BizResearch

Global Economic Prospects 2012: Uncertainties and Vulnerabilities

Source: World Bank

Extract from Press Release

Developing countries should prepare for further downside risks, as Euro Area debt problems and weakening growth in several big emerging economies are dimming global growth prospects, says the World Bank in the newly-released Global Economic Prospects (GEP) 2012.
 
The Bank has lowered its growth forecast for 2012 to 5.4 percent for developing countries and 1.4 percent for high-income countries (-0.3 percent for the Euro Area), down from its June estimates of 6.2 and 2.7 percent (1.8 percent for the Euro Area), respectively. Global growth is now projected at 2.5 and 3.1 percent for 2012 and 2013, respectively.
 
Slower growth is already visible in weakening global trade and commodity prices. Global exports of goods and services expanded an estimated 6.6 percent in 2011 (down from 12.4 percent in 2010), and are projected to rise by only 4.7 percent in 2012. Meanwhile, global prices of energy, metals and minerals, and agricultural products are down 10, 25 and 19 percent respectively since peaks in early 2011. Declining commodity prices have contributed to an easing of headline inflation in most developing countries. Although international food prices eased in recent months, down 14 percent from their peak in February 2011, food security for the poorest, including in the Horn of Africa, remains a central concern.

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Click here to go to publications pages (for topical appendices, regional appendices, and non-English materials

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Energy & Development Trends: the Role of Rapidly Emerging Countries

Source: Center for Strategic & International Studies (CSIS)

From the publication web page:

One of the least understood but potentially important trends in the energy field is how emerging economies’ development priorities are shaping energy markets. Emerging economies are expected to make up the bulk of growth in demand for energy in the coming decades, with countries outside the Organisation for Economic Co-operation and Development (OECD) accounting for 83 percent of expected growth in energy demand between 2008 and 2035. As the global centers of expansion, these countries will increasingly influence how new energy markets evolve—commercial frameworks, technology sharing and development, regulations, and preferences for fuels and technologies that meet their societies’ needs. Many of these countries have integrated new notions of sustainable development—driven by concerns about local pollution, energy security, climate change, and social development—that are likely to bring about energy systems different from U.S. or European models of energy infrastructure and use.

These development frameworks also influence how companies compete and succeed in these markets by influencing technology decisions, efficiency or local pollution regulations, local rules about content, interaction with state-dominated sectors, and the dynamics of markets and physical infrastructure. Moreover, the influence these development policies have on the investments and strategies of energy companies and energy markets can materially impact investment and technology trends available to other developing countries. These strategies and experiences can open up opportunities for bringing energy to new areas in other countries. U.S. development efforts might gain useful insights through a survey of how Brazil, China, and India view meeting their energy needs within their development agenda, how companies are involved in these ventures, and what models could be useful for countries developing their systems. This report evaluates the role of rapidly emerging developing economies in energy development trends and recommends how the development programs of the United States, along with the international donor community, should shift to capitalize on these trends.

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Least Developed Countries Report 2011

Source: UNCTAD (United Nations Conference on Trade & Development

The least developed countries (LDCs) are a group of countries that have been classified by the United Nations as least developed in terms of their low gross domestic product (GDP) per capita, weak human assets and high degree of economic vulnerability.

This Report argues that the LDCs need to go beyond business as usual in order to promote inclusive and sustainable development and it suggests how South–South cooperation supports such a transformational agenda. Findings show that despite strong GDP growth during the last decade, the benefits of growth were neither inclusive nor sustainable, mainly because growth was not complemented by structural transformation and employment creation. Growth and trade has not-recovered to pre-crisis levels after the global recession of 2009. Most LDCs continue to deepen their specialization in exports of primary commodities and low-value, labour-intensive manufacturing, rather than diversifying into more sophisticated products. Growth projections also indicate that the poorest countries of the world could face a more volatile and less expansive global economic environment in the coming decade.

Further, the Report examines how South–South cooperation could support development LDCs against this background. It shows that there are intensifying economic relationships between the LDCs and other developing countries and that these helped to buffer LDCs from the downturn in advanced economies. A major new trend in the pattern of integration over the last decade or so has been the deepening and intensification of economic and political ties with more dynamic, large developing countries, acting as growth poles for the LDCs. While intensifying South–South relations presents major new opportunities for LDCs in terms of markets, foreign direct investment, remittances and official financing, they also bring many challenges, ranging from extreme competition to de-industrialization. Therefore, the long-term impact of South–South economic relations on the LDCs still remains a puzzle.

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Financial Access and Stability: A Road Map for the Middle East and North Africa

Source: World Bank
 
This new World Bank report lays out recommendations for reforming the financial sector in the region. It argues that while this sector has been resilient to the global financial crisis and the subsequent political shocks of the Arab spring, it has failed to provide broad, sound and equitable access to finance.

With recent turmoil in the region and deep-seated frustration among the large youth population, this failure might have been a factor in these outcomes. The report notes that lack of access to finance is due to weaknesses in financial infrastructure, insufficient competition in the banking sector. It recognizes that the structure of MENA’s banking systems is evolving in the right direction, but levels of competition are still weak.

It goes on to describe MENA’s financial sectors as dominated by large, well-capitalized banks, but largely undiversified and uncompetitive. With very high loan concentration ratios, banks focus on providing loans to large and well-connected enterprises and industrial groups. Add to that, essential non-banking financial institutions such as insurance companies, mutual and pension funds, leasing, and factoring, are under developed with few exceptions.

The report recommends that efforts to develop a new growth agenda for the region must include a significant component of financial sector reforms. It points out the importance of implementing a comprehensive and integrated agenda for both improving access and preserving stability.

Publication website with chapter-by-chapter link

Photo from Creative Commons: Flickr:  Rachel Strohm

e-Atlas of Global Development

The World Bank have just launched the e-Atlas of Global Development, a free, online, interactive tool which lets you map more than 175 indicators for up to 200 countries over time including creating two maps to compare progress.

Developed in collaboration with HarperCollins, the e-Atlas of Global Development allows users to easily and quickly map and chart economic and social indicators and compare country outcomes. This eAtlas, an online companion to Atlas of Global Development, third edition, builds on the Atlas topics, allowing you to visualize and analyze a wider variety of data in greater depth, over a longer time period. You can:

• Map more than 175 World Bank indicators worldwide
• Compare and view two maps simultaneously
• Animate maps to show change over time
• View all data in ranking tables and charts alongside maps
• Export maps and data for use in presentations and more
• Import your own data

Critical issues such as poverty, food production, population growth, climate change, international trade, and foreign direct investment are covered.

Photo from Creative Commons: Flickr: Malin Helene

Financial Access 2010: The State of Financial Inclusion Through the Crisis

Financial Access 2010 is the second in the series of annual reports by CGAP and the World Bank Group to monitor statistics for financial access in the world and inform policy debate. The series was launched in response to the increasing interest in financial inclusion among policy makers and the development community. The first report, Financial Access 2009, introduced statistics on the use of financial services in 139 economies and mapped a broad range of policies and initiatives supporting financial inclusion.

Financial Access 2010 extends to 142 countries, and builds on last year’s data to update the statistics on the use of financial services, and analyzes changes that took place in 2009―a turbulent year for the financial sector in the majority of economies around the world. In addition to measuring the state of financial access, Financial Access 2010 expands on last year’s work by reviewing three policy areas relevant to the current financial access debate: financial inclusion mandates, consumer protection in financial services, and access to finance by SMEs.

Source: Consultative Group to Assist the Poor/World Bank

New Markets, New Rules: Will Emerging Markets Reshape Private Equity?

Heino Meerkatt (BCG) and Heinrich Liechtenstein (IESE)

Emerging markets are generating increasingly attractive returns for private-equity investors and could soon account for the lion’s share of deals, according to research from the Boston Consulting Group BCG and IESE Business School. But which markets offer the greatest potential for investors? And what are the key success factors? In New Markets, New Rules: Will Emerging Markets Reshape Private Equity?, BCG and IESE address these questions by analyzing the largest data set of its kind and applying a novel framework for assessing the attractiveness of markets.

Key Findings:

The most attractive markets for investors are determined not just by their economic size, as measured by GDP but also by the relative sophistication of their socioeconomic environments, including their regulatory and legal systems. Although China will continue to shape the private-equity landscape, other countries that may be off many investors’ radar will have a surprising influence.

The winning firms will use business models that differ from those that have served the private-equity industry so well in the past in developed markets such as the United States and Western Europe. Key success factors in emerging markets range from accepting minority rather than majority stakes in businesses to investing in companies that are focused on domestic rather than international markets

The primary data for the analyses came from the International Finance Corporation (IFC) and covered 176 private-equity funds in emerging markets. The authors analyzed 942 data points from deals by these funds, spanning 75 emerging markets

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Strengthening MENA’s Trade and Investments Links with China and India

 

A World Bank Report
Social and Economic Development Group: Middle East and North Africa Region
September 2, 2008

MENA is becoming a region of winners from the oil windfall—and of non-oil producers on the sidelines. Rising demand for energy from China and India has greatly contributed to the increase in oil price and is likely to sustain the oil boom in the future.

The winners in the Gulf are laying big bets on economic diversification and knowledge enterprises—bets they might win, but with lots of risk along the way. Dutch disease effects of the oil boom may threaten the sustainability of the current expansion.

The non-oil producers on the sidelines, especially in the Maghreb, are finding it difficult to compete with China and India in both third and domestic markets. The lack of competitive manufacturing industries and services, the insufficient attention given in the past to building technological capabilities and promoting openness and entrepreneurship are constraining their ability to respond to competition. They need to accelerate productivity to tackle unemployment, especially among youth.

Both groups of MENA countries need to foster a culture of growth to overcome the
complacency instilled by oil windfalls and government subsidies. To do this, they might look to China and India as models of pro-growth strategies.

The growth of China and India offers new market opportunities for the countries in MENA. Besides energy, potential opportunities—for fertilizers, petrochemicals, crude materials, agricultural products, and a number of manufactured goods where MENA has strong comparative advantages—remain unexploited.

To read the whole report click here.

EM20 Index: a ranking of attractive emerging markets

Attractive investment locations are determined by more than GDP per capita levels

The PwC EM20 Index shows that the BRIC countries (Brazil, Russia, India and China) continue to offer interesting opportunities for investment – all four appear in both the PwC EM20 Manufacturing Index (‘the Manufacturing Index’) and PwC EM20 Services Index (‘the Services Index’). However,the results of our modelling also indicate a range of other locations that can offer attractive alternatives.This year Egypt tops the Manufacturing Index, and Poland takes first place in the Services Index. Low labour costs,a strategic geographic location and its falling country risk premium have helped to drive Egypt’s Manufacturing Index ranking, while Poland’s high position in the Services Index reflects its middle income status (compared to other countries in the Model) and relatively low country risk premium.

Click on the link below to read the report:

PricewaterhouseCoopers1 EM20 Index: a ranking of attractive emerging markets

Picture:Creative Commons:Flickr:Pezlet

Free Euromoney directories: CEE and Russian and India

Euromoney Indian Financial Markets Directory

Euromoney CEE and Russian Capital Markets Directory

We have copies of these directories available for free in the Library. Current students, staff, faculty and alumni of the London Business School please help yourselves. They are near the exit gate on the first floor.

Picture: Creative Commons: Flickr: acdme

Strategic management in Latin America

The June issue of the Journal of business research (vol.61:6) is a special issue on strategic management in Latin America. Despite a young and growing population (more than half of which are under 25), economic growth in Latin American countries has been slow and highly volatile. As Donoso & Crittenden discuss in their introduction to the special issue, Latin America has experienced repeated cycles of prosperity, stagnation and negative growth during the twentieth century.  For this reason, they go on to make the point that Latin American scholars need to focus their research on economic and management-related subjects. To encourage greater academic scholarship in these areas the Second International Strategic Management Conference in Latin America was held at Pontificia Universidad Católica de Chile in January of last year. The general purpose of the conference was to encourage discussion of the current state of strategic management practice and scholarship in Latin America. All of the 15 papers published in this issue were presented at the Conference. Nine of these papers address corporate and business-level issues in Latin American business management. Six papers explore functional strategy issues and two papers study marketing-related issues.

The issue of the Journal of business research can be found in the journals collection located in the library basement.

Alternatively, current Staff, students and faculty can access this electronically from Elsevier Science Direct (A-Z list of library databases via the Portal).

 

Innovation in emerging markets 2008

Innovation in emerging markets is an annual study from Deloitte’s Global Manufacturing Industry Group. This year it concentrates on product safety, product quality and environmental standards in emerging markets. Last year saw a number of high-profile product recalls. From contaminated dog food to children’s charm bracelets and necklaces decorated with paint containing high levels of lead. All of these recalls had one thing in common; they were all sourced from emerging markets. On top of this a rising concern for the environment among consumers, has resulted in global manufacturers are paying more attention to the potential environmental impact of their production processes.

More than 650 executives from developed markets and across various manufacturing sectors were involved in the survey. Around three-quarters reported an increased use of suppliers in emerging markets in the last three years, with almost half saying their use had increased significantly. The report examines how these companies are responding to growing concerns around product safety.  It concludes that global manufacturers sourcing from emerging markets will require better vendor selection, testing, monitoring and contract provisions.  More stringent standards will mean higher operating costs but providing products with a guarantee that they meet strict standards should present manufacturers with an opportunity to turn this challenge into a competitive advantage

The report can be downloaded from the Deloitte’s website

Picture from Creative Commons: Flickr: thirtyfootscrew