Meeting this demand produced one of the largest economic booms the US had ever experienced. Consumer markets and market segments in the BEMs are already booming. Unlike the situation after World War II however, the competition will be fierce as Japan, China, Europe, the NICs and the United States vie for these big emerging markets.
A political and economic revolution has been taking place in Latin America over the last two decades. Most of the countries have moved form military dictatorships to democratically elected governments, and sweeping economic and trade liberalization is replacing the economic model most. Latin American countries followed for decades. Privatization of state owned enterprise and other economic monetary and trade policy reforms show a broad shift away from the in ward looking policies of import substitution (that is, manufacturing products at home rather than importing them) and protectionism so prevalent earlier. The trend toward privatization of state owned enterprises in the Americas followed a period in which governments dominated economic life for most of the 20th century state ownership was once considered the ideal engine of economic growth. Instead of economic growth, however, they ended up with inflated public sector bureaucracies, complicated an unpredictable regulatory environments the outright exclusion of foreign and domestic private ownership and inefficient public companies.
Today many Latin American countries are at roughly the same stage of liberalization that launched the dynamic growth in Asia during the 1980s and 1990s. In a positive response to these reforms, investors have invested billions of dollars in manufacturing plants, airlines, and banks, public works, and telecommunications systems. Because of its size and resources base, the Latin American market has always been considered to have great economic and market possibilities. The population of nearly 460 million is one half greater than that of the United States and 100 million more than the European community.
The strength of these reforms was tested during the last decade, a turbulent period both economically and politically for some countries Argentina, Brazil, and Mexico the three BEMs in Latin America were affected by the economic meltdown in Asia and the continuing crisis in Russia devaluation and debt default caused a rapid deterioration in Brazil’s financial situations capital began to flee the country and brazil devalued its currency. Economic recession in Brazil – coupled with the sharp devaluation of the rest – reduced Argentine exports and Argentina’s economic growth slowed. Mexico was able to weather the Russian debt default partly because of debt restructuring and other changes after the major devaluation and recession in the early 1990s. However, competition with Chinese manufacturing has yielded slower growth than predicted at the time of passage of the North American Free Trade agreement (NAFTA) Other Latin American countries suffered economic downturns that led to devaluations and in some cases political instability. Nevertheless Latin America is still working toward economic reform.
Eastern Europe and the Baltic states satellite nations of the former Soviet Union, have moved steadily toward establishing post communist market reforms. New business opportunities are emerging almost daily, and the region is described as anywhere from chaotic with big risks to an exciting place with untold opportunities. Both descriptions fit as countries continue to adjust to the political, social, and economic realities of changing from the restrictions of a Marxist socialist system to some version of free markets and capitalism. However, these countries neither made the same progress nor had the same success in economic reform and growth.
Rapid liberalization of trade combined with their macroeconomic stabilization policies and broad institutional reforms crated a supportive environment for the expansion and reorientation of their trade. Since the early 1990s eastern European countries trade has been redirected away from dependence on former socialist countries and toward the more affluent western European market, thus resulting in trade patterns that are more in tune with both historical (pre World War II) and current market realities.
Beginning in 1996 the leading economies of Asia (Japan, Hong Kong, South Korea, Singapore, and Taiwan) experienced a serious financial crisis, which culminated in the meltdown of the Asia stock market. A tight monetary policy, an appreciating dollar and a deceleration of exports all contributed to the downturn. Despite his economic adjustment, the 1993 estimates by the International Monetary Fund (IMF) that Asian economies would have 29 percent of the global output by the year 2000 were on target. Both as sources of new products and technology and as vast consumers markets, the countries of Asia – particularly those along the Pacific Rim are just beginning to gain their stride.
Asian Pacific Rim>>
The four Tigers are rapidly industrializing and extending their trading activity to other pats of Asia. Japan was once the dominant investment leader in the area and was a key player in the economic development of China, Taiwan, Hong Kong, South Korea, and other countries of the region. But as the economies of other Asian countries have strengthened and industrialized they are becoming more important as economic leaders. For example, South Korea is the center of trade links with north China and the Asia republics of the former Soviet Union. South Korea’s sphere of influence and trade extends to Guangdong and Fujian two of the most productive Chinese special economic zones, and is becoming more important in interregional investment as well.
China has two important steps to take if the road to economic growth is to be smooth: improving human rights and reforming the legal system. The human rights issue as been a sticking point with the United States because of the lack of religious freedom, the Tiananmen Square massacre in 1989 the jailing of dissidents and China’s treatments of Tibet. The US government’s decisions to award PNTR reflected in part the growing importance of China in the global marketplace and the perception that trade with China was too valuable to be jeopardized over a single issue. However, the issue remains delicate both within the United States and between the US and China.
Actually there are two Chinas – one a maddening, bureaucratic, bottomless money pit, the other an enormous emerging market. There is the old China, where holdovers of the communist Party’s planning apparatus heap demands on multinational corporations, especially in politically important sectors such as autos, chemicals, telecom equipment. Companies are shaken down by local officials, whipsawed by policy swings, railroaded into bad partnerships and squeezed for technology.