Professional Documents
Culture Documents
Research Essay in Emerging Markets
Research Essay in Emerging Markets
2019-1
Final Exam
Research Paper
2019
After the Industrial Revolution, the world achieved great changes in the way of
trading between countries. The countries began to export new and improved
products over the years, they were implementing innovative processes to improve
product’s efficiency, also they formed and built lasting relationships between
countries that trade internationally. This contributed to reinforce political
bonds with the purpose of creating a bigger market to improve and develop the
internal market, which will provide employment, better education in citizens and
will improve the quality of life in countries.
Since last decades, countries of emerging economies have played an important role
worldwide. According to Kimberly Amadeo in The Balance - World Economy, Emerging
Markets, also known as emerging economies or developing countries, are nations
that are investing in more productive capacity. They are moving away from their
traditional economies that have relied on agriculture and export of raw
materials. Emerging markets are important because they drive growth in the
global economy.
This research essay will focus on the economic, political and social aspect based on
the question Which of the theoretical approaches presented throughout the course best explains
the relationship between emerging economies from Asia , North America and South America
region? .
Even though, choosing one or a mix of approaches can adjust better to the
question, each one (theoretical approach) is important and provides different
perspectives to explain certain events and moments in world’s history. The
theoretical approaches chosen among those studied in the course is a combination
of Liberalism, Capitalism and Constructivism. From my personal point of view,
those are chosen due to their higher adjustment in explaining the relationship
between emerging markets.
Another approach is Liberalism, unlike realism, the liberal school highlights the
possibility of cooperation and the generation of a context for general progress,
which are considered realizable, and where cooperation is present, at least in
power (Jervis, 1999). Also, the foreign policy of democratic states should not be
explained solely in exclusive terms of balance of power, but also through the
trust relationships that are generated between democracies (Doyle 1983).
According to Gino Pauselli, Rathbun (2010) in general terms, identifies liberalism as a
stream that focuses on the analysis of cooperation between States as a dependent
variable, where a greater potential for cooperation and progress in International
Relations is expected. Also, identifies liberalism as the analysis of international
reality (Pauselli, 2013).
We have also studied Post colonialism. According to Isabella Basaglia, Post-
colonialism undermine the notion that the history and political agenda of the
Third World countries is entirely a western creation. Colonised countries create
an identity which is an amalgamation of both the traditional and the Western in a
process of cultural fragmentation and multiculturalism: Hybridity. Thus, Post-
colonialism has altered the way we think about International Relations as it
questions and rejects grand narratives and acknowledge the transfer of ideas and
knowledge between the colonised and colonisers which defies any separatism to
nations and cultures. (Isabella Basaglia 2012)
Another topic is Varieties of Capitalism. Following Peter A. Hall and David Soskice,
To understand the varieties of capitalism, we need to know that this varieties of
capitalism approach to the political economy is actor centered, which is to say we
see the political economy as a terrain populated by multiple actors, each of whom
seeks to advance his interests in a rational way in strategic interaction with
others. The relevant actors may be individuals, firms, producer groups, or
governments. However, this is a firm-centered political economy that regards
companies as the crucial actors in a capitalist economy. About Liberal Market
Economies and Coordinated Market Economies, it follows that national political
economies can be compared by reference to the way in which firms resolve the
coordination problems they face in spheres. The core distinction they draw is
between two types of political economies, liberal market economies and
coordinated market economies (Hall & Soskice, ).
After reviewing the theories studied in class, this essay will focus on a
combination of Liberalism, Capitalism and Constructivism to answer the question
Which of the theoretical approaches presented throughout the course best explains the relationship
between emerging economies from Asia , North America and South America region?.
Economic Aspect
Emerging economies are exporting countries, in recent years, they are attracting
more foreign investment, also increasingly participating in international trade
and considering the global economic aspect in order to improve the national
industry and competitiveness. Industrialization provides greater added value to
the products than the export of commodities, which employes poor quality of
labor and innovation. The last leads to unsustainable long-term growth and the
high posibility of becoming a country dependent on exports of raw materials
subject to volatile prices in the international market.
Following Gammeltoft, most economies acceded to the WTO during the second-
half of the 1990s, which accelerated processes of liberalization, privatization and
institutional reform and pushed Emerging Multinationals (EMNCs) to
internationalize to counter intensified competition at home as well as provided
them with more and easier accessible business opportunities abroad (Gammeltoft,
2010). The growth of Outward Foreign Direct Investment Investment (OFDI), from
emerging and developing economies over have grown by around 57 percent yearly in
2000-2008 (Annex 1,2). The story is consistent across different emerging sub-regions.
Firms that are aggressively investing are also from a number of smaller emerging
economies from Asia, Latin America, and Africa (Goldstein, 2007).
Political Aspect
The institutions of a nation’s political economy are inextricably bound up with its
history in two respects. One on the one hand, they are created by actions,
statutory or otherwise, that establish formal institutions and their operating
procedures. On the other, repeated historical experience builds up a set of common
expectations that allows the actors to coordinate effectively with each other.
Among other things, this implies that the institutions central to the operation of
the political economy should not be seen as entities that are created at one point
in time and can then be assumed to operate effectively afterwards (Hall & Soskice).
Social Aspect
According to Ben Ross, Educational levels in Latin America remain lower than
those in developed countries and East Asia. From 1960 to 2000 the average
educational attainment in the adult population of Latin America almost doubled
from 3.3 to 6.1 years of school (Barro & Lee, 2000). The Inter-American Development
Bank (IDB) reported in 2005 that: in a study of 47 countries including most
developed countries, six Latin American countries and a sampling of countries in
Asia, Africa, Argentina was ranked 29th in productivity per worker, Mexico 34th,
Chile 36th, Brazil 38th, Colombia 40th, and Venezuela 42nd. The reasons for these
low productivity levels include slow progress in education, the failure of
training systems, poor labor relations, and the absence of compensation mechanisms
for workers who stand to lose their jobs or job standing due to innovations (IDB,
Competitiveness).
Following Alvaro Cuervo Cazurra, Developing country companies may follow
four alternative strategies for starting their multinationalization: (1) start in
countries that are proximate in culture and development, (2) start in countries
that are distant in culture and development, (3) start in countries that are
culturally proximate but distant in development, and (4) start in countries that
are culturally distant but proximate in development (Annex 4).
According to the research, the social and cultural aspect in emerging markets is
an aspect to be considered for foreign investment. Constructivist theory can be
identified in this process, since decisions are made in the way of beliefs and when
they change, so do the location of foreign investments in developing countries. As
for the varieties of capitalism, workers benefit from greater investment in emerging
countries, increasing their efficiency and purchasing power in the population. This
should undoubtedly be managed respecting the social norms in the country
invested and the social and environmental responsibility. The liberalist approach is
also present because one of its premises is that the rule of law obliges the
authorities to respect the rules, not arbitrarily use power and restrict
individual freedom. Societies are composed of individuals who, in all their freedom,
choose their employers. This, together with more investment in emerging
economies, translates into a greater development of human potential and in the
long term, more qualified personnel to incorporate better and innovative offers in
goods and services abroad.
Conclusions
3.
Figure 3. Foreign assets, sales, employment and transnationality index (TNI) of
largest 50 MNCs from developing economies.
Taken from Emerging multinationals: home and host country determinants and outcomes
Gammeltoft, Prakash and Goldstein.
4.
Taken from The multinationalization of developing country MNEs: The case of multilatinas
Alvaro Cuervo Cazurra
References
Amadeo, K. (24 de June de 2019). the balance . Obtenido de What Are Emerging
Markets? Five Defining Characteristics:
https://www.thebalance.com/what-are-emerging-markets-3305927
Basaglia, I. (s.f.). The Contribution of Post-Colonial Theory to the
Construction of Identity in International Relations.
Boyer, R. (2007). How and why capitalisms differ.
Cuervo Cazurra, A. (2008). The multinationalization of developing country
MNEs: The case of multilatinas. Journal of International Management , 138-
154.
Gammeltoft, P., Prakash Pradhan, J., & Goldstein, A. (2010). Emerging
multinationals: home and host country determinants and outcomes.
International Journal of Emerging Markets, 254-265.
Hall, P., & Soskice, D. (s.f.). An Introduction to Varieties of Capitalism.
Hopf, T. (2005). The Promise of Constructivism in International Relations
Theory. International Security.
Kenton, W. (28 de Marzo de 2019). Emerging Market Economy. Obtenido de
https://www.investopedia.com/terms/e/emergingmarketeconomy.asp
Mearsheimer, J. (2005). E.H. Carr vs. Idealism: The Battle Rages On. London,
Thousand Oaks, CA and New Delhi: SAGE Publications.
Merriam-Webster. (s.f.). Obtenido de https://www.merriam-
webster.com/dictionary/capitalism
Morgan, G. (2011). Comparative Capitalisms. Int. Studies of Mgt. & Org.
Pauselli, G. (2013). Teorías de relaciones internacionales y la explicación de la ayuda
externa. Obtenido de
http://ried.unizar.es/index.php/revista/article/viewFile/65/29
Sánchez, L. E. (Setiembre de 2012). ¿De qué se habla cuando se habla de
Constructivismo? Revisión de sus clasificaciones y categorías.
Schneider, B. (2009). Hierarchical Market Economies and Varieties of
Capitalism in Latin America. Cambridge University Press.
USC, U. o. (16 de June de 2019). Research Guides. Obtenido de Organizing Your
Social Sciences Research Paper: Theoretical Framework:
https://libguides.usc.edu/writingguide/theoreticalframework
Wendt, A. (1992). Anarchy is what states make of it: the social construction
of power politics. International Organization 46, 2.
Wendt, A. (2008). Constructing International Politics. International Security, Vol
20.
Wikipedia. (16 de Abril de 2019). Teoría de las relaciones internacionales. Obtenido de
https://es.wikipedia.org/wiki/Teor
%C3%ADa_de_las_relaciones_internacionales
Abend, Gabriel. "The Meaning of Theory." Sociological Theory 26 (June 2008):
173–199
Swanson, Richard A. Theory Building in Applied Disciplines. San Francisco, CA:
Berrett-Koehler Publishers 2013.
Martha Finnemore y Kathryn Sikkink, “Taking Stock: The Constructivist
Research Program in International Relations and Comparative
Politics” en Annual Review of Political Science, vol. 4, 2001, pp. 392.
Alexander Wendt, “Anarchy Is What States Make of It: The Social
Construction of Power Politics” en Paul R. Viotti y Mark V. Kauppi,
International Relations Theory, 1999, p. 4.
Robert Barro and Jong-Wha Lee, “International Data on Educational
Attainment: Updates and Implications”, National Bureau of Economic
Research, Working Paper 79 (Cambridge MA, 2000), pp. 29-30.
IDB, Economic and Social Progress in Latin America: 2004 Report. Good Jobs
Wanted: Labour Markets in Latin America (Washington DC, 2005), p. 282.
IDB, Competitiveness, p. 105.