong SAR --- Economies where it is easy for firms to do business often have advanced e-2008 (China), government initiatives. E-government kicked off in the 1980s, and economies with Singapore, well developed systems continue to improve them. Hong Kong SAR (China) and Denmark, United Singapore turned their one-stop shop for building permits into online systems in Kingdom 2008. Denmark just introduced a new computerized land registration system. The United Kingdom recently introduced online filing at commercial courts. DATA SOURCE: Doing Business Index 2011Emerging Market’s Future Page 21
  22. 22. Bibliography1: Lynge Nielson, ―Classif ication of countries based on their level of development: How it is done and how it could be done,‖ IMF w orking paper, February 20112: Markus Jaeger, ―The Great Risk Shift – or why it may be the time to rethink the developed-/emerging-markets distinction,‖ Deutsche Bank Research, 20103: World Economic Forum, Global Competitiveness Report, 20114: Agility Emerging Markets Index 20115: Sumit Dora, Sven Smit & Patrick Vigguerie, ―Drawing a new road map for growth‖, McKinsey Quarterly , Apr 20116: Alan M. Taylor, ―The Future of International Liquidity and the Role of China,‖ Maurice R. Greenberg Center for Geoeconomic Studies and International Institutions and Global Governance Program, CFR, November 20117: Esw ar S. Prasad, Role Reversal in Global Finance, Cornell University, Brookings Institute and NBER, August 20118: Sebastian Becker, ―Public Debt in 2020: A Sustainability Analysis for DM and EM Countries,‖ Deutsche Bank Research, March 24, 20109: Wayne G.Borchardt, Jill S. Dailey and Paul F. Nunes, ―New paths to growth, The Age of Aggregation,‖ 3 rd issue of Accenture Outlook, 201110: The Emerging Middle Class in Developing Countries, OECD Development Centre11: Credit Suisse Research Institute, 2011 Global Wealth Report, October 201112: David Jin, David C. Michael, Paul Foo, Jose Guevara, Ignacio Pena, Andrew Tratz, Sharad Verma, Winning in Emerging- Market Cities – A guide to the World‘s Largest Growth Opportunities, The Boston Consulting Group Inc., September 201013: Doing Business 2011, Making a Difference for Entrepreneurs, A co-publication of the World Bank and IFC, 201114: Good Governance Program, Business Ethics, A Manual for Managing a Responsible Enterprise in Emerging Market Economies, U. S. Department of Commerce, International Trade Administration, Washington D. C. 200415: Global Innovation Index 2011, INSEAD 201116, Deloitte Touche Tohmatsu, ―Innovation in Emerging Markets, Strategies for Achieving Commercial Success,‖ 200617: Studies on Growth with Equity, Making Recovery Sustainable – Lessons from Country Innovations, International Labour Organization / International Institute for Labour Studies, 201118: Global Entrepreneurship Monitor, 201019: Financial turmoil and global imbalances: the end of Bretton Woods II? Chris Hunt, September 2008Emerging Market’s Future Page 22

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