Emerging economies

Four major emerging realities in the context of emerging economies are

1. Global Demand Patterns:
Global demand pattern are gradually shifting towards the emerging economies.
As early as 2009, the annual increase in US dollar spending from the Emerging economies could be greater than that from the G6 and more than twice as much in dollar terms as it is now. By 2025 the annual increase in US dollar spending from the BRICs could be twice that of the G6, and four times higher by 2050.

Fig1: Incremental Demand

For instance if we consider Agricultural products-Russia, China are among top agricultural importers:
§ Russia is the world.s third largest importer of agricultural commodities, particularly poultry,
dairy, and fruits and vegetables. With just 2% of the world.s population, Russia consumes
close to 20% of the world’s poultry.
§ China also ranks among the top ten importers of agricultural commodities. It remains the
largest importer of cotton. China is expected to become the largest importer of oil seed meals and consolidate its position in imports of oils and oilseed as biofuel production expands.

Fig2: IMPORT DATA of Agricultural Commodities


Rising incomes may also see these economies move through the ‘sweet spot’ of growth for
different kinds of products, as local spending patterns change. This could be an important
determinant of demand and pricing patterns for a range of commodities.

2. Flow of world financial assets:
Higher growth may lead to higher returns and increased demand for capital in emerging market and for the means to finance it. The weight of the emerging economies in investment portfolios could rise sharply. The pattern of capital flows might move further in their favor and major currency realignments would take place. More of the funds are now moving into equities, showing that such investments are becoming more long term in their orientation. In 1990, 67% of emerging country assets were bank deposits and government bonds; today, that ratio has dropped to 55%.This reflects changes in the relative size of the economies. Emerging markets have been growing much faster than the developed economies. Thus, their share of world GDP has risen.

Fig3: FDI Inflow


3. Decoupling of the emerging economies from the Industrialized countries:
We see that emerging economies are slowly decoupling themselves the developed world. This is very stark in Asia. With three out of the four largest economies in 2050 potentially residing in Asia, we could see important geopolitical shifts towards the Asian region. China’s growth is already having a significant impact on the opportunities for the rest of Asia. Sustained strong growth in the other BRICs economies might have similar impacts on their major trading partners.

Fig4: Share of Emerging Market’s Trade
Though emerging economies are not yet fully decoupled from the developed economies but we can see from the graph above, an increase in the trade between the emerging countries and a decrease in their dependency on the developed world. Hence these economies will progressively be shielded from the economic recessions in the developed world.

4. Significance for today’s global companies:
As the advanced economies become a shrinking part of the world economy, the accompanying shifts in spending could provide significant opportunities for many of today’s global companies. Being invested in and involved in the right markets—and particularly the right emerging markets—may become an increasingly important strategic choice for many firms. The list of the world’s ten largest economies may look quite different in fifty years time. The largest economies in the world (by GDP) may also no longer be the richest (by income per capita) making strategic choices for firms more complex.


China Vs India: Which one will be the fastest growing economy?

Among the Emerging countries, China is expected to be the fastest growing country till around 2020. China’s growth rate is expected to fall to 5% in 2020. By 2050, China is expected to slow down to 3.5 %. India on the other hand is expected to be growing at rates above 5% till 2050.

Table1





Three major factors which favor India’s strong growth expectation are:
1) Working age population:
The growth in the labor force is one of the significant factors that would fuel India’s growth in the long term.
2) Growth in investment ratio
India’s Investment ratio is expected to overtake that of all the other BRIC countries by 2020.
Refer the bar charts below:
3) Rise of human capital in India:
Human capital is expected to rise in India faster than any other country including China. This will have a significant effect on growth.


Conclusion:
In conclusion, most indicators show that India would emerge as the world’s fastest growing country in the long term.

Fostering entrepreneurship

Management students are meant to be entrepreneurs, whether they are working as executives in the corporate world or as promoters of ventures. Hence, in which ever setting they are operating in, they would be corporate masters, in terms of initiatives and ideas and an appetite to innovate. Fostering this spirit is what is the need of the hour.

The most critical impact that we can expect to have on MBA students is to get them to start thinking in the entrepreneurial way while they are at B-school. To this end, the business school should act as a facilitator, giving the student exposure to entrepreneurship at various stages and in various forms. One of the most impact-full concepts in this arena is peer learning. Business schools should focus on admitting budding & practicing entrepreneurs in their student body. This will serve to inject the infectious entrepreneurial spirit in the student body. As a responsible MBA student, I would like to underscore this fact to the admission committee of my school and also to those of all other B-schools. I believe that we, as the student body, have a voice using which we can get the admission policy of our schools tailored in this direction.

One very critical area which is very often neglected is “Internal Entrepreneurship”. Students often are unaware that entrepreneurship is critical even when they are working as executives for a corporate. Therefore, there is a need to create awareness about internal entrepreneurship among students, especially early on in the MBA course. We as part of the Entrepreneurship club/student body should get the relevant faculty/industry executives to talk to students on internal entrepreneurship. Other initiatives that I would like to initiate are having awards like the “Star Internal Entrepreneur of the month” and getting these people to campus to talk on their experience with internal entrepreneurship. Since the students interested in internal entrepreneurship are different from those interested in starting their own ventures, we actually should have a different student club to promote ‘Internal entrepreneurship’. As a long term initiative, I would also press for a course in internal entrepreneurship to be included in the syllabus, so that MBA students have a good exposure to this critical subject.

Once the students are initiated into entrepreneurship, the next steps would be to facilitate their ventures. Here, having an ‘idea generation camps’ can play an important role. The effect of these camps is two fold. One to get MBA students thinking in direction of new idea generation and second to connect those students with ideas and those without ideas. We need sessions where in students are taken through idea generation in a structured manner & are taught to recognize gaps, each indicating a pressing need for a particular product or service and areas where customers are underserved. They should also be taken through a structured course in writing, analyzing and critiquing B-plans, as a part of their core terms.

Student entrepreneurs face a lot of practical implementation issues. One of the stumbling blocks for budding MBA entrepreneurs is the student loan EMIs that they need to pay. I feel that we students need to get the alums and the B-school together and form a fund which will ensure that this EMI is taken care of. This could be in exchange for an equity stake for the fund. The proceeds from these stakes could be used to sponsor loans for future student entrepreneurs. This would enable forming a strong knit community of student entrepreneurs built on the concept of “pay it forward”.

I would also like to initiate a recruitment stream at B-schools where startups can come and recruit students offering equity as compensation. Recruitments by start ups should be encouraged by allowing them the luxury of recruiting from B-schools without having to pay the normal recruitment fee. This will allow a lot of MBA students, who are vary of the effort and risk involved at the idea generation phase of the venture, to get involved in entrepreneurship.

Let me conclude by saying that there is a pressing need to foster entrepreneurship, a critical growth driver for the country, among MBA students. We, the student body at ISB, are actually in the process of implementing some of the initiatives that I have mentioned above. And we have found the necessary support from our institution and else where. Hopefully all B-schools can implement such initiatives, which will provide a major thrust to Entrepreneurial development in the country.

An introduction

Who am I?
-An adventure loving sailor who has tramped the world and experienced the vagaries of the ocean
-An Engineer who has been a master technician at work
-A Manager who has shown exemplary leadership while leading a multinational- multifunctional staff
-An athlete who has developed mastery in karate
-A MBA who can analyze, strategize and crack cases

In reality I am all of the above and much more. I have thrived upon and thoroughly enjoyed the diverse settings that I have been exposed to in life. Each one of them has added a dimension to my personality and made me the person I am.

Life at sea: My experience as a marine engineer has been a steep learning curve. The early days at sea made me realize the fruits of hard work and perseverance. It taught me the dignity of labor & the importance of showing respect to & valuing individuals. As I progressed rapidly through the ranks, I picked up leadership and team skills on the way. I also got opportunities to interact with & manage clients from the world over. This rich and diverse experience served to instill in me the ability to touch base with and establish sound relationships with people from variegated backgrounds.
An ocean liner is a daunting place to be in and the challenges that I faced at every step tested my skills to the full extent. From extreme sea sickness, to the strict timelines that my team had to adhere to while complete tasks, to handing team conflicts and leading teams in crisis situations such dealing with a potentially life threatening inferno – each of these experiences imparted a degree of toughness and the determination to excel against all odds in me...

Life at ISB: Coming back to mainstream education after 5.5 year break has been a real pleasure and ISB has been the ‘land of opportunities’ for me. The biggest opportunity is in the form of a very rich and exclusive peer community that allows me to interact with a class consisting of rocket scientists, investment bankers and consultants, and compete on the sports field with the ex-captain of Indian hockey, and many others. Other aspects of this opportunity are in the form of learning key concepts in management from world class faculty, and meeting and interacting with eminent personalities from the business world globally. Participating in prestigious competitions like Numero Uno has also been a part of the opportunity that ISB has presented me with. ISB has introduced me to totally new bodies of knowledge such as finance which I took to like fish takes to water & that has strengthened the otherwise hobbyist interest that I had in those subjects.
During my time at ISB, I have tried to capitalize as much as possible on these opportunities and this has aided my personal development.

Karate and me: Another critical component of my personality comes from my involvement with Karate. Karate taught me to seek self perfection and to train my mind to have a strong control over my body. At an early stage in life, Karate gave me an opportunity to experience management first hand. I handled a branch of my institution, teaching the art, handling students, promotions, personal relations, and admin issues.

Fine arts: Another dimension to my personality comes from my exposure to Karnatic music. I have enjoyed playing the Mridangam, a classical percussion instrument at various public recitals.

As I look back on the life that I have so far led, I find a sense of contentment in the learning that each and every experience has provided me, and that has prepared me well enough to take on challenges in future with a panache. Life beckons and I am ready as ever.