The Department of Commerce has identified countries as BEMs Big emerging markets Although these criteria are general and each country each country does not meet all criteria,. Other countries such as Egypt, Venezuela and Colombia may warrant inclusion in the near future. The list is fluid because some countries will drop off while others will be added as economic conditions change. Inducements for those dong business in BEMs include export Import Bank loans and political risk insurance channeled into these areas.
What is occurring in the BEMs is analogous to the situation after World War II when tremendous demand was created during the reconstruction of Europe. As Europe rebuilt its infrastructure and industrial base, demand for capital goods exploded; as more money was infused into its economies, consumer demand also increased rapidly. For more than a decade, Europe could not supply its increasing demand for industrial and consumer foods. During that period, the United States was the principal supplier because most of the rest of the world was rebuilding or had undeveloped economies.
In the long run the economic strength of China will not be as an exporting machine but as a vast market. The economic strength of the US comes form its resources productivity and vast internal market that drives its economy. China’s future potential might better be compared with America’s economy, which is driven by domestic demand, than with Japan’s driven by exports. China is neither an economic paradise nor an economic wasteland, but relatively poor nation going through a painfully awkward transformation from a socialist market system to a hybrid socialist free market system not yet complete and with rules of the game still being written.
The wave of change that has been washing away restricted trade, controlled economies closed markets, and hostility to foreign investment in most developing countries has finally reached India. Since its independence in 1947, the world’s largest democracy had set a poor example as a model for economic growth for other developing countries and was among the last of the economically important developing nations to throw off traditional insular policies. As a consequence, India’s growth had been constrained and shaped by policies of import substitution and an aversion to free markets. While other Asian countries were wooing foreign capital, India was doing its best to keep it out. Multinationals seen as vanguards of a new colonialism were shunned. Aside for textiles, Indian products found few markets abroad other than in the former Soviet Union and Eastern Europe.
Now, however, times have changed and India has embarked no the most profound transformation since it won political independence from Britain. A five point agenda that includes improving the investment climate; developing a comprehensive WTO strategy; reforming agriculture, food processing and small scale industry, eliminating red tape; and instituting better corporate governance has been announced. Steps already taken include the following:
1) Privatizing state owned companies as opposed to merely selling shares in them. The government is now willing to reduce its take below 51 percent and to give management control of so called strategic investors
2) Recasting the telecom sector’s regulatory authority and demolishing the monopolies enjoyed by state owned companies.
3) Signing a trade agreement with the United States to lift all quantitative restrictions on imports.
4) Maintaining the momentum in reform of the petroleum sector.
5) Planning the opening of domestic long distance phone services, housing and real estate and retail trading sectors to foreign direct investment.
India has the capacity to be one of the more prosperous nations in Asia if allowed to develop and live up to its potential. Some worry however is that the opportunity could be lost if reforms don’t soon reach a critical mass – that point when reforms take on life of their own and become irreversible.