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International Business and Emerging Markets: A Long-Run Perspective -…
International Business and Emerging Markets: A Long-Run Perspective
Opportunities for Western MNEs
Emerging Markets
New political environment
Deregulation
Privatization
Globalization
E.g: Telecom
First Global Economy(1850-1929)
Transportation and
Communication infrastructure
Costly, but costs falling
Local Competition
Embryonic
With potential for further development
Markets and Resources
Low Incomes
Cultural differences
Vast Natural Resources
IB Strategies
Seek home country support
Overcome logistical challenges
Co-op with local elites as partners
Build global value chains
Political Economy
High Receptivity
International law and imperialism support Western firms
Institutional Frailty
Great Reversal (1929 - 1978)
Transportation and
communication infrastructure
Transportation improving
Local Competition
State-owned companies
Private enterprise curbed
Markets and Resources
Limited Convergence
Foreign ownership restricted
IB Strategies
Investments in Western markets
Forced negotiations
Use of joint adventure and
local participation
Political Economy
Expropriation
Import Substitution
Institutional Frailty - Turbulance
Exchange Control
Foreign ownership restrictions
Second Reversal (1978 - Present)
Transportation and communication
infrastructure
Sharp fall
Communications web
Local Competition
Growing private-sector companies
state owned enterprises
Markets and Resources
Globalization
Rising Middle Class Income
Tribalization
Low Cost Labour
IB Strategies
Access to low labour cost
Adaptation to local markets and politics
Build and distribute global value chains
Political Economy
Liberalization
Sovereign and assertive governments
Institutional Frailty