Emerging Markets in the United States - Coursework Example

Emerging Markets in the United s Introduction With the vast variety of markets existing in the world, there is a lot of competition for those marketers who try promoting new products thereby giving the world the concept of an emerging market. Markets are determined by their extent and demand. The extent of a market may be defined by geographical boundaries or by the cost involved in transporting the goods to far reaching areas. The demand of a market, on the other hand, is determined by factors such as fashions and trends, affordability and the availability of substitute and complement goods. Emerging markets are usually international markets that set their grounds in a foreign setting and try to create a demand for their goods. While developing economies are usually flooded with emerging markets, the concept is not novel to developed economies. It is these emerging markets, which when successful in the future, become economic giants in the industry (Garten, 1997). The emerging markets need to consider a lot of geographical and economic concerns before setting in a foreign country. They may be small enterprises or large projects. This paper seeks to evaluate the industry of emerging markets in the United States and see how successful it has been over the years. It would also analyze how these emerging markets have affected the economy of US and all related economies. Emerging markets have had positive impacts and some negative setbacks and this paper would state both sides of the picture. Global Overview of the US The US is the third largest country in the world comprising an area of 3.79 million square miles. It accommodates over 300 million people in fifty states, and being so, it remains the most populated region in the world. The US is the most ethnically diverse nation in the world with people from all over the world staying there for work, study or leisure. It has a GDP of 14.3 trillion US dollars which proves that it is a relatively economically stable country in the world. However, about 11% of the US population lives below the poverty line (Juster, 1997). It has a very high rate of productivity and high rate of scientific developments and innovations. Also, the unemployment level in the US is fairly low and inflation is under control too. The US is bordered by the Pacific and Atlantic Oceans making it a favorable site for water travel. Also, it has sufficient nuclear weaponry and a strong army to ensure its defense against the worldly enemies. The US also enjoys fairly good relations with most economies of the world and it stands as a much unbiased nation with a lot of political autonomy globally. Most countries respect the decisions made by US in their political matters and they do not consider suggestions by US as intrusions to the political policies. The US is thus one of the most powerful nations today and if it continues to work as hard economically, it will enjoy its position for a long time. Emerging Markets in the United States Although the United States is a very advanced and developed country and can sustain its population using its own reserves and local markets, the large emerging markets in United States are very important for its growth and financial standing. Not just that, the large emerging markets of United States are an important source of growth and development of the world’s economy and provide US businesses and investors a golden opportunity and stimulus for economic and financial activities. Emerging markets play an important role in the US because US is presently a global hub for all financial and economic activities. These markets help in the promotion of goods internationally and also help other weaker economies gain from the transactions. No one would prefer to buy a skirt from Indonesia when he has the option of buying it from US. This is because the US has made its market very reliable and superb quality wise over the years. Now, if instead, the US incorporates an emerging market of skirts from Indonesia and uses its own name to sell the product, the skirts will do exceptionally well. This means the emerging markets in US do not just benefit US economy but it is also fruitful for other economies that get their goods promoted in the US. The US economy is characterized by eleven major emerging markets that represent over thirty-one percent of US’ Gross Domestic Product (GDP). Also, these eleven countries control over thirty percent of total international reserves; this is indeed a mighty amount! The eleven countries that form large emerging markets in the US are Argentina, Brazil, China, India, Indonesia, Korea, Mexico, Russia, Saudi Arabia, South Africa and Turkey. These countries account for fourteen percent of the world’s income alone and have production that satisfies not just the US but is also exported at high profits globally (Roubini, 2004). The United States however, has been treating the emerging markets quite uncertainly over the last few decades. While it has been very welcoming to some emerging markets, it has been critical to the rest. It has been very open to emerging markets from India. This is because US realizes the market in India to be highly productive and very efficient. It also sees the Indian market as a link with South Asia which has been long known as the golden sparrow for its abundance of resources and spices and other rare commodities. Moreover, the emerging markets by India in the US are very productive and quality wise flawless. However, the US does not allow Russia to establish any emerging market in the US. This is because of the political uncertainty that prevails in Russia. Moreover, it does not also allow Brazil for emerging markets in US because of the debt crisis. Therefore, before allowing a potential international emerging market in US, the government needs to ensure that it would prove fruitful to the US economy and not seep away its seemingly large but actually void resources. The nuclear proliferation with India is one big reason for US to allow large emerging markets from India. However, it needs to ensure that the working environment in the US is not hampered. On the other hand, the emerging markets in US have brought with them a lot of vices too. For example, the US unemployment rates have soared higher in the last decade owing to a lot of large emerging markets from all countries in the world. The local population of US has little scope since the US goods and services have little demand. Chinese substitutes have overridden the demand for US goods since they are cheaper, almost as durable and much more abundantly produced. The quality has been slightly compromised in Chinese goods but they last long enough to gain customer loyalty. The US produced goods have thus suffered badly by this competition since they are not able to meet up with the international pricing standards. They are much more expensive and due to the global recession that prevails, many try and avoid them. Also, the emerging markets in US have adversely affected the work environment. People from different countries have different styles of working which may not be as efficient as the style adopted by the Americans. However, the different communities would never give up on their style of work and so there are differences in the working environment. While the Muslims would prefer to close their shops during prayer times, the Indians would like to go on holidays for their cultural festivities and similarly the Christians would demand church time breaks and other perks. Satisfying so many communities is very difficult or rather impossible and adopting a midway is usually unacceptable to most people. Therefore, the work environment in the US has suffered (Agtamael, 2007). The US workforce had to give up a lot of privileges and leverages as well as perks to satisfy the other creeds that live with them in the US. Ideological, Economic and Political Factors One may wonder what attracts all the countries in the world towards US which is a very advanced economy and what does US gain from these large emerging markets. It is actually the economic soundness and financial stability that allures many countries towards establishing their markets in the US. Since it is financially sound, the countries that invest in US for large emerging markets are not dubious whether or not their investments will pay back. They know that the US has a large market which is very sound financially and so it will not keep aside their hard earned money. This certainty allows the countries to engage in large financial ventures in the US without having the need to think twice about it (Ramamurti, 2009). Also, the political condition of US is very sound. It enjoys good relations with most parts of the world and it occupies it’s time in solving international problems and issues. Therefore, most countries respect the decisions by US and consider it to be a politically stable economy. What US gains from the emerging markets is a chance to overrule another country politically. It enjoys good relations with the emerging markets from India, therefore US also unnoticeably thinks that it has the right of intrusion in India’s political scenario. This may be considered right by some while wrong by others, whatever it may be, the emerging markets do pay back US in terms of greater political power globally. US is the largest consumer market in the West so it allows the smaller markets from the East to establish a link with the West. This allows the East to meet the West and vice versa, this link also establishes a cultural link between the two very diverse parts of the world. They are able to exchange ideas, goods, cultures and gain positively from one another. Since the world has shrunken to a global village, it is important to have a cultural, political, economic and financial link between nations. That just helps them learn more from each other and come closer in the long run. This is one of the biggest factors why many countries choose to opt for establishing large emerging markets in the US instead of any under developed third world region in Asia. Ever since the Renaissance and later the Industrial Revolution, the West has been the hub of all developments, innovations and inventions. Therefore, the idea of having an emerging market in US is appealing to both sides, the developing side which seeks to learn and US itself which seeks to earn from its repute and high standing. Conclusion As realized in the preceding parts of the paper, the emerging markets in the US can have mixed effects on its economy depending on what is being marketed and how and what is at stake. The answers to all of these will tell what benefit or danger does an emerging market hold for the US. In any case, it is important for a country like the US to work towards budgetary reality checks, crisis resolution and poverty reduction planning. These would tell if US is better off without the new emerging market or worse off. Future decisions should then depend on the data that is collected. However, at present the emerging markets have given more to US than taken away from it. The unemployment of local citizens and increase job insecurity are small threats that can be tackled effectively if the US government takes them seriously and encourages more interaction with the international marketers. The US however, should never stake its position for money in the sense that it should never take in more emerging markets than it can handle just for financial reasons. It is already a well developed nation and it needs to hold to that position than look for alternatives for fast money. References Garten, E. (1997). The Big Ten: The Big Emerging Markets and How They Will Change our Lives. Basic Books. Juster, K. & Simon, L. (1997). Making Economic Policy Work: An Assessment of the National Economic Council. Brookings Institution. Roubini, N. & Setser, B. (2004). Bailouts or Bail-ins? Responding to Financial Crises in Emerging Markets. Institute for International Economics. Agtamael, A. (2007). The Emerging Markets Century. Free Press. Ramamurti, R. & Singh, G. (2009). Emerging Multinationals in Emerging Markets. Cambridge University Press. Read More