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Case Study: What Is Different About Emerging Economies?: MAN 010 Assignment 3 Module 3

This document discusses differences between emerging and advanced economies. It notes that emerging economies have lower per capita incomes but higher growth rates on average. [1] From a business perspective, emerging economies have lower R&D intensity and a higher proportion of GDP from industry. [2] Culturally, emerging economies tend to have greater power distance, collectivism, and long-term orientation as well as higher prioritization of work but lower trust in foreigners. [3] Emerging economies also have weaker administration in terms of rule of law, political stability, and corruption control, which can deter foreign business. [4] Despite weaker administration, emerging economies express more confidence in their governments. [5] Emerging economies also have lower urban

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John Kennedy Cristobal
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23 views

Case Study: What Is Different About Emerging Economies?: MAN 010 Assignment 3 Module 3

This document discusses differences between emerging and advanced economies. It notes that emerging economies have lower per capita incomes but higher growth rates on average. [1] From a business perspective, emerging economies have lower R&D intensity and a higher proportion of GDP from industry. [2] Culturally, emerging economies tend to have greater power distance, collectivism, and long-term orientation as well as higher prioritization of work but lower trust in foreigners. [3] Emerging economies also have weaker administration in terms of rule of law, political stability, and corruption control, which can deter foreign business. [4] Despite weaker administration, emerging economies express more confidence in their governments. [5] Emerging economies also have lower urban

Uploaded by

John Kennedy Cristobal
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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MAN 010

ASSIGNMENT 3 MODULE 3

Case Study: What is Different about Emerging Economies?


Starting with economic differences, the most obvious are the emerging economies’
lower per capita incomes and faster real growth rates. But even those
characterizations fail to apply to every emerging economy: The International Monetary
Fund lists both Qatar and Yemen as emerging or developing even though they had the
world’s third-highest Gross Domestic Product (GDP) per capita and lowest real growth
rate, respectively, in 2015. 
From a business perspective, lower research and development (R&D) intensity in
emerging economies is particularly salient, given the association between R&D (and
advertising) intensity with resources that enable firms to become multinational. Also, the
higher proportion of GDP coming from the industrial sector in emerging economies
implies that it is no longer appropriate to treat ‘industrialised countries’ and ‘advanced
economies’ as synonymous.
Culturally, there are statistically significant differences on three of Hofstede’s
dimensions of national culture. Greater power distance, collectivism, and long-term
orientation in emerging economies all imply requirements for executives to vary
leadership practices. Based on data from the World Values Survey, people in emerging
economies accord work a higher priority in their lives—presumably an advantage for
employers—but have lower levels of trust in foreigners, which can complicate
international business activities in particular. Furthermore, the higher cultural
fractionalisation and lower representation of women on boards in emerging economies
highlight the importance of thinking about diversity within as well as across countries.
Administratively, emerging economies rank significantly worse than advanced
economies on indicators of institutional quality, e.g., rule of law, political stability, and
control of corruption, all of which can dampen international business activity. According
to an estimate by Shang-Jin Wei, ‘an increase in the corruption level from that of
Singapore to that of Mexico would have the same negative effect on inward FDI as
raising the tax rate by fifty percentage points. ‘Emerging economies also require more
documents to conduct international trade and rank lower on the World Economic
Forum’s Enabling Trade.
Surprisingly, despite their administrative weaknesses, publics in emerging economies
express greater confidence in their governments. Emerging economies also present
distinct geographic conditions. They average lower levels of urbanisation which impact
both demand patterns and supply chains. Temperature levels are also higher, on
average, in emerging economies. And while emerging economies’ higher likelihood of
being landlocked is not statistically significant, infrastructure deficiencies make
landlocked emerging economies far less accessible than landlocked advanced
economies.
 
Questions

 Why should business managers critically think of the higher cultural


fractionalization and lower representation of women with regards about diversity
across emerging economies?
 How can the poor administration strategy of emerging economies dampen
international business activity? 
 How might infrastructure affect business in emerging economies?

 
Answer:

 Business manager should consider cultural fractionalization and representation


of women because they are significant on national culture. They affect the
greater power distance, collectivism and long term orientation in emerging
countries. People in the emerging market have a higher priority in life so
business manager should consider the mental state of his/her subordinate and
take advantage of it.
 Emerging Market need a leader who can keep up with many changes and have a
clear vision towards its country. Rule of Law, Political Stability and Control of
Corruption significantly affects the flow in the emerging market. The positive the
state of the emerging country towards administration strategy the positive its
effect towards other country and international trade.
 Infrastructure is essential to every businesses because they help businesses to
connect to each other, provide higher opportunity to give service, reduce the cost
of business and etc.

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