Doing Business in Emerging Economies

Question: Discuss about the Doing Business in Emerging Economies. Answer: Introduction BRICS stands for Brazil, Russia, India, China and South Africa all these emerging economies have proved themselves the financial powerhouse in the time of crisis (Ribeiro and Dwyer 2015). In the midst of world economic slowdown, BRICS became the shining light of hope. It has established itself to be the new business frontier for Major Corporation around the world. In the last two decades, emerging economies has grown twice faster than advanced economies. It is also expected that for coming 20 years the emerging market will continue to holds its high growth rate because of emerging middle class and technological innovations. Opportunities Threats of BRICS Nations The biggest strength of BRICS nations is that they are all growing economies. The growth projections of the BRIC have considerably reduced since 2010. The sluggish growth rate is a matter of concern but the main reason for such slow growth is the inability of the US and Europe market to recover form crisis. Though the export demand has not improved but the BRICS countries continues to grow because of their internal domestic demand (Singh 2016). The BRICS nation does not have any cohesive foreign policy to work as a unit. Further, the economic structures of member countries are also widely different which pose a problem (Chun 2016). It is unlikely that the BRICS will be able to immediately act as alternative to US and European economies. In spite of all these shortcomings, the opportunities provided by the diverse BRICS nations are huge. Why India among BRICS Nation The recent trend shows that India is the pulse of the BRICS nations and this can be verified if all the member nations are analyzed appropriately. On analyzing Brazil it can be seen that it is facing one crisis after another and it is also in the middle of worst recession in 25 years. The Russian economy is also staggering due to sanctions and weak energy export due to depletion in resources. The Chinese economy is also slowing down due to lack of adequate economic reforms and lastly South Africa is the smallest economy that is growing in a minimal rate (Chunlin et al. 2013). It should be mentioned that among all the nations India is in relatively well position. The Indian economy does not primarily depend on Export but internal domestic demand. As a result the slowdown in worlds economy has little impact on India. India is an importer of energy and other commodities therefore it has benefited from lower international prices. The most important distinctive characteristic of Indian economy is that it has shown the world that it can always change and adapt to the changing economic environment (Kumar and Arora 2015). SWOT Analysis of Indian Economy At the very beginning before analyzing the Indian economy it is important to know few important figures that appropriately reflect the vastness and diversity of Indian economy. In terms of Gross domestic Product India is the 3rd largest economy of the world and in term of purchasing power parity it is 3rd largest (Shira and Devonshire-Ellis 2012). It has population of 1.25 billion and every year there is an addition of 18 million people. It is important to note that about 50% of the population is below 25 years. This tremendous workforce could be huge asset for the country. In the last six decades, Indian economy has grown rapidly and now it is yet at another cross road of major economic development. The Indian economy has grown by $1trillion in last two decades, which helped her in bringing out large people from poverty and creating an emerging middle class. The aspiring middle class is the growth engine of Indian economy and it is expected that in 2015 Indian economy will grow by 6.4% (Lee 2014). The World Bank estimates Indian economic growth rate will surpass China in next two years. It also states in its report that fundamentals of Indian economy are strong and it expects that Indian economy will show growth. The SWOT Analysis emphasis on strength, weakness, opportunities and threats and it is helpful in ascertaining the overall economic condition of the country. The SWOT analysis of Indian economy is given below: Strength The Indian economy is largely dependent on Agriculture. Therefore, industrial slowdown does not affect the entire economy. It has more than 50% cultivated land so it does not require importing essential food items. It has a large number of English speaking populations. It has large number of highly skilled labor force. The economic system of India is highly diversified. India has seen booming IT and BPO sector which is providing it the valuable foreign exchange. India has wide variety of natural resources, minerals and live stocks. Weakness A large part of the work force is engaged Agricultural activity but agriculture only contribute 17 % of the GDP. There are high poverty levels across India. There is a huge income disparity between wealthy and poor people and it is continuously growing. The corruption has affected the economic growth. The infrastructural facility is not improving at the rate it should be improving. There is a huge unemployment problem. There is a growing division between rural and urban population. There are complex regulations that create hindrance in business. Opportunities India follows open economic system so private sectors can easily enter the market. The service sector, which is a large part of the GDP, is growing at high rate this gives business the opportunity to grow. The Indian economy is attracting a high inflow of foreign direct Investment in different sectors. In the IT and other sectors, there is a huge prospect for foreign exchange earnings. There are opportunities to enter into business of biotechnology. There are huge possibilities to grow in the area of infrastructure development. Threats There is slow down in global economy; There is a problem of high fiscal deficit; There is possibility of government intervention in doing business; India is going towards population explosion and still there are no adequate measures implemented by the government; The farmers have to sustain huge loss every year, as agriculture is extremely dependent on monsoon. Conclusion The opportunities offered by India economy are abundant for the growth of business. It is firmly rooted in democracy and the government pro actively promotes private participation in economy. The growth rate of Indian economy has remained steady and healthy in spite of global recession. The legal framework is complex and overburdened but it is in general just and fair for doing business. Various amendments are being made in law to increase the ease of doing business in India. It can be said that India has become the bright spot for doing business among BRIC nations. Reference Chun, K.H., 2016.The BRICs superpower challenge: foreign and security policy analysis. Routledge. Chunlin, C., Chang, L. and Xuejun, H., 2013. The Status and Role of BRICS in the World Economy.Comparative Economic Social Systems,1, p.008. Kumar, R. and Arora, V.S., 2015. Trade complementarity between India and BRICS.JIMS8M: The Journal of Indian Management Strategy,20(1), pp.37-42. Lee, A., 2014. India Rising.Int'l Fin. L. Rev.,33, p.17. Ribeiro, G.L. and Dwyer, T., 2015.Social, Political and Cultural Challenges of the BRICS. Langaa RPCIG. Sharma, P., 2013. Trends and SWOT analysis of FDI in Indian Economy. Shira, D. and Devonshire-Ellis, C. eds., 2012.Doing business in India. Springer Science Business Media. Singh, K., 2016. A Comparative Analysis of Foreign Trade of BRICS Countries.Prabandhan: Indian Journal of Management,9(2), pp.29-40.