Whether a business sells products and services or invests in infrastructure, resources, and people, opportunities abound throughout the world. As situations in the United States, in the West, and with traditional trading partners stagnate, companies must be more aggressive in spotting trends.

Identifying and taking advantage of changing economic conditions in emerging markets is a way to position for growth. These economies carry risks, such as political and social instability, but businesses cannot afford to overlook the potentially outsized opportunities. Reflecting this, advanced studies in the online Master of Business Administration (MBA) in International Business program from Barry University explore the unique cultural, ethical, and financial challenges and opportunities involved with global expansion, investment, and management in existing and emerging markets.

What Are Emerging Markets?

Emerging markets are countries with smaller economies (at least historically) that show rapid growth and global engagement in a short time. They typically demonstrate a high gross domestic product (GDP) relative to their size. In other words, a region or country’s policies and populace drive improved productivity and economic output due to education, industrialization, and the proliferation of productivity-enhancing technologies.

Definitions or classifications of what regions or countries are currently considered emerging markets vary. But, regardless of the classification system, emerging markets account for a large proportion of global economic growth — the majority of growth by most estimates.

According to Statista, the combined GDP of the world’s emerging and developing economies exceeded 42 trillion U.S. dollars in 2022, equaling over 40% of the combined global GDP. According to other sources, emerging markets actually contribute the majority of the world’s GDP. Nasdaq reports that the ten largest emerging markets alone constitute roughly 31% of the global GDP.

Clearly, emerging market economies drive a great deal of global economic growth. These nations will experience the highest economic growth as they approach the standard of living of developed nations because at this stage they attract worldwide investments in their companies and infrastructures in the form of equities, venture capital, and bonds. Investment flows are increasing to emerging economies with the proliferation of exchange-traded funds (ETFs), many of which are specific to emerging economies, enabling individual investors to benefit from development opportunities.

Which Are the Leading Emerging Markets?

Nations in what is known as the BRICS group are among the leading emerging markets and most important developing countries. They have several things in common, including large populations, strong natural resource bases, positive demographic trends, global or continental influence, and a desire to improve international representation of, influence of, and investment in emerging economies. The original BRICS nations are also now among the top global economies. In fact, taken together, BRICS countries recently overtook G7 countries in terms of total GDP and purchasing power polarity, according to Statista.

BRICS began as BRIC, an acronym for Brazil, Russia, India, and China. South Africa joined the group in 2010, and BRICS recently invited several other countries to join. Numerous emerging markets in what’s known as the “global south” are vying for a position in the group. The following are the initial BRIC members:

  • Brazil: Brazil was the largest economy in South America and the 11th largest economy in the world in 2022, according to Investopedia. Brazil struggled with inflation and a severe recession prior to the COVID-19 pandemic and faced the pandemic’s widespread economic impacts. But the country’s economy rebounded substantively in years since. Brazil is rich in natural resources, including offshore oil and iron ore. It has a growing technology sector and is a cheap producer of industrial and consumer goods.
  • Russia: The eighth largest global economy in 2022, according to Investopedia, Russia is known for its energy industry and is one of the world’s leading exporters of oil and natural gas. Emerging industries include information technology, telecommunications, and software. It is also a rogue nation in many ways, at least from the perspective of the U.S. and other democracies. This status has hurt the Russian economy at times, as with global sanctions imposed on Russia due to its 2022 invasion of Ukraine.
  • India: The most populous country — and democracy — in the world, India is known for its information technology and outsourcing industries, as well as manufacturing and farming. Investopedia places India as the world’s fifth-largest economy in 2022. Demographics are in India’s favor with a young, working population and an expansive higher education system.
  • China: China is the world’s second most populous nation — barely — and the second largest economy in the world, trailing only the U.S. China saw extremely rapid growth over recent decades, though its economy slowed substantially during and after the pandemic. Still, many economists expect China to surpass the U.S. and become the world’s largest economy. China is widely known for its manufacturing sector with its low-cost labor. There is social instability, however, caused in part by a huge gap between the rich and poor, and political instability caused by lack of cooperation with western trading partners, including intellectual property rights violations.

How Do Emerging Markets Affect International Business?

When educational opportunities take hold, countries become leaders in technological innovation. When demographic trends align, such as a higher-than-usual percentage of young working people, labor pricing competition enables companies to become price leaders. This poses a challenge for countries with higher labor costs, driving them to compete by using technologies like AI and automation to drive down labor costs and drive up productivity, all of which benefits global GDP.

As smaller economies start to develop, they attract the capital they need for their infrastructures to grow in ways that are viable long term. India and China’s economic ascendance is letting the countries join global accords, address serious pollution issues, and elevate the standard of living and economic well-being of citizens.

How Might Small Businesses Invest in Emerging Markets?

Businesses that want to grow in every industry must diversify their investments. Diversification of markets enables them to take advantage of rapid growth cycles in emerging economies, to reduce the cost of research and development by having a much larger potential payoff, and to mitigate the risks of overinvesting in fewer countries.

The effect of adding emerging markets to a business’s portfolio can be one of high long-term growth and less volatility and dependence on the political, social, and economic factors that can tank a nation. As the world becomes more chaotic, investing in emerging markets can actually reduce volatility in business revenues and values. Aspiring global business leaders interested in learning about the complexities of effective and ethical international investments can do so through advanced studies in Barry University’s online MBA in International Business.

Learn more about Barry University’s online MBA in International Business program.