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needed for transportation,
communications, and energy, and
the financial infrastructure needed to
channel investment and savings. As
these platforms develop, they provide
resources essential for national
growth and reduce the market
inefficiencies that slow the pace of
development. Africa as they advance to the next
stage. These are regions where growth
is rapidly shifting — and in some
countries has already shifted — from
industrialization to technology-fueled
transformation. For that reason, we’ve
stopped calling them emerging markets;
the term growth markets is a better
descriptor.
In an established industrial
community, these three domains
have grown up over time, and it
is easy to take them for granted.
But in an emerging economy, they
must be designed and developed in
unison. Hard infrastructure, such as
roads, must be matched by softer
infrastructure, such as good hospitals
and schools. Dependable power
supplies and communication networks
must be in place before manufacturers
can set up efficient production
facilities and distribution networks.
Companies must be able to attract
skilled labor with more than just
jobs. They must offer an environment
conducive not only to economic
success but to good living as well. Investing in these markets is a very
different game from going into an
industrializing market in search of
double-digit GDP growth or cheap
labor. But thousands of opportunities
beckon for all sorts of forward-looking
companies, big and small, established and
entrepreneurial, domestic and foreign.
In emerging
markets, companies
must offer an
environment
conducive not
only to economic
success but to good
living as well
The need for such development opens
up any number of opportunities for
business leaders, both foreign and
domestic, to invest in the economies
of Asia, Latin America, Central and
Eastern Europe, the Middle East, and
Many global companies and investors
have been discouraged from going into
these markets over the past decade
as overall GDP growth has slowed and
emerging market equities have trailed
those of developed countries. But
withdrawal and retreat is a shortsighted
strategy. It is shortsighted in part
because growth economies are still
expanding much faster than those of
the developed world; they will account
for almost two-thirds of global GDP
growth by 2021. We expect, on the basis
of trade, investment, and GDP growth
data from the International Monetary
Fund’s World Economic Outlook, to see
the next major growth surge begin in
the year ahead, and to return to the
global economic heights experienced in
2011–12. Absolute gains in GDP — the
actual growth in value — should reach
1.9 times that expected in d