Impact of Globalization on Emerging Markets
The process of sustaining the economy in stable and emerging markets has created the need to integrate production activities for financial stability. The diversity nature of the economic undertakings depicts interdependence to enhance the performance of the national income. The desire to increase the rate of growth and development has improved the level of economic integration leading to global dealings. Globalization has proved to be the current approach to sustaining the performance of local and international economies based on geopolitical and socioeconomic dimensions (Wolf 4). The recent shifts in globalization techniques and aspects are associated with the implications that encourage the development process for emerging markets such as India. Nevertheless, several critical evaluations indicate the adverse effects of global markets integration on developing markets. The understanding of the effects associated with this notion requires a comprehensive evaluation, which will assist in unraveling the extent to which emerging markets have benefited from the advances in globalization. In this paper, we critically evaluate the impacts of globalization on emerging markets such as India my looking at the associated statistical performance as well as long-term and short-term implications depicted in the existing literature.
What is globalization of markets
Overview of Globalization
The economic activities in a country are meant to generate revenue that is necessary for the development of the nation. The process of securing the needs of the state cannot be complete unless the element of economic integration is incorporated. Globalization is a concept that emanated from the need to share various factors of development and growth. Many countries in the world differ regarding the natural resources and economic activities (Marino 206). Moreover, the number and composition of their respective population are also diverse, which is associated with the needs of that state. Therefore, trade became essential as a method of filling the existing gaps in the economic cycle. Furthermore, in the 19th century, it became clear that countries that shared their expertise, production process and advanced their integration showed interrelated development rates and sustainability (Baldwin 213). At this point, the notion of globalization started to be recognized as an avenue to advance growth. The most recent economic shifts in the 20th century are characterized by advanced social, political, and economic integration for mutual and global benefits.
It is critical to point out that global integration is a multidimensional concept that is used across the world to enhance the level of integration among states. The International Monetary Fund (IMF) recognized globalization in 2000 as an approach used among nations to interrelate through the sharing of their respective economic, social, and political ideas and perspectives to enhance their local and international performance (International Monetary Fund n.p). Therefore, when evaluating the concept of globalization, the economic restriction is not viable since countries have exchanged their culture, knowledge, as well as their technology and production expertise (Baldwin 213). Moreover, globalization is considered as networks of socioeconomic systems that interconnect regions and states for uniform, shared, and excellent growth and development. The reason why countries embraced global economic integration is the because of the capacity to spread financial risks as well as sharing the international monetary advantages. Stable economies have accumulated revenue from associating with the developing states. On the other hand, the emerging economies have secured advanced production expertise, vast markets, and financial support by engaging the developed countries in their economic ties. Nevertheless, the positive implications have also been associated with negative elements especially for the emerging markets across the globe (Baldwin 214).
Emerging markets overview
The concept of emerging market started when there were states with transitional characteristics associated with both developing and developed countries. The need to recognize the uniqueness of such states created the new term of emerging markets. The states that fell in this category included those economies that were shifting from dictatorship operations to a more free market and corporate sector than the previous experiences. Emerging markets have been historically known to be growing at a faster rate to encourage innovation and foreign investment. Most research has emanated from the evaluation of the transitional characteristic associated with the Mexican and Turkey economies in the 19th and 20th centuries. The identified characteristics associated with such economy were found to be above 10% but below 75% of the EU economic per capita income (Bemarmels and Fisher 148). The trend of the economic growth depicted a constant increase over a period that extends to three decades. Most of the institutional of economic sustainability were under the development process with few established entities. However, the number of countries that showed these features increased to over 45% of the world’s states.
Therefore, scholars reevaluated the meaning of emerging markets based on the global economic performance as well as the metrics associated with the countries of reference. Currently, the BRIC states have maintained the exact definition of emerging markets across the globe. Brazil, Russia, India, and China have been known to exhibit stable economic growth with high per capita income. Egypt, South Africa, Turkey, and Nigeria have also been included among the states associated with emerging markets. Nevertheless, the introduction of globalization has transformed the standard measure for the emerging markets across different platforms (Char n.p). The implication of globalization in countries such as India has created alternative shifts and trends across the local economies as discussed in the next section with more emphasis on Indian economy.
Positive Impacts of Globalization on Emerging Markets: The Perspective of India
Stimulating Innovation and Technology Development
The rate of innovation in a country forms the baseline of market expansion and development. The advancement of technology in emerging markets has created an enabling environment where the new products and services have been developed. The level of growth in India has depicted an advancing rate where the capacity to generate high national income is based on the increasing microeconomics. Through global integration, the Indian market has been linked to a more sophisticated system of offshore expertise since 2000 for developed IT services and industrial production. The journey towards achieving the GERD level of 2% of the annual GDP is part of the targets set by the government due to the potential associated with global expertise (IPP n.p). The standard of internal growth regarding high-quality goods and services has emanated from international ties with Russia, China, and the European countries. The current level of initiated innovation is expected to increase to a sustainable level by 2020 for economic stability within the Asian region and globally. The state’s focus is currently channeled towards increasing the market potential to match global capacities.
Moreover, globalization has enabled Indian government to formulate policies to enhance innovation through local and international integration. The state shifted the innovative approaches to assist in controlling social issues through The 12th Five-Year Plan from 2012 to 2017 (IPP n.p). The need for a safe environment is now possible through the sustainable and green growth program adopted by the European states such as the United Kingdom. In India, the problem of energy security as well as controlling emerging technologies to address the economic needs has affected the orientation of growth and development. The same scenario is affecting other emerging markets such as China and South Africa. However, the adopted policy of innovation has assisted in setting the STIO strategies for the sustainable technology-based plan. Furthermore, the level of design and implementations regarding the Strategic Policy Intelligence (STI) Policies has encouraged cost management for a new firm, foreign investment, and government’s revenue management (IPP n.p). Succinct collaboration with non-state actors has advanced the level of institutionalization and market evaluation capacities to enhance production and branding of services and good. Such moves have generated the unique corporate culture in India favorable for local and international sustainability. Nevertheless, the integration and balancing of social and economic needs through modern technology still pose significant challenges for the state.
Fig 1: Technological Advantages: Percentage of Patent Applications between 2010 and 2015 for India Compared with OECD and EU