In today’s global economy, emerging markets are getting attention from businessmen and investors. For them, the growth of an economy is crucial in deciding whether or not they will involve themselves or their industry in the market. Most of the emerging markets are found in Asia and Africa.
The emerging market offers opportunities, however, it is different than those of developed countries. These markets have some of the characteristics of a developed country, but not all. Moreover, these markets are evolving economically but with the guaranteed growth some challenges must be understood and addressed to navigate success smoothly.
Rapid economic growth also poses risks and challenges yet opportunities, too. What are these opportunities and with these, how are challenges faced?
Opportunities and Challenges in Emerging Markets
Infrastructure Development Challenges and Opportunities
In emerging markets, infrastructure development offers both opportunities and challenges. It is crucial to understand how this development work in your economy to address the potential risks and challenges.
- Insufficient funds. Infrastructure development requires a large amount to fund the target infrastructure project. And as for an emerging market, this is a great challenge because of its limited government resources, and areas like healthcare, social welfare, and education are more prioritized than infrastructure development. Furthermore, the emerging market may not be able to afford the cost of infrastructure project materials, thus, it is important that there should be sufficient funds.
As Murat Yashar, the owner of House of Worktops, has said, “Infrastructure development requires a tremendous amount of funding and this is challenging for emerging markets because they may struggle to find the capital needed. In relation to this, emerging markets may struggle to find people with sufficient technical expertise in infrastructure development. As a result, executed infrastructure projects may fail to meet the needs of the population.
To overcome this challenge, collaboration with international financial institutions and banks to gain access to loans, grants, and financial assistance should be a priority.
- Regulation Issues. Infrastructure development requires extensive planning and processes that should adhere to the permitting and legal systems. For this reason, there could be delays with the infrastructure project building. To address this, it is best to simplify the processes by still abiding by the legal system to expedite the development through clear procedures.
- Inadequate technical experts. Infrastructure development is the work experts in infrastructure can handle. Emerging markets may lack high-skilled professionals like those from infrastructure project development. Because of this, effective planning and implementation will be greatly affected.
- Technology Advancement. Technology is one of the key components of a successful industry, emerging markets are not an exception. As for the infrastructure, if technology is used access to renewable energy and digital infrastructure materials, it can improve the efficiency, feasibility, and connectivity of emerging markets.
- Economic Integration and Growth. This offers great opportunities to emerging markets because this allows emerging markets to connect with larger global or regional markets in terms of infrastructure development. This becomes an opportunity for infrastructure development in emerging markets because this can increase infrastructure, trade, and investment demand.
Skill Development and Talent Acquisition Challenges and Opportunities
Skills development and talent acquisition are one of the areas emerging markets are going to deal with. A market that is approaching becoming a developed country is in dire need of people that has adequate skills and talent that fits the standard of an emerging market.
- Skill mismatch and quality of education. This occurs in emerging markets wherein there is a mismatch of skills and standard job qualifications.
According to Sweetlana Portnaya, who runs Top10.com, “Emerging markets usually experience a mismatch between the skills possessed by an individual and the requirement of the job market. The reason why it’s happening though there is economic growth is that there is limited to no collaboration between learning institutions and industries.”
Consequently, there is a gap between the skills taught in school and the skills required by the job industries.
If the existing educational curriculum and training programs did not align with the developing needs of the industries, then there will be a lack of relevant skills among the graduates that result in skill mismatch. That is why it is essential for emerging markets to invest more in education and vocational training to strengthen the quality of education and produce quality workers.
The same insight of the CEO and founder Rohit Bimbra of Home Healthcare Shoppe who says, “Emerging markets are prone to issues and challenges in terms of skill development and talent inquisition. This includes limited access to quality education and vocational training programs. This can be attributed to various factors one of those is inadequate educational infrastructure because emerging markets can restrict the development of schools, libraries, and modern facilities needed for education.”
The reason for this to happen is insufficient funding for education wherein maintenance of quality educational institutions is either restricted or limited. As a result of a limited investment of the government in education, there will be more underfunded schools or universities that hinder quality education for students.
- Loss of human capital. This is also known as “brain drain”, wherein an industry or market is losing its talented employee and seeks opportunities and transfer to other industries.
In the case of emerging markets which commonly have low-salary income, talented individuals may look for another market/industry that offers high income. Losing skilled individuals may worsen the skill shortage in emerging markets. The way to counter this is to offer competitive salaries that also provide a good work environment and career growth.
- Partnerships with international institutions. Establishing relationships and partnerships with international institutions like universities, training, and research centers can help emerging markets know and gain access to the best global practices to produce a land of skilled professionals.
- Partnership with private sectors. Private sectors are one of the sources of career and skill development opportunities. When government or public institutions establish relationships with private institutions they can provide up-to-date training, apprenticeship, and workshops that ensure to produce skilled workers that are highly demanded by an industry.
By discovering and facing these challenges in emerging markets there will be a large difference in emerging market approach to the challenges and dealing with the opportunities in favor of its economy and the global economy.
The Role of Technology in the Growth of Emerging Markets
Technology is one of the key components of a successful industry, emerging markets are not an exception. Technology revolutionized financial services and platforms in emerging countries such as mobile banking, and digital payments that allow expanded access to financial services.
According to SonderCare CEO, Kyle Sobko, one of the roles of technology in the growth and development of emerging markets is that technology connects the emerging market with the global economy through digital connectivity and communication platforms. As a result, this allows remote work opportunities and new markets for goods and services that help increase revenue and increase market competitiveness.
Additionally, with digital connectivity access to an extensive amount of market information, it enables businesses in emerging markets to identify new market opportunities by being updated with any market trends and competitor strategies resulting in product development and market positioning.
In addition to that, Joseph Melara, Managing Real Estate Broker of Residential Brokers says, “Technology inclusion fosters entrepreneurship in emerging markets. With access to digital tools, businesses can start their own online market, develop innovative solutions and collaborate with international business partners. This leads to the expansion of the economy, the generation of employment opportunities, and more advancement of technology.”
Technology is indeed one of the greatest contributors to any industry including the economic growth of a country.
Risks to face during Global Economic uncertainties
In the event of global economic uncertainties, emerging markets can face multiple risks. It is no surprise that during these times such as recession, emerging markets are prone to risks especially since they are in the process of developing and aiming for economic growth.
“Reduction of global demands”
The possible risks include a potential reduction in global demand and investors that could lead to currency value depreciation and economic growth slowdown. Thus, can affect the economic growth and development of emerging markets.
In regard to this, the Owner of My Medicare Supplement Plans, Loran Marmes, says, “Global economic uncertainties can lead to price volatility wherein there will be an unanticipated change of demand and supply that could trigger price change. It will be either of increase in prices or a price drop. When prices are high, it can boost the earning of the export commodities and contribute to the economic growth on the other hand, when the prices drop it will result in reduced government revenues and trade imbalances.”
To alleviate these risks and other potential risks, emerging markets should focus on the diversification of their economy, development of industries, and improving financial stability through partnerships and the rest of the development needed will follow.
Nevertheless, it is important that emerging markets strengthen their economic resilience to adequately manage the possible risks to their economy.
In conclusion, challenges and opportunities are part of any growth, especially economic growth. Economic growth is not just about good results, and opportunities but alongside it is the risks and challenges that could also affect how an economy connects to the global economy.