Part 1: New emerging markets and BRIC.
Over the last decade there have been significant changes to the world economy and the way once traditional Multinational corporations do business. This has been primarily due to the rise of new markets, particularly the BRIC economies. “The greatest effect of globalization is the shifting of the world's wealth centers. Former developing countries are rapidly becoming richer through their use of natural resources, labour forces, and industrialization. An essay published by Goldman Sachs identified the core leaders in this category as Brazil, Russia, India, and China, and subsequently coined the term BRICs. Europe soon realized the vital necessity of building bridges with these emerging economic powers. Portugal saw an opportunity to utilize its historic and cultural ties with Brazil to bolster a strategic partnership with the EU.” (Building Bridges to the BRICs, Africa on the Agenda. Foreign Affairs, 00157120, Mar/Apr2008, Vol. 87, Issue 2). New emerging markets like Thailand, the Czech Republic, and Poland along with many others are now a source for potentially attractive investments. CEO, Cordiant Capital Inc., David. G. Creighton said “While we have seen many countries develop fairly quickly over the last fifteen years, including the Czech Republic, Poland, Thailand and Mexico, there are a number of others that, for a variety of reasons, are lagging behind. We continue to find attractive opportunities in Russia and Latin America and are now beginning to engage with the next wave of countries in such places as El Salvador, Bulgaria and Kazakhstan. It’s all about finding the right risk/return profile.” (The New Emerging Markets by Benefits Canada, 2007) New emerging markets, especially the BRIC economies, have been on the rise in terms of industrialization and Gross domestic product growth particularly in the service sectors. To further observe the rise of new emerging markets, specifically BRIC economies the table below shows the top 20 economies for the years 1995, 2001, 2003 and 2006:
Table : Top 20 Economies
13South KoreaKorea, RepSouth KoreaIndia
Based on World Bank development reports, these rankings show the emergence of new markets as well as the growth and development of BRIC economies. In the report titled “Dreaming with BRIC’s : The path to 2050” (Goldman Sacs, 2003), the assumption is made that in a period of less than 40 years the BRIC economies could be larger than the combined G6 nations in terms of US dollars. Furthermore, the report states that the BRIC countries alone are worth about 15 % of the G6 nations. This alone would indicate the expected levels of growth from emerging markets, specifically Brazil, Russia, India and China. To further understand the emergence of these markets, we must look at the various social and economic factors that transformed these once developing economies to emerging markets with a strong global presence. Prahlad and Lieberthal (The end of corporate imperialism, 1998) postulate that the emerging middle class as an market force has actually led to...