Emerging markets to drive next decade growth


TUESDAY, 29 JUNE 2010 01:27


Growth in the global economy in the coming decade will be driven by emerging markets, according to Stephen Jennings, the global CEO of Renaissance capital. Though growth in emerging markets has been good in the last twenty years, the next decade will even be better, he argued.


For instance, growth in emerging markets will be driven by businesses that are increasingly focusing on such markets. These businesses will dominate the global landscape as they are expanding in emerging markets, where significant opportunities for growth have emerged lately. These businesses are exploiting opportunities in these frontier markets which include Russia, the CIS countries like Ukraine and Kazakhstan, and Nigeria. They will be creating and adding value in these economies, and will also be seeing their trend towards global expansion.


Some of these expansions will also come from companies that have access to resources that will fuel the growth of the next decade. The expectation is that these businesses will post exponential growth because they have become strategic and competitive in their purchase of resources. Jennings mentioned that Chinese companies are a tip of an iceberg, when compared to the opportunities that exist in emerging markets.


Thirdly, he noted that emerging markets are growing, not just because of natural resources, but also have become markets for goods and services, and increasingly playing a huge role in global politics. The increasing importance of the G 20, in contrast to the G 8, in the last few years, is a good example of this.


Jennings was speaking at the Renaissance 14th annual investor conference here in Moscow. He admitted that it is difficult to build businesses in emerging markets, but it should be recognized that the models for businesses in established markets is not a panacea for emerging markets. He argued that businesses will have to build pragmatic relationships with governments in emerging economies.


On China and Africa relationship, Jennings and Renaissance believe that China will continue to play a huge role in Africa, especially as emerging markets in Africa and elsewhere have been forced to evaluate the sources of new capital in the wake of the global financial crisis. Emerging markets are now approaching Asia, especially China, for access to capital.


Nonetheless, there are concerns for emerging markets in the next decade. These critical concerns are water, food, and energy. Governance is also important because countries compete to attract capital, and capital will only flow to the countries that are stable. Strong institutions, infrastructure, and governance issues are thus very important.





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