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Government reforms in the emerging markets: Ken Research

Posted on 12 October 2017 by KenResearch Education and Recruitment,

The developing countries with slower or low economic growth are categorized under emerging market economy. When a country moves from a closed economy to an open market economy it is designated as an emerging market economy. The developing countries prepare themselves for an economic reform that helps in a stronger and more responsible economic performance levels, transparency and efficiency in the capital market. Emerging markets develop in both local and foreign investments. A foreign investment is an indication that the world is observing an emerging market. Emerging markets reflect rise in employment levels, refined labour and managerial skills, sharing and transfer of technology. A successful emerging market should increase its gross domestic production and cease the gap between the already emerged and emerging worlds.

According to the market research, report "Government Spending Top 5 Emerging Markets Industry Guide 2017", these countries contributed $5,068.2 billion to the global government spending is industry in 2016, with a compound annual growth rate (CAGR) of 8.7% between 2007 and 2011. The top five emerging countries are expected to reach a value of $7,589.4 billion in 2021, with a CAGR of 8.4% over the 2016-21 period. Within the government, spending's industry, China is the leading country among the top 5 emerging nations, with market revenues of $2,982.2 billion in 2016. This was followed by Brazil and India with a value of $927.7 and $704.8 billion, respectively. China is expected to lead the government spending's industry in the top five emerging nations, with a value of $4,639.0 billion in 2021, followed by Brazil and India with expected values of $1,233.8 and $1,093.7 billion, respectively.

The stable U.S. dollar, recovering inflation and moderate economic growth in China has improved the emerging markets in the year 2017. It is essential that the future of the emerging markets in the developing countries such as China, India and Brazil need strong commitments to economic, financial and structural reforms; and industries need to provide more exposure to consumer spending. The productivity and innovation pave way to a robust growth in the emerging markets. Every country is unique and the emerging market faces it own individual issues and opportunities. The emerging markets reflect an increase in income and raised living standards. This resulted in more employment of trained individuals and less poverty.

China has a strong record of accomplishment of reforms in the emerging market. The government reforms included environmental policy, sustainable urban development, transitioning toward less state control of the economy, a better fiscal framework, financial liberalization, and anti-corruption measures. China will witness growth in jobs and consumption due to inflation. The inflation is an attraction for production and financial services increase availability of credit for consumer spending.

Brazil needs short-term improvements to address financial revenues and spending. In addition, the government is aiming at more open markets, global integration and greater investment.

Indian government has been working to encourage foreign investment in manufacturing, infrastructure, reforming financial policies, labour markets and the energy sector. The country has issues with legal and regulatory affairs.

Mexico is performing structural reforms in energy sector and is supported by private investment. There is political stability; however, the crime and corruption rates remain the same. Mexico is a country with a strong consumer base and the consumer spending is due to a large number of workers from other countries.

Saudi Arabia is also working to reduce its public subsidies, financial reforms, a more internationally open society and, the public listing of Saudi Aramco, the world's largest oil company. Saudi Arabia is a resource-driven economy that depends purely on petroleum revenue.

With the emerging markets, billions of world’s population is coming out of the poverty line. This population is now a gigantic consumer market. The majority of them are now young, living in urban areas, digitally connected, and well-educated. Emerging markets look forward to brighter opportunities and offer new areas of investment. Almost all the governments in developing countries face challenges to keep pace of the economic growth. It is expected that by the year 2021, the top five emerging markets will reach a CAGR of 8.4% and will achieve a value of $7,589.4 billion. China is expected to lead among the top five countries followed by Brazil and India.

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Related reports:

Government Spending Global Industry Almanac 2017 

Apollo Education Group, Inc.-Strategy, SWOT and Corporate Finance Report

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Ken Research
Ankur Gupta, Head Marketing & Communications
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