During the late 1980s, some institutional investors observed that instead of investing in established and developed economies, emerging and yet developing markets would offer higher growth rates. Considering the fact that these markets were in their nascent stage and were beginning a process of consistent and progressive economic growth, it made more sense to indulge in growing markets rather than opt for the traditional method of investing in slowly saturating developed market. The growth of the investment will increase with growth of the economies and would give a better opportunity to capitalize the potential of a would be-developing market.
In the last twenty years, various foreign institutional investors have invested capital, time and energy in these markets. In return the growing economies have prospered more and more and brought validation to their observation.
Currently, the BRICs economies have proved to be the biggest potential among all emerging markets. The BRIC countries comprises of Brazil, Russia, India and China. Their continuous economic growth has encouraged various market leaders to invest in them and has proven to be a confidence boosting factor in the growth of these industries.
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In the upcoming ten years, Brazil, Russia, India and China are trusted to become the next super powers and induce huge economic and industrial growth in their economies. Their continuing support to various industries and efforts to bring in sustainable development for an elongated period of time has proven to be supporting factors for breeding grounds of domestic as well as foreign industries.
The major factor that worked for these emerging economies is their ability to open their markets to international opportunities. Investors have and will always seek fresher pastures with the aim of greater developments. Along with the support and capital brought in by these companies, the nurturing environments of these economies have created an incubator for home-grown entrepreneurial ventures.
Other factors behind the success of these BRIC economies vary from country to country. For example, Japan and Korea have mainly based their growth on manufacturing prowess. Similar path has been adopted by China. Its favorable market conditions, manufacturing prowess and gigantic human capital is supporting it’s towards becoming the next super power. Brazil and Russia, on the other hand, look towards capitalizing their natural resources and continually increase the gross domestic product of their economies. India is the lone economy that is basing most of its growth and development on the skilled manpower and outsourcing capabilities of the country. Due to the currency valuation differences between Indian Rupees and the currencies in developed countries, Indian companies use this to their advantage for increasing revenues. Among the BRIC countries, China and India have displayed the highest real GDP growth over the past years.
Once these economies pass on to being the next super powers it will be time for a new set of emerging economies to take their place. It is being predicted that the next 11 countries which have the potential of being the largest economies in the 21st century include Iran, Bangladesh, South Korea, Indonesia, Mexico, Nigeria, Pakistan, Philippines, Turkey and Vietnam.