LESSONS FROM EMERGING MARKET ECONOMIES Instructor Institution Date Emerging markets are defined as economies whose trade or business activities are experiencing rapid expansion and growth. Rousseau and Sylla (2001) add that emerging markets are characterized by rapid growth of industries…
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This paper is based on the writings of Rousseau and Sylla on financial institutions and their role in expansion of trade and economic growth. Lessons which can be learned by emerging economies from the US are presented and described at length within this paper. Moreover the paper discusses the implementation of various models for a sound financial system and description of its role in enhancing expansion of trade and economic growth of emerging markets. It is through a good or sound financial system that rapid economic growth can be realized by emerging market. As a result, emerging economies must put in place a sound public debt and finances system (Rousseau and Sylla, 2001, p. 2). The financial markets are critical in the development of any economy and thus emerging markets must prioritize stabilization of their financial systems. For example, the remarkable growth of the US capital markets and banking systems is attributed to the rapid growth of its economy and acceleration of trade within the country and internationally (Rousseau and Sylla, 1999, p. 4). This illustrates the role of financial markets in empowering individuals and businesses through provision of credit facilities as capital to enhance their trade. The efforts of the individual businesses in their trade endeavors will in return promote the ultimate economic growth of the economy. Moreover, the confidence and morale of investors is improved when there is availability and access to credit facilities. As a result, the investors will make use of the credit facilities and invest in the economy leading to expansion of trade and the economy in general. Monetary exchanges which characterize trade activities are promoted through a sound financial system. Banks enhance business transactions which are attributed to expansion of trade within emerging markets and thus growth of businesses. Rousseau and Sylla (2001, p. 42) emphasize that expansion of businesses into corporations and their internalization demonstrates a rapid growth of the economy. Rousseau and Sylla (1999, p. 15) reaffirm that the growth in stock of money or liquid money through expansion and increase of bank loans promotes financial development, economic growth and trade. For example, the increased liquid money in the expanded US bank credit boosted foreign investment through investors who were now more confident to invest in the economy. As a result imports were encouraged in addition to the increased application of modern production methods and thus internal economic growth. In this sense, financial are accredited for expansion of a country’s trade into import and export trade. Because of the growth of an emerging market’s trade into international orientations, foreign exchange is attained and hence further growth of the economy. It is the liquid money which finances businesses within an emerging economy Rousseau and Sylla (1999). The rate of exchange of liquid money within an economy demonstrates that there is rapidity of trade activities and hence a reflection of an expanding economy. According to Rousseau and Sylla (2001, p. 21), stable monetary arrangements within a country is one of the most important prerequisites to expansion of trade and growth of the economy. Monetary arrangements include policies which govern the financial systems. This means that emerging markets or economies must
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(“Emerging Markets Economies Essay Example | Topics and Well Written Essays - 1500 words”, n.d.)
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(Emerging Markets Economies Essay Example | Topics and Well Written Essays - 1500 Words)
“Emerging Markets Economies Essay Example | Topics and Well Written Essays - 1500 Words”, n.d. https://studentshare.org/macro-microeconomics/1449210-emerging-markets-economies.
Developed and emerging markets firm
The rate at which urbanization is increasing has made a new consumer generation to come about having a strong passion for the development of infrastructure and consumer goods in support of their new lifestyles. This has made investors continue enjoying a season of returns that are exceptional over main classes of assets.
Multinational companies are also variously referred to as multinational corporations (MNCs) or transnational corporations. Multinational companies are basically corporations that have various operations based in countries other than their original home country.
This study reviews the studies of other researchers and then randomly selects a group of developed and emerging markets to verify whether there exists significant opportunities for investment and risks in stock markets. The author analyses the risk-return relation of making investments in the emerging economies.
Emerging markets are usually large economies in their respective regions, have large populations, resources, markets, and have transitioned from developing to emerging economies. They are in-between developing countries and developed countries. Good examples of such countries are China, India, Indonesia, Russia, Mexico, South Africa, Poland, Turkey, South Korea, Brazil and Argentina.
Corporate profits seem to grow rapidly when there is a higher economic growth. One of the reasons why developed markets like the U.S have been ranked high is because of the development of markets outside the country. Some nations are borrowing a leaf from the U.S and are performing well as emerging markets.
Additionally, management skills from foreign investors are implemented to the host country. Foreign direct investments (FDI) have been viewed as the best financing tool in the emerging markets. As stated above, emerging markets create new technologies which can increase productivity and create new jobs in the host country.
Therefore, recreating financial markets and market-based institutions has been a work in progress. On the other hand, the leaders in India chose a mixed economy after independence from Britain. Markets proceeded to