Impact of Emerging Nations in a Globalized World

1. Impact of Emerging Nations in a Globalized World Academy Speaks 2011 University Excellence Award in Research Texas A&M University-Corpus Christi A. N. M. Waheeduzzaman Professor of Marketing and International Business College of Business Mary and Jeff Bell Library May 3, 2011

2. Self-Introduction • Born and raised in Bangladesh • Educated in Bangladesh and USA • MBA in Marketing-Dhaka University, Bangladesh • MBA in International Business-George Washington University • Ph.D.-Kent State University • Came to USA about 25 years ago, to Texas about 10 years ago in 2000, as fast as I could, and joined TAMUCC • Teaching and Research Interest: Marketing and International Business

3. Thank You All • African proverb: it takes a village to raise a child. Perhaps, it also applies in my situation. It takes a university, with a good support system and a great group of colleagues, to perform and win awards. • To College of Business Awards Committee and University Awards and By-Laws Committee • To the University for Research/Data Support [especially, Global Market Information Database (GMID)] and Travel Support • Thanks to the following individuals for nomination and support: Drs. Moustafa Abdelsamad, Abbas Ali, Patrick Carroll, Leon Dube, and Marilyn Spencer • To all my Student Assistants for the great help over these years

4. Presentation Outline • This presentation is from the following article published in April, 2011. • Waheeduzzaman, A. N. M. (2011), “Competitiveness and convergence in G7 and Emerging Nations,” Competitiveness Review, 21 (2), 110-128. • Who are Emerging Markets? Why study them? • How are they going to affect the U.S. or the World? • What would be the policy implication for business and government? • Impact or implication in three areas: economic, political/international relations, and society/culture

5. Naming of Emerging Markets • Antoine van Agtmael, an officer of the International Finance Corporation, is credited to have coined the term in 1981 • He wrote a bestseller The Emerging Markets Century in 2007 published by The Free Press

6. Who are the Emerging Markets?

7. Data Collection • G7 (Developed) countries: Canada, France, Germany, Italy, Japan, United Kingdom, and United States. • Big Emerging Markets (12 countries): Brazil, China, Egypt, India, Indonesia, Mexico, Poland, Philippines, Russia, South Africa, South Korea, and Turkey. • BRIC nations: Brazil, Russia, India, and China. • Time period: 1980-2009 and 1980-2020 • Data source: Most data came from the Global market Information Database, Euromonitor; The World bank, Heritage Foundation, Freedom House, and the United Nations

8. Comparative Series Data Figure 1: Per Capita GDP

9. Comparative Series Data Figure 2: Real GDP Growth

10. Comparative Series Data Figure 3: Index of ageing

11. Comparative Series Data Figure 4: Trade % of GDP

12. Perspectives in Competitiveness Table I:Perspectives in International Competitiveness Note: The table has been adapted and updated from Waheeduzzaman and Ryans (1996).

13. Comparison of GDP, Trade, and FDI Table IIA: PPPGDP-Total and Ratio in Percentage

14. Comparison of GDP, Trade, and FDI Table IIB: World Trade-Total and Ratio in Percentage

15. Comparison of GDP, Trade, and FDI Table IIC: FDI-Total and Ratio in Percentage

16. Table III: Top Seven Economies Based on GDP measured at PPP (in billions), 2009 US Dollars

17. Table IV: Comparative position of G7, BEM and ASEAN A. Series and Growth Variables

18. Table IV: Comparative position of G7, BEM and ASEAN B. Average of Various Indices

19. Table IV: Comparative position of G7, BEM and ASEAN C. Summary of Findings

20. Convergence between G7 and BEM Yi = D (t) = α + β1 t + β2 m [Equation 1] where, Yi = Mean growth of the variable in G7 and BEM t = Discrete time interval t m = Type of market dummy variable, where, 0 = BEM and 1 = G7. ΔYi = α + β1 t1 [Equation 2] where, ΔYi = ((YG – YE)/ (YE))*100 YG = Mean score of the variable in G7 YE = Mean score of the variable in BEM t = Discrete time interval t

21. Table V: Testing Difference and Convergence between G7 and BEM A. Time growth model (Equation 1) Note: ** = significant at α <.05 level.

22. Table V: Testing Difference and Convergence between G7 and BEM B. Growth of proportional difference (Equation 2) Note: ** = significant at α <.05 level.

23. Summary Comparative Economic Growth • BEM is growing at a rate double than that of G7 • 50% of growth comes from only 4 nations: Brazil, Russia, India, and China (BRIC) • By 2020, four out of seven top economies will be in the emerging markets • BEM has 65% of the global population compared to 13% in the G7 • BEM has 8% of global wealth, collective “demand pull” is high • BEM enjoys 21% of global trade • BEM and G7 are converging, though slowly

24. Impact of Economic Growth • A new economic revolution?- the phenomenon can be compared with the Post-Industrial Revolution growth, shift in global “wealth creation” and change of “production center”- is the center of gravity changing from Europe/ North America to Asia? • The demand pull- increased consumer expenditure and purchasing power in emerging nations • Intense competition- for markets and resources (especially energy) • Environmental depletion/degradation- very high • A realtivley weak dollar making the situation complex?

25. Carbon Emission

26. Impact on Political and International Relations • Economic growth may have helped democracy? • Is a new political reality emerging because of the shift of the center of gravity? • Emerging nations’ political power is evident in.... • UN- expansion of Security Council • WTO- Doha Round negotiations • IMF- dollar as a global currency • Military modernization, satellite-based communication infrastructure, and competition in cyber space are increasing • Economic Integration (ASEAN, MERCOSUR) and cooperation among emerging nations increasing • Will this lead to polarization? Will China, India and Russia be the next pole?

27. UN Security Council Expansion India, Japan, Brazil and Germany

28. China, India and Russia- A new pole emerging? • Rise of China- in their mind, the 21st Century is the “Century of the Dragon” • Asia is at the center of growth, ASEAN nations’ cooperation with China and India increasing • Shanghai Cooperation Organization (China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan) meets every year- a Central Asian or Eurasian Alliance? • India and Russia have been strategic partners for about 50 years- India’s place is in Asia and she needs a Super Power support • Chinese and Russian heads of the states/leaders are meeting almost every year

29. Social and Cultural Impact • Globalization of consumption- a new culture emerging (McDonaldization?) • Consumers rely on global brands- brands from emerging nations are entering • Global travel growth- 15% in emerging nations, the 2016 Olympic in Rio de Janeiro effect • A new genre of “world citizenship” is emerging through Internet, Google, Youtube, Facebook or Myspace where youths from the emerging nations are playing a significant role • They eat fast food, wear, blue jeans, listen to Beyonce, have a Facebook account, love tweeting and texting, chat via hotmail, and think that their governments are trapped in old ideological conflicts.

30. Selling Coffee in China

31. Would like to be buried with Coke? Coca Cola Coffin in Ghana

32. Big Mac Index

33. Promoting Kimono in Kyoto (Do you notice the Gucci bag?)

34. World’s Tallest Buildings

35. Want to buy a house in Palm Island, Dubai?

36. What should be done? • America faces the largest budget deficit, the largest trade deficit and the largest debt- need attention at individual and collective level • Look for markets and allies in emerging markets, engage in “commercial diplomacy”- proposed by Secretary Ron Brown and Under Secretary Yale University Professor Jeffery Garten (source: The Big Ten, 1997) • Also, there is a classic rational choice issue- where to spend, how to allocate resources, GUN or BUTTER? – a very contentious political issue?

37. What should be done?...continued • Yale University Professor Paul Kennedy (1987) in his The Rise and Fall of the Great Powers states: • Great Power ascendancy correlates strongly to economic resources • And, military "over-stretch" not supported by economic resources causes the decline • Ancient Indian materialistic philosopher Charvak (like Greek philosopher Epicurus) notes: live happily, eat butter, even if you have to borrow. • Interestingly, he has few followers in India but many in America • Today, the followership is increasing in India because of their new-found affluence • Treasury Secretary Geithner’s (October 17, 2009) call- we should live within our means (will that reduce the debt?)

38. Conclusion:Are we on the right track? • America is one of the most creative nations on earth; so far, she has risen to her feet whenever needed- e.g., WWI, WWII, Great Depression, or global calamities • Two world wars should have taught us that war is not a good means to resolve disputes. Belief in peace and diversity and sharing of global resources are fundamental to global economic prosperity • Even if we disagree let us continue the debate to get to the right track- hopefully, with creativity, collective vision, and leadership we will get there…..

39. If they can do it in the sky we can do it on the ground International Skydivers in Thailand

40. Thank you for your time Questions? Comments?