An emerging market can be defined as the economy of a nation that is still progressing to become advanced to the level of the world class economies. These types of markers normally do not have market efficiency as seen in some of the already developed economies. Moreover, the emerging economies do not necessarily follow the strict standards and regulations that are put in place for accounting purposes. On the contrary, the emerging markets are characterized by physical financial infrastructures that may include the financial banks as well as a unified currency. An emerging market can belong to a nation that was either developed in the past or has a potential for developing in the future.
Local investors may be interested in the emerging markets within a given economy due to the prospects of gaining high returns from such markets. Such investors normally know that such markets remain potential for future business since no one has placed their intended investments in such grounds. Moreoverthe investors normally tap in to such markets because they know that they will most definitely get a fast economic growth as compared to the already developed markets where they will most likely face tough competition. It is however worth noting that placing an investment in to the emerging markets may be risky because of the political instability that may be in existence in such markets (Calvo, 2007). Additionally, the domestic infrastructure in the emerging markets may be so poor such that one would need a lot of money to establish his business. Similarly, the currency that is used in the emerging markets may be very volatile thereby creating instability in any new business venture. The other problem that may be encountered is the issue of limited equity opportunities where the businesses are mostly run by the governments (Calvo, 2007).It is also important to note that the nation does benefit as an emerging market because the enormous investments placed in that country increases the growth rate of the GDP.
The emerging markets are of importance in the global arenabecause for one they are contributing a lot to the world’s economic growth. Research shows that between the year 2008 and 2013, approximately eighty percent of the growth that was experienced across the globe was as a result of the effects of the emerging markets (Dinesh et al. 2014). Moreover, it remains a fact that it is the emerging markets that do own a great majority of the natural resources across the world (Dinesh et al. 2014). A good example is the countries in the African continent that are endowed with unlimited natural resources such as gold, silver, natural parks, lakes and oceans. Since the emerging markets own a big share of the exchange reserves, they contribute greatly to the rising share that is witnessed in global trade. Good examples of business that have survived as a result of the investments made in the emerging markets include Volvo, Land rover and Arcelor.
The investors who took the risk and invested their capital in the emerging markets have been able to set pace and trend across the globe over the years (Jagelewski, 2010). Moreover, such investors are of the opinion that their businesses will develop and grow over time due to the strong base they get from the emerging markets. For instance, the smartphones that people use in the current generation are all made and manufactured from the emerging markets and then distributed throughout the world. Similarly, there other global leaders in the oil industry who began their business operations from the emerging markets but have managed to grow and become global entrepreneurs due to the growth opportunities offered in such markets.
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