ITF_Group 2_ Section F

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Program & Batch: PGDM 2014-2016

Term: III

Course Name: International trade & finance

Name of the faculty: Dr. Ratna Vadra

Topic/ Title : FDI in Emerging Maret!

Original

or Revised Writeup:

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!roup Num"er: 02

Contact No# and email of !roup

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FDI in Emerging Markets:
mailto:[email protected]:[email protected]


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Foreign Direct Investment is one of the indicators of the countrys growth potential

and the economic health of the country. This is no new phenomenon, its been there

for a long time. The early investments were during the early 19thcentury, large

industrial era organisations started looking for growth which was already saturated

in the local markets, so this is the time when they started looking into transnational

countries. The FDI in the crude form can be explained as a company looking for

investment opportunities in foreign countries, which is not their home market.

The growth story of china cannot find references in the mankind history, the worlds

second largest economy has grown in sub double digit growth rates for more than 2

decades, to sustain this kind of growth is unprecedented. This is the one of the major

reasons why the west started looking towards the east for better value for their

bucks. The reason that china dominated the emerging markets rooster is the size of

the population and under the leadership of the Chinese leader Deng Xiaoping the

nation welcomed the west to come invest with structural changes and crucial

reforms. Many South East Asian economies are today adapting those policies. Apart

from the Asian market countries from the Middle East like Qatar, UAE, and Turkey

are also on the rise, many African countries and the South American nation have

joined the wave.

According to the International Monetary Fund FDI refers to an investment made to

acquire lasting or long term interest in enterprises operating outside of the economy

of the investor.

According to World Bank, it is defined as net inflows of investment to acquire a

lasting management interest (10% of voting stock) in an enterprise in an economy

other than that of the investor.

Globally the FDI inflows to the countries is classified as the 3 types

Horizontal FDI

Platform FDI

Vertical FDI

Horizontal FDI: it is when the company replicates the similar operations and the

business model in the host nation

e.g.: Walmart, star bucks across the globe

Platform FDI: it is made in the host nation only to facilitate the export of goods to

third country

e.g.: Apple in Ireland, Google in Cayman Islands


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Vertical FDI: when the company is making the investment in the host nation to move

upstream or downstream in different value chains.

e.g.: ONGC Videsh

Emerging Markets

It is very important to define the emerging markets before understanding the FDI

inflows into these markets, as for the report purposes Emerging Markets as defined

the MSCI emerging markets index which is widely followed across the industry is

been considered. The index has 23 member nations that are classified as emerging

markets, the 23rd

nation Greece was removed in 2013 and Morocco was included inthe list. The nations are as follows.

Brazil Chile

China Colombia

Czech Republic Egypt

Hungary India

Indonesia Malaysia

Mexico Morocco

Peru PhilippinesPoland Qatar

Russia South Africa

South Korea Taiwan

Thailand Turkey

UAE

Source: MSCI.org

Before going into the details about every nation individually, the factors that affect

the Investments globally should be studied those include the economic policies ofmajor institutions and economic cycle the nations are in, the active participants in the

FDI inflows or outflows are China (inflows- $358 billion, outflows- $ 73 billion)

followed by USA (inflows- $235 billion, outflows- $360 billion) and the next by

Luxembourg (inflows- $30 billion, outflows- $37 billion) there are many countries on

the list for the outflows which are very small in terms of GDP like Luxembourg has

outflows of 448% of their GDP and Mauritius 660%. One important thing to notice is

that these nations are tax havens, so they act as a channel for routing the money to

various countries. These nations also have tax treaties with many other nations to

avoid double taxation like Mauritius has a tax treaty with India and this results in


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Mauritius being the major contributor to the India FDI of $22 billion in FY14 with

36%, the factors are:

%# Economic cycles:This plays a crucial role in determining the global FDI flows,

because the business cycles results in the organisations having massivesurpluses and deficits.

2.Policy stance of large monetary institutions: The policy rates set by the major

financial institutions across the globe determine the flows like the Federal

reserve of USA is very important the period in which the rates were as low as

zero the FDI flows into the developing nations were skyrocketing.

3.Country risk: The country risk attached to any country is determined by many

factors and is calculated by the rating agencies, the three big rating agenciesdetermine the risk. The risk premium of any nation rises with the lower credit

rating for that nation.

4.Political risk: The political situation in any country determines the future of

any investment, so the political situation in the nation should be stable which

is not the case with many developing nations.

5.Infrastructure:The infrastructure that is present in the country determines the

efficiency with which the investment can be utilised because a nation with

good infra already in place facilitates the organisations to come set up shop

directly without having to start right from the basic infra like roads, power,

and water.

6.Ease of doing business:Every nation has different regulatory hurdles, the ease

of doing business is a ranking given by the World Bank which measures how

easy it is to come and start a business in any country across the world. It has

been historically seen that the developing nations and that too the BRICSalways have ranked lower on this scale as compared to the developed nations.

7.Growth:The countrys GDP growth is principal factor that determines how the

returns will be from the investment made in that country. That is the reason

the developing nations have seen larger chunk of FDI inflows coming their

way.

8.Tax:The tax policies in the host nation showcase the nations stance towards

the foreign players, the higher the taxes on the corporate profits simply shows

that the government is not pro-industries.


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9.Market size:The potential market that the business can find when entering the

nation is very important because when the company is committing billions of

dollars then there should be a market large enough that it can cater to, the

market doesnt necessarily mean large population, and it means the target

market or the potential market. This is one of the many reasons why the

companies world over are changing their approach to India specially, which

has the huge demographic dividend with the westernization of the culture

and half the populations within the age group of 15-40 years of age.

10.Labour & productivity:Out of all the above mentioned factors this is the very

crucial and strategic factor this can be seen in the fact that the nation like

china which is predominantly labour driven and is widely believed to be most

efficient labour productivity across the globe. The labour that organisationslook when investing in a host nation should be costing less than the home

country like the services industry of India & China.

The following is the list of the nations that attract the highest FDI inflows globally

this includes all the nations including the developed ones

CountryFDI inflows

(Figures in $ billions in 2013)

1.China 347.25

2.USA 235.87

3.Brazil 80.52

4.Hong Kong SAR china 76.64

5.Russia 70.42

6.Canada 67.31

7.Singapore 63.5

8.Ireland 49.96


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9.Australia 49.76

10.UK 48.31

Source: Worldbank.org

As we can see the above list has 5 emerging markets and 5 developed markets with

the majority of the share coming towards the emerging markets, out of the total of

$1.089 trillion almost 60% contribution is to the emerging markets and out of this

China alone including Hong Kong which is an integral part of it contributes more

than 66%.

Now we have look at the other side of the coin which is major contributors to the FDI

outflows, this list has majority of developed nations, this is because these are the

capital surplus nations with limited opportunities in the home country and are

looking for investment opportunities in the host nations.

Country nameFDI outflows

(Figures in $ billions in 2013)

1.USA 360.82

2.Japan 138.23

3.China 73.26

4.Russia 70.45

5.Switzerland 60.0

6.Germany 58.36

7.Canada 42.63

8.Netherlands 37.12

9.Sweden 33.3


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10.Italy 31.06

Source: Worldbank.org

The above list it can be seen that only 2 countries out of the 10 are from the emerging

markets and that too China and Russia are the only ones the reason being they have

huge cash surpluses, China has immense forex reserves from the merchandise

exports and Russia with the export of natural resources.

0

50

100

150

200

250

300

350

400347.25

235.87

80.52 76.64 70.42 67.31 63.5 49.96 49.76 48.31

FDI infows

5 Emerging

economies

5 Developed

economies


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0

50

100

150

200

250300

350

400 360.82

138.23

73.26 70.45 60 58.3642.63 37.12 33.3 31.06

FDI o!fows

Now every emerging nation can be looked into individually, the factors that will be

used while evaluating the nation are factors ranging from the GDP size, GDP

growth, Per-capita (PPP), Ease of doing business ranking, CAD, Public Debt.

"r#$il% Infows &80.26 'illion o!fows (&2.5 'illion

The economy has seen substantial improvement in the standards of living and the

HDI of the country is 79 which is very good compared to others from the emerging

markets the FDI inflows into Brazil are at $80.26 billion which is only after China in

the emerging market front, this is because of the better infrastructure it offers.

A surge in the repayment of loans by Brazilian affiliates abroad to their parent

companies pushed intracompany loans has led to the unique negative outflows. This

has been the trend in the Caribbean nations in the recent years because of the

8

Developed

economies

2

Emerging

GDP : $2.2 trillion

GDP growth : 2.49%

Per- capita : $ 15,203

Ease of doing : 120

Current account :- $ 54 billion, 2.45% of GDP

Public Debt : NA

Labour participation rate : 59.7%


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regions offshore financial centresFigures in % as on 2013

Sector Employment contribution GDP contribution

Services 62.9 69

Agriculture 14.5 6

Industries 22.6 25

Source: ilo.org

This shows the economy is mostly based as a service driven economy both the factors

like the employment and GDP contribution are from service sector and thus the FDI

inflows are mostly been into service sector historically. The US contributes to the

Brazils mammoth FDI it contributes 81% of FDI flowing into Brazil which is more

than $65 billion.

Comparison of Brazil with India:

Brazil even after having huge CAD and without having growth rates that India has

maintained it attracts more investment than India because of the proximity of USA

and Brazil not just geographically but also politically. The policies and the

government of Brazil are more stable.

)*ile% Infows &20.26 'illion +!fows ,egligi'le

The South American nation has very positive factors except for the growth rate

which is although better than many nations during the post-recession era but given

the size of the GDP it can better the growth rate. The CAD is very high this might

hamper the future flows. The nation is considered to be very open to foreign

investment and the government has made FDI as part of their national development

plan and this resulted in the Q1 of FY14 see a staggering 82% growth in FDI inflows

yoy.

GDP : $220 billion

GDP growth : 4.07%


Ease of doing : 41

Current account :- $9.4 billion, 4.2% of GDP

Public Debt : NA



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Figures in % as on 2013


Services 66.3 61

Agriculture 9.8 4

Industries 23.9 35

Source: ilo.org

The biggest advantages for Chilean economy apart from the proximity to the worlds

largest economy is that the economy is very transparent and straight forward. The

FDI as a percentage to GDP is more than 10% which cannot be seen in any other

emerging economies and the nation scores high on the HDI at 42.

Comparison of Chile with India:

The striking difference in the two nations is that the Chilean economy gives equal

treatment to the foreign investments with the local investments in almost all fronts

and there are no cap on the investments which attracts a large chunk of the FDI

flowing from many developed nations and this year the country for the first ever

Chinese FDI flew into the economy the sector in line with the nations strength

services.

)*in#% Infows &347.85 'illion +!fows &73.2'illion

The worlds powerhouse which manufactures varied range of products that every

man on the planet consumes at least once, there is no comparison to this with any

other emerging market or any developed economy. If we compare it even with the

developed nations there is no close competition to this mammoth Dragon in the East.

The nation has to attract the major portion of the FDI inflows which is the highest inthe world the next is USA which is only 2/3rdof it. In the recent report of the UN

GDP : $9.24 trillion

GDP growth : 7.67%


Ease of doing : 90

Current account :$193 billion, 2.08% ofGDP

Public Debt : NA

Labour articiation rate : 70.07%


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China has thrashed USA as the worlds largest economy in PPP terms at $16.4

trillion.



Services 36.1 46

Agriculture 33.6 10

Industries 30.3 44

Source: ilo.org

There is no nation in the world which is so large and has almost equal contribution

to employment from all the 3 sectors, the industrial era nations on an average have

20% of their GDP coming from the Industries but China has 44% of the $9.2 trillionwhich accounts to more than $4 trillion of goods manufactured in China. USA

contribution to China FDI inflow is $54.2 billion, which is 15%. The bilateral relations

between them is although only limited to trade & finance this could be an example to

other nations across the globe.

Comparison of Chile with India, it is not a fair comparison on any front except for

the growth rate which is the only front where India is close & of course the

population

)olom'i#% Infows &16.7 'illion +!fows negligi'le

The South American nation has seen healthy growth rates in the recent years and the

ease of doing business rank is very healthy at 34 ahead of all the emerging markets

rooster. The high public debt is one of the concerns for the nation, the CAD on the

other end is on the higher side. USA works very closely with the nation not just on

the economic front but also on the political stability. The country was independentfrom Spain in 1822 and one of the oldest democracies in Latin America.

GDP : $378 billion

GDP growth : 4.25%


Ease of doing : 34

Current account : -$12.2 billion, 3.22% GDP

Public Debt : $63 billionLabour participation rate : 64.9%


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Services 63.7 57

Agriculture 16.9 6

Industries 19.4 37

Source: ilo.org

Unlike many other emerging economies this Latin American nation has very less

contribution coming from the Agricultural sector this could be one of the reasons for

the high CAD, due to large food imports. Again due its presence in the South

American continent and early independence it has gained a lot and has seen good

flows and growth rates but the HDI standing is at 98 which is because of the regular

insurgencies from the local population, but the per-capita is healthy at $12k.

Comparison of Colombia with India:

The nations are quite contrast in almost every aspect the cultural differences are

pretty obvious but the way the employment comes it is from services & industries

unlike Indias agrarian economy. Colombia is rich with Oil reserves and is a net

exporter of the fossil fuel.

Indi#% Infows &28.5 'illion +!fows &1.8 'illion

The nation which was once considered to be a sub-continent in itself, the seventh

largest nation in area and the second largest in population. It has the potential to do

a lot than what it is today but it faces many challenges in this venture, the country in

the past decade from the 2010 has seen growth rates of 7-8% which is only next to

China when comparing nations which are equal or above $2 trillion GDP sizes.



GDP growth : 5.01%


Ease of doing : 142


Public Debt : $49 billion

Labour participation rate : 52%


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Services 28.7 57

Agriculture 49.7 18

Industries 21.5 25

Source: ilo.org

The nation has the potential to become the powerhouse of the 21stcentury with the

largest pool of young population moving into this century when many nations like

Japan & Australia are getting old, but at the same time it faces many structural

problems like the political instability, high dependence on agriculture making it an

Agrarian economy with the third largest economy in terms of PPP, and high CADwhich has hurt the currency in FY13 which depreciated by 30%.

Although the situation has changed drastically on the economic front and political

front in the last 7 months per se, with the mandate to the Modi government and in

control CAD of yearlong target at 1.9%, falling crude which is blessing in disguise for

the fiscal trouble for the newly formed government. Without these 5 year low crude

prices it would have been impossible to achieve the 4.1% fiscal deficit target. High

fiscal deficit effect the credit rating of the nation and India couldnt have afforded a

downgrade.

Indonesi#% Infows &18.44 'illion +!fows ,egligi'le

The South East Asian nation which has huge population and is an Island nation but

has seen an unprecedented growth in the recent years, its pretty much on its way to

become a trillion dollar economy. Like many other emerging nations it is primarily a

service driven nation.


GDP : $868 billion

GDP growth : 5.78%


Ease of doing : 114





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Services 44.7 40

Agriculture 34.7 14

Industries 20.6 46

Source: ilo.org

India is losing the BPO sector to Indonesia because of rising employee costs and this

is a gain to Indonesia which has comparatively lower labour costs.

The largest contributor to the FDI inflows is Japan which has replaced China with

Indonesia as the top priority FDI destination, with cheap and large labour

population many Japanese, Korean and American companies have lined up to investheavily in this nation in the coming years.

Comparison of Indonesia with India:

India attracts a large portion of FDI from Mauritius which is a tax haven but

Indonesia has renowned investors who have committed for more, but at the same

time the nation is enjoying the positive outlook from many nations on the FDI front

whereas India is considered to be a difficult place.

-#l#si#% Infows &11.58 'illion +!fows &6.2 'illion

It is the size of Uttar Pradesh and has a population less than that of U.P & Rajasthan

combined at 280 million but attracts 4% of their GDP as FDI inflows and this is after

a significant correction in the recent years. This is the only emerging market which

has an outflow that is more than half of its inflows.


GDP : $312 billion

GDP growth : 4.68%

Per- capita : $32,324

Ease of doing : 18

Current account :$18.6 billion, 5.7% GDP




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Services 59.4 50

Agriculture 12.7 9

Industries 27.9 41

Source: ilo.org

The major sources were Singapore, Mauritius, Cayman Islands again one important

observation is that all the major contributors are tax havens which again raises the

question on the authencity of those ventures. The investments have slowed

drastically in the last nine months.

Comparison of Malaysia with India:

Mauritius which is the largest contributors to both India & Malaysia is widely

considered to be a laundering destination for organisations who are trying to evade

taxes in the home country. Although the nation is no comparison to the size and

population but it has overtaken India in many fronts like the Current account

surplus which is a very rare thing that can be observed in emerging economies and

the ease of doing business standing is at 18 which explains the large inflows into the

nation.

-e/ico% Infows &35 'illion +!fows &10 'illion

5 of the 23 nations on the list are from the South American continent which has

many added advantages like the proximity with the worlds most powerful country

and early independence from the colonization which has hindered the growth in the

Asian economies widely.



GDP growth : 1.1%


Ease of doing : 53


Public Debt : NA



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Services 62.0 62

Agriculture 13.7 3

Industries 23.8 35

Source: ilo.org

Pre-recession era Mexico was growing at healthy rates of 5-6% and has slowed down

in the last 2 years from 5.6% in 2011 to 1.1% in 2013. But the country has the biggest

advantage of being the USAs neighbour and it shares a 2000 mile boundary, this not

facilitates the cross- border trade which was $550 billion with Mexico being its

second largest export market and the USA is the largest export market for Mexico

more than 80% of exports from Mexico are channelled into the USA and the rest to

Canada again the part of economic conclave NAFTA.

Comparison of Mexico with India:

The differences are very clear the nation is more matured market in terms of ease of

doing business which is 142 for India and 53 for Mexico and almost $17.1 billion of

FDI flowing into Mexico is from USA which again India has in form of Mauritius.

Thats the reason the flows for both the countries is very close and the on the

outflows front Mexico is ahead in 2013 but the reason being Indian investments has

slowed down during the year which was at $12.1 billion in 2011.

er% Infows &10.2 'illion +!fows ,egligi'le

The employment population ratio for the nation is at 70.03% which signifies that

most of the population is young and of working age now. The nation again has

healthy inflows at 5% of the GDP and it has been able to sustain the growth rates at a

time when its neighbouring Latin American nations have seen decreasing growth

rates.

GDP : $202 billion

GDP growth : 5.82%


Ease of doing : 35





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Services 57.4 56

Agriculture 24.6 7

Industries 18.0 37

Source: ilo.org

*ilippines% Infows &3.15 'illion

This is clear contrast between the two nations in the different parts of the globe one

which is very close to developed economies and has been independent for almost

200 years now and on the other side the rising Asian economy which has seen

independence from the colonization only 50 years ago. The American counterpart

has better business environment which is friendly for the foreign organisations and

at the same time has small population and has better HDI ranking at 52 when

compared to the 117 for the Asian.

This is again one important reason why the Latin American nations are worst hit

post-recession era and not the Asian economies as much, that the over dependence

of these economies on the developed world has repercussions that are inevitable and

even in the case of Peru it can be seen whose growth for 2014 is recorded at 1.3% and

6.75% for the Asian counterpart.



Services 53.4 57

Agriculture 31.0 12

GDP : $272 billionGDP growth : 7.18%


Ease of doing : 95

Current account : $7.1 billion, 2.6% GDP




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Industries 15.6 31

Source: ilo.org

ol#nd% Infows (&6.2 'illion +!fows (&4.9 'illion

This is another classic example of how over the course of the history the

geographical location of the nation and the trade blocks it is part of determine the

nations economic cycles in the short run. There are very few countries that are part

of EU that are underdeveloped or developing and Poland is one among them.

The FDI inflows and outflows have been dredging due to the slowdown that the EU

is facing since the 2008 recession there is no sign of relief for the smaller nations

because the ECB has turned down the possibility of stimulus packages similar to the

QE to stimulate growth.



Services 57.4 65

Agriculture 12.0 4

Industries 30.6 32

Source: ilo.org

The country has no reason to be facing these consequences because it has good

business environment and has controllable CAD but only the fear of EU further

sliding into recession has led to this kind of money going out of the economy. But the

year 2014 has brought luck to Poland from the dragon, that is China which has

GDP : $517 billion

GDP growth : 1.57%


Ease of doing : 32


Public Debt : NA



19/28

invested for the first time and the rising trade with the Middle East is helping it

revive the economy.

#!#r% Infows (&0.84 'illion +!fows &8.20 'illion

The oil rich Middle East nations are completely different in every way from the rest

of the world maybe it be the extreme Islamic culture and the widespread deserts and

the sheiks are all but for these countries. The growth rates are wholly fuelled by the

increase in the oil production and has nothing to do with any other sector

contributing towards it, oil production contributes to 55% of the GDP.

GDP : $202 billion

GDP growth : 5.57%


Ease of doing : 50

Current account :$61 billion, 30% GDP

Public Debt : NA



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The other factors like the per-capita and HDI are all high because there are few

residents and majority of the expatriates in the country who are not included in the

calculation of the per-capita income. It has been seen that the inflows into these

nations have been dud, but at the same time they are always high on the outflows

front, with investments across the globe.


Sector Employment contribution

Services 46.8

Agriculture 1.4

Industries 51.6

Source: ilo.org

Comparison of Qatar with India:

There are hardly any factors that these two nations are on the same front, Qatar is oil

rich nation and whereas even after having fair amount of oil reserves in India, due to

the unprecedented demand for the fossil fuel country has always been starving for

oil and major portion of the oil has been sourced from the Middle East. With an

annual import bill of $110 billion in 2013.

ssi#% Infows & 70.65 'illion +!fows &54.5 'illion

The once super power USSR has now the legacy left in ruins of Russia the cold

nation during the cold war era in the late 1980s was on the track to become a

superpower threatening the dominance of USA but all that is past. But recently when

the Crimea annexation was written in the history books, Russia is that angry child

who is acting rebel against the western world.



GDP growth : 1.31%


Ease of doing : 62

Current account :$71 billion, 3.39% GDP

Public Debt : $9.4 billionLabour participation rate : 64.8%


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Services 65.3 60

Agriculture 7.0 4

Industries 27.7 36

Source: ilo.org

The recent call by the G20 nations to impose sanctions against Russia to stop it from

further destabilising the eastern Ukraine has led the country into turmoil but this

was not sufficient to stop the Putin on fire, but now that the Oil prices have crashed

and the sub 60s is bad news for the Russian Budget which needs the price to be at

$120 per barrel for breakeven. The economy is now experiencing negative growth in

the 9 months of FY14.

Comparison of Russia with India%

The Russian Indian connection is nothing new, right from strategic defence deals to

many financial aid during the crisis of the 1990s. Russia has a Communist

government and has a lot of land in fact the largest country on the planet but it is not

widely habitable across the region. But India is the worlds largest democracy with a

large land that has ideal climate for inhabitants. The recent INS Vikramaditya in the

Indian navys fleet is again from Russia with love, this has made India joining the

elite club of Nuclear Submarines in its fleet.

o!* ric#% Infows &8.2 'illion +!fows &5.2

'illion

The African nation which is part of the BRICS the growth story of the developing

world, the economy has been facing the consequences of having large CAD which is

highest among the BRICS, India had it at 4.9% but has managed to lower it in 2014

but it is not the case with South Africa even in 2014 it is as high as 3.6%.

GDP : $350 billion

GDP growth : 1.39%


Ease of doing : 43

Current account : -$20 billion, 5.7% GDP

Public Debt : NA



22/28



Services 71.3 70

Agriculture 5.1 2

Industries 23.6 28

Source: ilo.org

Among the BRICS, South Africa has the highest contribution to its employment from

services which is again dependent on the developed world and this is quite evident

in the slower growth as compare to early years.

China has been strategically investing in South Africa over the years and it is largestcontributor to the inflows into the country. It is to be noted that none of the BRICS

contribute to even more than 1% of FDI inflows into India.

Comparison of South Africa with India:

India and South Africa are similar in many aspects maybe it the late reforms that

were kicked in these economies when the rest of the world is on the fast track,

massive population of both the country are in poverty and there are chronic

infrastructure problems like water, sanitation, power, roads in both the nations

o!* ore#% Infows &12.22 'illion

The nation which is the half the size of the vibrant Gujarat and is situated on the

borders of the North Korea which is ruled by modern day Hitler, Kim Yun Gong.

There is enormous potential in the way this nation has been growing in the last


GDP growth : 2.97%


Ease of doing : 5Current account :$43 billion, 3.19% GDP

Public Debt : NA



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decade, the growth houses are mainly the South Korean Chaebol, and these are

business conglomerates which owns multiple businesses.



Services 69.5 59

Agriculture 6.1 2

Industries 24.4 39

Source: ilo.org

The renowned Chaebol from South Korea which dominate their own space globally

are Samsung, LG and Hyundai, these companies are classic examples of covering theupstream and downstream of the value chain in the true form like for example

Hyundai, is known by the world as car manufacturer has Hyundai oil bank,

Hyundai Steel, Hyundai motor parts, Hyundai Motors.

Comparison of South Korea with India:

Unlike the problems that India face in terms poor infrastructure resulting in

Unemployment & poverty. South Korea is well placed and ranks 15thon HDI this is

better than France ranking of 17

th

. It is also not well placed in the geographicalpolitics the trade between the neighbouring Japan and North Korea is negligible, this

is a result of political tensions that are prevailing in that region.

On an average during the 2006-2012 period the inflows to the developing world have

grown by more than 60% on the other hand the share of the developed world have

come down by 47% which is facing the decline. The UNCTAD global investment

report of 2013 featured top 5 investment safe havens which is led by USA and then

four emerging markets China, India, Indonesia, Brazil. This shows that the relevance

of these economies cannot be ignored by investors.


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Source: Euromonitor International from UNCTAD

Political Stability and Absence of Violence 2013 Index and Ease of Doing Business

2013 rankings show a direct correlation in the emerging market economies.


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Source: Euromonitor International from UNCTAD

The slowdown in the global flows hasnt affected the emerging markets very much

this can be seen in the graph below that explains how these economies have been thesweet spot for the global investors even in the case of falling FDI flows

)onclsion%


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The emerging markets led by the mighty China have entered into the 21stcentury

that is said to be the century for the developing nations to lead the global economy.

The many hurdles that these economies face are political instability, economic

reforms in some nations like India, South Africa should be on the fast track so that

the momentum can be maintained.

The MSCI emerging markets are very crucial to the global FDI flows as well and

structurally they are always on the receiving end and the developed world on the

other. The total inflows in the 23 nations is $695 billion which is 43% of the global

FDI flows which stands at $1.6 trillion for 2013, but it is also to be noted that 22% is

China alone and 31% contribution is by the top three nations China, Brazil and

Russia. In the coming there is lot of opportunities for investment avenues from

countries like India, South Africa, and Indonesia which have a lot of natural

resources and huge unemployed population, the advantage these nations have is

large areas of habitable land.

Figures in USD billion

Markets Inflows % of total Outflows % of total

Emerging

markets695 43 295 19

Developed

markets525 33 850 53

Rest of the world380 24 455 28

Global 1600 100 1600 100


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eerences%

1.http://www.ilo.org/ilostat/faces/home/statisticaldata/ContryProfileId?

_afrLoop=410524902517503#%40%3F_afrLoop%3D410524902517503%26_adf.ctrl-state%3Dbhx4daw08_4

2.http://data.worldbank.org/indicator/NV.IND.TOTL.ZS

3.http://www.portal.euromonitor.com/portal

4.http://data.worldbank.org/indicator/NV.SRV.TETC.ZS

5.http://en.wikipedia.org/wiki/Chaebol

6.http://hdr.undp.org/en/content/table-1-human-development-index-and-its-

components

7.http://www.state.gov/r/pa/ei/bgn/2898.htm

All the data recorded is till 2013 and the source for the GDP, growth rate, per-capita

etc. have been

http://data.worldbank.org/indicator/NY.GDP.MKTP.CD
http://www.ilo.org/ilostat/faces/home/statisticaldata/ContryProfileId?_afrLoop=410524902517503#@%3F_afrLoop%3D410524902517503%26_adf.ctrl-state%3Dbhx4daw08_4http://www.ilo.org/ilostat/faces/home/statisticaldata/ContryProfileId?_afrLoop=410524902517503#@%3F_afrLoop%3D410524902517503%26_adf.ctrl-state%3Dbhx4daw08_4http://www.ilo.org/ilostat/faces/home/statisticaldata/ContryProfileId?_afrLoop=410524902517503#@%3F_afrLoop%3D410524902517503%26_adf.ctrl-state%3Dbhx4daw08_4http://data.worldbank.org/indicator/NV.IND.TOTL.ZShttp://www.portal.euromonitor.com/portalhttp://data.worldbank.org/indicator/NV.SRV.TETC.ZShttp://en.wikipedia.org/wiki/Chaebolhttp://hdr.undp.org/en/content/table-1-human-development-index-and-its-componentshttp://hdr.undp.org/en/content/table-1-human-development-index-and-its-componentshttp://www.state.gov/r/pa/ei/bgn/2898.htmhttp://data.worldbank.org/indicator/NY.GDP.MKTP.CDhttp://www.ilo.org/ilostat/faces/home/statisticaldata/ContryProfileId?_afrLoop=410524902517503#@%3F_afrLoop%3D410524902517503%26_adf.ctrl-state%3Dbhx4daw08_4http://www.ilo.org/ilostat/faces/home/statisticaldata/ContryProfileId?_afrLoop=410524902517503#@%3F_afrLoop%3D410524902517503%26_adf.ctrl-state%3Dbhx4daw08_4http://www.ilo.org/ilostat/faces/home/statisticaldata/ContryProfileId?_afrLoop=410524902517503#@%3F_afrLoop%3D410524902517503%26_adf.ctrl-state%3Dbhx4daw08_4http://data.worldbank.org/indicator/NV.IND.TOTL.ZShttp://www.portal.euromonitor.com/portalhttp://data.worldbank.org/indicator/NV.SRV.TETC.ZShttp://en.wikipedia.org/wiki/Chaebolhttp://hdr.undp.org/en/content/table-1-human-development-index-and-its-componentshttp://hdr.undp.org/en/content/table-1-human-development-index-and-its-componentshttp://www.state.gov/r/pa/ei/bgn/2898.htmhttp://data.worldbank.org/indicator/NY.GDP.MKTP.CD


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loss#r

FDI - Foreign Direct Investment

MSCI - Morgan Stanley Capital International

BRICS - Brazil, Russia, India, China, South Africa

CAD - Current account deficit

PPP - Purchasing Power parity

HDI - Human Development Index (2014)

UN - United Nations

BPO - Business Process Outsourcing

NAFTA - North American Free Trade Agreement

EU - European Union

ECB - European Central Bank

G20 - international union of central banks & government

UNCTAD - UN Conference on Trade and Development

EME - Emerging Market economies

Per-capita income figures taken are on the basis of PPP and not the nominal

figures

The Public Debt figures for many nations is not available

Qatar has no system of displaying the records for GDP components so the

data regarding that is not available

Date post:	24-Feb-2018
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