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Opportunities for Investors to Increase International Trade within Emerging Markets

Investing in foreign markets provides a substantial opportunity for profit. Emerging markets, also referred to as emerging economies or developing nations, are fast growing in countries all over the world. These nations are focused on improving productivity, consumer buying power, and the quality of life for their people. According to research by McKinsey and Company, emerging markets account for 35 percent of the world’s gross domestic product (GDP). Over the next ten years, emerging markets are projected to grow three times faster than markets in developed nations, providing even more incentive to invest in international trade.

Factors Influencing Emerging Markets

Emerging markets are continuing to grow around the world for a wide range of reasons. Technology has driven many changes, specifically enabling increased access to education, including technical and higher learning classes for young people in underserved countries. Additionally, online classes from universities all over the globe make education possible and cost effective in areas where it was previously unavailable. More and more young people in emerging markets have been moving to urban centers in their countries to find work, revitalize run-down areas, and amass wealth to support themselves and their families. Consumers in these countries have increasingly utilized mobile devices to search products, engage in social media, conduct personal banking, and purchase goods and services.

Global Emerging Markets

Indonesia

Indonesia has the largest economy in Southeast Asia with a GDP growth rate of 5 percent as of 2016. The country’s main exports are mineral fuels and machinery parts. Although it experienced a significant economic boom due to its exporting, Indonesia’s growth has slowed since 2012. In response, the government is determined to continue to develop the export economy based on the country’s manufacturing sector, and boost the country’s spending on infrastructure.

Egypt

The main exports of Egypt include oil, cotton, and fruits and vegetables. With a 2016 GDP growth rate of 3.8 percent, the country continues to invest in its automobile, manufacturing, and food sectors—with special attention being paid to the housing sector. The government predicts that over the next ten years, there will be an additional 10 million residents in its urban areas.

Bangladesh

The economy of Bangladesh has experienced significant growth, roughly 6 percent per year since 1996. The country has proven especially resilient in response to changing economic factors. Political instability, corruption, anemic implementation of economic reforms, poor infrastructure, and lack of reliable power generation have not hampered the growth of Bangladesh over the years. One of the country’s economic stalwarts is its garment industry, accounting for over 80 percent of exports and more than $25 billion in revenues in 2016.

Burma

The Burmese government has made a substantial effort since 2011 to attract foreign investment, and to implement economic reforms which included easing sanctions on Western countries. As of 2016, Burma has experienced a GDP growth rate of 6.5 percent, powered by abundant natural resources with key exports in natural gas and wood products. The country’s resources, along with its young workforce, have led foreign investors to back multiple industries within the country. These include the garment industry, food and beverage production, energy generation, and investment in technology sectors.

Pakistan

Another emerging market that has attracted foreign investors is the economy of Pakistan. Textiles and apparel such as garments, bed linen, cotton, carpets and rugs, make up the majority of Pakistan’s exports. The government is focusing on lowering energy costs as a way to boost manufacturing. Pakistan and China created a $46 billion investment program called the “China-Pakistan Economic Corridor,” aimed at improving the energy sector, and engaging other infrastructure projects.

Emerging markets around the world present prime opportunities for foreign investment in international trade. Most of these countries are undertaking substantial reforms to jump-start their economies and attract foreign investors. These improvements include building infrastructures, increasing manufacturing and agricultural production, and rebuilding urban centers. Emerging markets provide unique and untapped investment opportunities. Those who invest not only have the potential to earn significant returns, but they can play a key role in helping underserved countries better serve their people.

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Sources

http://www.businessinsider.com/the-10-emerging-markets-of-the-future-2016-7/#bangladesh-1

https://www.cia.gov/library/publications/the-world-factbook/fields/2116.html

https://www.artisanpartners.com/content/dam/documents/insights/vr/Where-We-Are-Finding-Growth-Emerging-Markets-Consumers-vR.pdf

http://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/finding-profits-and-growth-in-emerging-markets

https://www.forbes.com/sites/greatspeculations/2016/01/15/exporters-facing-opportunity-with-consumer-spending-in-emerging-markets/#7b8564aa4c15

http://www.worldwideerc.org/Resources/MOBILITYarticles/Pages/0514Faulk.aspx

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