As the world economy continues to evolve, countries in the emerging markets are quickly gaining ground on developed economies. News of this shift has been making headlines recently, signaling a paradigm shift that has the potential to benefit many sectors and industries throughout the world.
The term “emerging markets” refers to countries that are in the process of becoming more developed, with strong economic growth rates, and markets that are open to foreign investment. On the other hand, “developed economies” usually comprise countries with high per capita income, advanced levels of infrastructure, and a high standard of living.
Recent data shows a clear indication that these emerging market economies are outpacing developed economies, providing important strategic opportunities for businesses that understand how to capitalize on this shift.
China, India, Brazil, and Russia are currently some of the world’s fastest-growing economies. According to the World Bank, China’s economy is expected to grow by 8.1% in 2021, while India’s is expected to grow by a staggering 10.1%. That’s compared to the United States, where the economy is anticipated to grow by only 3.9%.
Emerging market economies are also expecting to recover faster from the ongoing global pandemic than developed economies, which face several headwinds, including high levels of debt. Moreover, emerging market economies are showing impressive progress in the area of digitization. For instance, Chinese tech companies are expanding globally and rapidly, while India has become known as one of the world’s leading technology hubs, offering advanced software development and cutting-edge research and development capabilities.
The breakout growth potential of emerging markets provides tremendous opportunities for businesses to expand their global footprint. For instance, developing economies represent a vast pool of highly skilled and relatively low-cost labor. This, in turn, creates a cost-efficient environment for businesses to conduct research and development, innovation, and manufacturing.
Moreover, emerging economies’ openness to foreign investment and their robust growing markets are strong appeals for businesses. As those economies continue to grow, businesses have the chance to leverage them, innovate, and learn from them. For example, consumer companies can gain valuable insights from emerging economies in terms of product innovation and pricing positioning, leading to successful global strategies and a competitive advantage.
As the global economy shifts, businesses that take advantage of emerging markets’ rapidly changing landscape will benefit in ways that can be measured in both short-term and long-term gains to shareholders. In summary, emerging markets’ outpacing developed economies signals important opportunities for global businesses to leverage economies that are growing at rapid rates, thereby driving success across the world.
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