Introduction
Emerging markets make up a significant percentage in terms of the global population and global economies due to their strong relationships and linkages through geopolitics, finance, and trade. Investors are usually keen on understanding the direction taken by the existence and operation of emerging markets from both domestic and global perspectives for them to develop effective market strategies (Kose and Prasad, 2010).
Domestic and Global Perspectives in Defining an Emerging Market
From a domestic perspective, an emerging market refers to an economy that tends to make progress as well as advancements with regard to local debt liquidity and local equity. In this case, this market is subject to a certain form of regulation and exchange but maintains infrastructures and economies within a domestic environment. With regard to a global perspective, an emerging market refers to the economy of a country that has previously been developing to the extent of beginning to realize industrialization, modernization, and rapid economic growth. To that extent, it is worth noting that emerging markets from a domestic perspective as well as from a global perspective generally lack appropriate standards and efficiencies that regulate the operations and environments of markets from advanced economies (Kose and Prasad, 2010).
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Importance of an Emerging Market from a Domestic Viewpoint
From a domestic point of view, emerging markets are important in the sense that they either positively or negatively influence the performance of the domestic markets such as in the American market. One of the positive influences of the emerging markets is that they play a vital role in increasing and improving various aspects of innovation where domestic markets are exposed to more opportunities through the elimination of market barriers. In this regard, there is enhancement with regard to labor mobility, competition as well as research and training. This unleashes entrepreneurial vigor and commitment that is important to the attraction of a wide range of investment ideas. Emerging markets also play an active part in facilitating increased sharing and exchange of technology across different economies. This helps in creating a standardized and a more reliable balance when it comes to patenting and protection of intellectual properties as well as various innovations. Additionally, emerging markets are critical in sustain direct investments which result from the removal of unnecessary barriers between various economies (Pelle, 2007).
Importance of an Emerging Market from a Global Viewpoint
From a global point of view, emerging markets are important in the sense that they are often responsible for the formation and development of new partnerships that are responsible for economic growth. This is because of emerging markets, when put together, account for more than half of the global Gross Domestic Product. Moreover, most emerging markets around the globe have managed to contribute substantially towards a steady growth of the global economy from the time that a financial crisis raided the global market in the previous decade. As such, emerging markets have continued to play a crucial role in supporting advanced and developed economies by creating and sustaining many jobs and employment opportunities (Pelle, 2007). In addition, a global viewpoint of emerging markets clearly indicates that these markets often create major driving forces that propel the global economy towards reducing levels of poverty by significant margins. Furthermore, it is important to appreciate that a global viewpoint of emerging markets is vital in relation to the manner in which it aids in the evaluation of events and trends of different economies around the globe. Emerging markets have also assisted developed markets around the world in broadening and changing their business environments to accommodate new ideas thus creating more investment opportunities (Kose and Prasad, 2010).
Conclusion
In summing up, the domestic market in America finds emerging markets to be a crucial component in their present and future interactions at local and global levels. Both global and domestic views of the importance associated with emerging markets are important considerations businesses and investors in the assessment of the present and future markets potentials.
References
Kose, M. A., & Prasad, E. (2010). Emerging markets: Resilience and growth amid global turmoil . Washington, D.C: Brookings Institution Press.
Pelle, S. (2007). Understanding emerging markets: Building business BRIC by brick . New Delhi: Response Books.
