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The discussions on the emerging markets have been on the rise of late. There is a general feeling that the emerging markets in the brackets of China, Brazil, India and South Africa will in the near future overtakes the developed countries in the brackets of the United States, Germany, Russia, Italy, France, the United Kingdom and Canada.
The gap between the developed and the emerging markets is quickly reducing. The efforts made by the developing countries to curve a much larger niche are facing a stiff competition from these developing countries. The essence of embracing very advanced technology will be the only factor that will stand in between them (Lundvall, 2011).
This does not, however, means that these countries do not possess any bit of technological mind. In the real sense, they are leading in producing low technology that can be afforded by any one (Marr & Reynard, 2010). BRICS economies boast the largest size in terms of land sizes and population, save for some developed countries like the United States and Canada.
These four countries have more than half of the world’s population. In the near future, it is expected that these countries will be in the forefront in shaping the economy trend s of the world. The following discussion will comprehensively cover the background of these countries, their financial strengths and their influence. A special focus on the prospect of New Zealand engaging in business with them will also be put on spotlight.
New Zealand and its firms
Well-established agricultural firms dominate the country. The major exports from New Zealand are dairy products, wool and forest products. Vegetables and fruit farming are also extensively practiced. Exports amounted to US $ 3 billion in the last two years (Arena & Reinhart, 2007.
New Zealand has also developed the information and technology industry as well as the medical and healthcare sectors. Ser vice industry contributes to 69% of the economy while agriculture and factories producing tangible goods contribute to the rest.
It is the largest economy in South America. Brazil boasts of so many natural resources. Mining, agriculture, manufacturing and the service sectors are the leading source of national income. In 2001, Brazil’s economy grew by 2.4% only (UoC, 2008).
In the two following years, Brazil had to face a rough time with their currency losing value greatly. Adjustments and changes in the government lending and borrowing policies were made. The efforts paid off with a surplus in trade that followed led to very increased exports.
Brazil has seriously been affected by domestic debts. From the year 1993 to 2003, it incurred many domestic debts such that the economy was on the verge of collapsing. However, it was controlled by the end of 2006. The introduction of the economic stimulus programs and those of regulating public lending and borrowing boosted the economy further.
The 2006 growth rate of the Brazilian economy was 3.7% with the GDP of $1.65 trillion. The rate of unemployment is 8%, and the inflation rate was 3%. Other new industries include chemical, shoes, motor vehicle and aircraft.
Brazil’s main trade partners are the United States, their neighbors Argentina, China and Germany. Coffee is the main agricultural export. Other crops include oranges, Soya, wheat, rice, sugarcane and corn. Last year, the growth rate was 8%, and it is estimated to expand at the rate of between 5%, and 6% this year (Buckley, 2009).
The driving force behind the Brazil’s economy is the availability of domestic markets, very articulated and reasonable fiscal policies, inflation control and good management of the currency. Foreign investors have been attracted by the high interests’ rates.
This in return has pushed the value of the currency up. Brazil has embraced the policy of foreign investments being the leading recipient of foreign direct investments in the whole of South America. In a show of a powerful financial muscle, Brazil is planning to invest billions of dollars on off shore oil and power. The gross domestic product as of 2010 was $2.1 trillion.
Per capita income was $11200 (Draper & Alves, 2009). The service sector contributed 67 of the GDP followed by the industry sector with 27%. Agriculture had an input of 6%. The exchange rate is currently at U.S.1 $ = 1.63 Brazilian Reais. Annual exports were $205 billion and exports were $ 180 billion, with a balance of trade of $ 25 billion.
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New Zealand can take the advantage in the populous nation in supplying the required medical equipments. The superior agricultural products from the country can be used as a source of income from exports to Brazil.
New Zealand takes advantage of transparent open policies in Brazil to transfer medical experts. New Zealand has developed more than Brazil in terms of technology and innovation and can use this to trade in technological goods (Montiel, 2003
China has undergone many transformations. Since Xiaoping took to the seat of the Chinese government, China started to experience a more mature growth in the economy. China is the fourth country in terms of size in the world. It is currently in the second place, from the United States. This great step has been achieved because china uses low technology and the availability of cheap is abundant.
However, its dollar worth to the United States is slightly above 10 %. Earnings per head in China were $1700 by the year 2005 (Arena & Reinhart, 2007). A trademark step towards China growth came in the year 2001 when it officially joined the World Trade Organization. This meant that it could now trade with the rest of the world including the developed nations.
The Foreign Direct Investments (FDI) had risen from $44 billion to $54 billion in 2005. The portion of China’ economy in relation to the world’s economy was 12%in the year 2004. Last year the growth rate of China’s economy headed to 11% with a GDP of US $ 5,746 billion. The GDP is expected to grow to up to US $ 6,423 billion by 2015 (OCCD, 2009).
The unemployment rate was 4% last year, having decreased from 5%. The industry sector is China’s top income earner followed by agriculture. The decentralization policy of many enterprises held by the government prior to the 1980s has provided the very first key to a significant growth.
The great leap forward of 1950 to 1980 set the platforms for the latter developments. At this time, China cut drastically consumption with more emphasis on rapid industrialization.
New Zealand can again benefit in the agricultural field. It can either explore the Chinese markets that are not fully exploited, by either establishing additional trading ties. This would be possible by exporting more livestock and agricultural products or providing the required expertise.
Currently China is the second trading partner with Australia being first. It is also the second importer of New Zealand goods. Timber firms in New Zealand can take an opportunity in China in the construction industry, which is picking a fast pace of late (Smitz, 2005).
The federation of Russia is the ninth most populous nation in the world with more than one hundred and forty million. After the fall of the Soviet Union, Russia reconstructed its monetary policies to recapture the lost glory. The major exports from Russia come from the industry and the oil sector. Russia enjoys a growth rate of 7% although is had been stagnating over the last couple of years.
Innovation is the key to revive the superpower (Park, 2008). One third of the world’s steel comes from Russia. Export of armaments is also an important business in Russia. However, it has not fully opened its trade to the international community. Restrictions to Russian markets also play a major role in its hindrance to achieving maximum potential.
Although Russia has many closed economies, New Zealand can exploit the agricultural sector in Russia. Russia for many years has been a powerful country but has not performed well in this sector. New Zealand boasts of a strong medical and health care sector. It can take the opportunity of the population in Russia to extend in terms of medical supplies (Marr & Reynard, 2010).
India takes the twelfth position in the global economies. It is in the third position in Asia behind China and Japan. The average growth rate of the Indian economy is 8%. Foreign Direct Investments increased to US $255 billion. Last year the gross domestic product was US $ 1,300 billion (Kobayashi, 2008). Income per head per year was $3000.
Service and transportation industries topped in the national income earnings with 55% followed by the industry with 30% and agriculture with 16%. More than half the Indian population relies on farming. Many people practice agriculture in India, but it is at the subsistence level.
The service sector can come in handy. Manufacturing firms will find very reliable market in India. Medical services, personnel and equipments, are very necessary to the huge Indian population. Infrastructures such as roads and railways area not well developed in this country and New Zealand construction firms can take advantage in this.
Timber manufacturing company would also find a favorable market in India. The general, open policies that India has embraced in trading with other partners provide a conducive environment for the same (Sarkar, 2009).
This is the newest member of the BRIC. The initials have now changed to BRICS. South Africa joined this league lat year. It leads the whole Africa in having the strongest economy. The largest and the most profitable sectors in the country are the mining, manufacturing and service.
South Africa is ranked 26th across the world with an earning per head of $ 10,000 (Lundvall, 2011). Over half of the national income is earnings form the foreign countries. One fifth of the African continent’s consumption comes from South Africa.
Benefits of trading with the BRIC countries
One of the benefits is that these countries provide a ready market for any product or service. This is because they have a huge population. Trading with these countries is beneficial in that they produce low cost goods and services. Through using this technology, many people can afford them (kobayashi, 2008).
The business policies are open in nature and encourage foreign investment. This is unlike the developed countries who opt for the restrictive business policies, while putting in places many rules and regulations to govern their trade. This is in one way or another unhealthy.
One of the risks doing business in the BRIC countries is the high prevalence of corruption. Interacting with the governments of these countries will entails long processes with a high probability of short cut access to goods. Although goods are of low technology, they may end up being fake products.
Another risk in doing businesses in these countries is that expenses for running the business may increase if one fall short of understanding the laws, rules and regulations that govern the business policies (Borodina & Shvyrkov, 2010). Political risk is another one that can hinder proper business operations.
Understanding the intellectual and any other asset protection law will be of the essence. One good strategy to avoid this would be proper adherence to the regulatory laws. Following, the international set standards will also help to avert this vice.
In advanced economies, the protection law is firmly in place and followed. They are no cases of corruption in developed countries like Australia and United Kingdom. By virtue, being working in a developed country registering a business, as a legal entity is needed (Chandra, 2006).
In the above discussion, a comprehensive explanation has been provided on the status of the developing countries with a special focus on Brazil, Russia, India and China. Their strategic positioning towards attaining the status of a developed country is also given. New Zealand is well placed to take many and diversified opportunities available in these countries. However, this will require a calculated step before engaging them.
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