Features of Emerging Market - Essay Example

The term emerging market is not a new phenomenon; instead it is a new term to describe growth and flourishing business and market activities in a country. This term is used to describe fast growing pattern of around 28 developing nations which have experienced rapid growth and boom. Out of these 28 emerging nations, India and China head the list (Li, 2008). Apart from the growth in their economies, these economies have also experienced transition from agrarian to service economies and not only their economies but their culture is also getting exposure throughout the world. A developing or emerging market is one characterized by high industrial growth. This implies increase in the industrial output and India has been going through rapid industrialization. It has seen a growth of around 27% percent in Industrial output which is second only to China. Growth in Industrial output means a great deal of wealth is being generated and looking at the statistics we can see that as a result this wealth generation there was a need of an organized financial system. As a result of the unprecedented growth that India experienced, many financial firms including banks, insurance companies, consumer banking firm sprouted to serve the increasing needs of Indians in order to properly utilize their newly-earned wealth. (Lei, 2007) Another feature of an emerging market is proper governance and India is being governed by a very rational and open-minded parliament. Some credit also goes to Indian army for that as India has never faced Military coups or any other embarrassing situation like that where power is snatched from the representative of the people and given to one sole dictator. This economics stability has earned India a title of "Largest democracy in the world". One must keep in mind is that economic stability is imperative for fast growth. The reason behind why countries around India who are blessed with the same natural characteristics as India and high populations have never been able to reach the level of India, when it comes to economic growth. Almost all countries surrounding India suffer from instable political system and periods of military coups occasionally, but the real credit goes to patriotic Indian army, which has never been temped into launching a coup against their own people. This has earned India a escalated position not only in the Asian economics but also in the world economics, where Indian case studies adorn the history, present and future. (theindianpolitics, 2009) A land of around 1.5 billion people, India's climb in the social and economic spheres has been tremendous over the past few years. During this time, India has grown from strength to strength. Proving all its doubters wrong, India is reaching great new heights at a very fast pace. This growth of India is not confined only to their economy, but let it be any facet; India is growing rapidly in an attempt to escalate to nadir. India is leaving its mark on just economic progress and development but all sphere of life or all fields where it can grow any further. For example, social growth of India can be judged by the fact that entire Asia is intimating European culture, but Europe and Western Nations are intimating India's culture. India's film industry, "bollywood" has penetrated western market and became the second largest film industry of the world after Hollywood. This great success of bollywood and Indian culture has given India exposure to far flung areas and contributed heavily in the recognition of India all around the world. As a result of all this factors and blessed with tremendous amount of useful natural resources, such as cheap and skilled labor, tropical climate, great fertile land etc. (Vyas, 2003) India has become a business hub and all trading and business activities are diverting towards India. Owing to all these factors and great trust shown by the foreign investor towards India, Bombay Stock Market is growing around 17% annually which is comparable to the richest stock markets like New York Stock Exchange (NYSE) etc. Apart from the rise in Money markets such as stock exchange, India has also grown four-fold in its retail sectors. Almost every product whether big or small, technological or manual, mechanical or electrical is being produced in India and is being distributed through a well-developed chain of proper infrastructure and distribution channel. This organized retail sector is dominated by industrial and manufacturing giants like Tata, Pantaloons, Reliance and AirTel. These firm have made India recognizable allover the world. India's recent economic trends have forced even the most cautious of the economists to believe that India is going to be the next big economy of the world. The economy has been a star in the last few years growing from strength to strength. The GDP growth rate of India is around 8% (Index Mundi, 2009), which is very decent considering the global financial crisis that the entire world is going through. However, despite the economic crisis, growth in GDP means that Indian economy is very strongly hedged against uncertainty and we can expect bigger things from this economy. All the things discussed above were the reasons which triggered the Indian economy to grow. However, if we analyze India's economy potential to grow, we will find that India has been blessed with certain natural factors which have accelerated the India's progress. For example, India has been blessed with a large population. Currently, India's population is near 1.25 billion. As a result of this large population, India has an ample supply of cheap labor. As a result, this has reduced the production costs of the firms operating in India. These firms can produce a commodity at a lower price than other economies and hence gain international competitive advantage. According to an article, export in India has been faster than GDP due to massive influx of FDI or foreign direct investment. FDI occurs when a foreign firm purchases assets in India. Many firms are purchasing assets in India to exploit the advantage of cheap factor of production has resulted in massive exports growth in India, which come to around 15% annually. Similarly, this competitive advantage has boosted India's export in the international market and contributed to the growth of the economy. It has also encouraged many firms to look for outsourcing opportunities in India and some large firms like BMW have even shifted their operations into India. All of this has accelerated the growth of India, which now has a distinct position in the list of emerging markets (Business Week, 2009). These outsourcing opportunities have made India a migration market for some of world's biggest companies. Many large companies and their staff is migrating to India to enhance their business opportunities and finding it very compatible for growth. Although India's trade is only 24% of its GDP, it is believed that in future this share is going to rise making India as one of most active country in international trade. Some ideological factors have also played their parts in the rapid growth of India over the last few decades. These factors include India's cordial relationship with USSR and USA. These factors have not only just increased trade opportunities for India but also opened the gates for transfer of technology from some of the most advanced nations to India. For example, recently a bill was signed whereby it was agreed that U.S.A will provide India with uranium enriching nuclear facility. Furthermore, in 1980s, several trade pacts were signed between India and developing nations. Similarly, it was the ideological factors that brought about I.T boom in India. In fact, had India been lagging behind in I.T, it would never been able to achieve things that it is achieving currently (Nagadevara and Tara, 2007) References: Nagadevara and Tara. Factors influencing quality of technical Education in India. http://findarticles.com/p/articles/mi_6773/is_2_7/ai_n28522889/ Index Mundi (2009). Indices and Statistics. Retrieved October 17, 2009. http://www.indexmundi.com/india/gdp_real_growth_rate.html Money Zine (2009). Bombay Stock Exchange. Retrieved October 18, 2009. http://www.money-zine.com/Investing/Stocks/Bombay-Stock-Exchange/ Wei Lei. (2007). Characteristics of Emerging Markets. University of Virginia (CEPR) Chuan Li (2008). What are Emerging Markets The University of IOWA, CENTRE OF INTERNATIONAL FINANCE and ECONOMIC RESEARCH Ramnarayan Vyas (2003). Nature of Indian Culture. Concept Publishing N Shivapriya (2009).India remains top outsourcing destination. Business Week. http://www.businessweek.com/globalbiz/content/jul2009/gb20090710_974200.htm Economy Watch (2009). Indian Economy Overview. Retrieved 19 October 2009. http://www.economywatch.com/indianeconomy/indian-economy-overview.html The Indian Politics (2009). Indian Politics Show. October 18, 2009. http://www.theindianpolitics.com/ Read More