StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Analysis of Emerging Markets: Turkey and Peru - Essay Example

Cite this document
Summary
"Analysis of Emerging Markets: Turkey and Peru" paper discusses Turkey and Peru's markets putting in mind that some of the factors that have contributed to their emergence are: The significance of trade, the role of the government, investments, and savings, and education among others…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER95.8% of users find it useful
Analysis of Emerging Markets: Turkey and Peru
Read Text Preview

Extract of sample "Analysis of Emerging Markets: Turkey and Peru"

Emerging Markets Emerging markets are becoming the fastest drivers of global development. These markets are expected to grow twice or thrice the number of developed countries like the United States. The public investor continues to underweight these developing markets in their collections. Corporate profits seem to grow rapidly when there is a higher economic growth. One of the reasons why developed markets like the U.S have been ranked high is because of the development of markets outside the country. Some nations are borrowing a leaf from the U.S and are performing well as emerging markets. They include Brazil, Indonesia, Chile, Israel, Egypt, Turkey, Pakistan, Russia, Peru, and Korea. In this context, Turkey and Peru are the markets discussed, putting in mind that some of the factors that have contributed to their emergence are: The significance of trade, the role of the government, investments and savings, and education among others (Larrain, Helmut &Maltzan 67). Factors that have allowed Turkey to move up the development ladder Importance of investments and savings Historically, Turkey has been dependent on developed markets for a huge portion of its investments and savings. However, the country is now focusing to engage in more business with other regions of the world, with the Middle East, Asia, and Africa included. It is this shift in focus that is accelerating the growth and investment of Turkey. In addition to this, Turkey has in recent years overcome a sequence of economic and political challenges and is now benefiting from a period of solid and stable economic growth, which enables it to grow at least five percent yearly. Its world class characteristics include the strategic position at the crossroads of the Middle East, Europe, and Asia. To add on these strategic positions, the huge size of its domestic markets also attracts some investors, who remain confident about the country’s features. The goods market below shows relationship between the savings and investments of Turkey at equilibrium. The role of the government, its policies and programs The structural transformation of Turkey was generated by political stability and economic reform. First, the newly implemented FDI frame law by the government marks the foremost instalment of this economic reform to alter the investment setting in the country and make it attract global investors. The FDI frame law ensured equal treatment to all investors regardless of the initial authorization request to move dividends freely, to be guarded against expropriation, to get access to real estate, and to hire emigrants. Turkey reduced corporate tax from approximately 33% to 20% for each company. The reason for doing these was to make Turkey one of the leading liberal nations worldwide in terms of the investment environment and for FDI framework. The consequence of this transformation have been promising and significant, since the country started to grow at a faster rate after 2001 and it now has the utmost industrial power as well as the one of the leading free-market economies. The economic programs were founded on a powerful macroeconomic policy framework. Some of the broad-ranging structural government reforms are a key renovation of the banking system. A liberal foreign investment government, a better investment atmosphere, and privatization are the major pillars of government reform. The economic programs joined with supervisory and regulatory reforms improved the Turkish economy’s toughness to shocks. Consequently, Turkey emerged from the international crisis to be among the globe’s fastest-growing economies (Aguiar, & Gopinath 23). Educational level The availability and access of highly learned personnel is a position-specific element that has made Turkey emerge economically. High educated person are highly required by businesses that invest in technological businesses and have assets in skills like the capabilities to develop intangible or differentiated products. The presence of elites in interaction with labour costs has impacts on Turkey’s decision to go international in the sense that it may find experts on location or can convey its own personnel from the local position. This involves a great quantity of cost for investment as shown in the labour graph. (Guimaraes & Karacadag 34). Even though some improvements have been achieved in the education sector, Turkey still had to do more in the sector to maintain its status as an emerging market. This will involve the Bologna model or process that will ensure that higher education is improved to suit the economic growth. The model will ensure that specialization and division of labour become more productive. Importance of trade Turkey has been experiencing export-led development since the late 90s. This is according to Erce 5. By desirable quality of economic reforms, limitations on imports have been lifted, liberalization of exchange transactions, and safeguard practices were lessened. The outcomes of the economic reforms realized during the last years, both the composition and volume of the Turkish trade have changed drastically, thus increase in exports. Turkey has been on the front line in promoting investment and trade with its previous regional rivals, Iran and Syria, thus making its yearly trade with the Arab world a big success. Factors that have contributed to Peru’s emergence market The role of non-tariff policies in trade For a long time now, trade linearization has been utilized as a development tool as evidenced benefits realized to Peru while engaging in world trade. Bilateral, multilateral, and regional trade negotiations plus non-reprisal concessions have resulted in a credible reduction in average tariff safety. With positive market access states, international trade has rocketed to previously unrealized levels, thus raising the standards of living and welfare of the country.# The role of government According to the finance minister of Peru, Luis Miguel, the government is seeing through a package of reforms that will enable the economy to be much predictable, even if it, will mean fighting with the state’s unions. The administration under President Ollanta Humala is pushing forward programs of measures such as procurement law and labour market reforms. In addition, a third time of capital market reform is being put in place to facilitate SME entry and a restoration of fiscal regulations. Such reforms have made and would still make Peru a better place for investment and give a favourable environment for trade and economic growth. Rapid economic growth According to the economic growth theory, there may be a long-term increase in employment, output, or income. Peru has a record of rapid economic growth due to a sustained procedure of economic reforms and conducive external conditions. The fall in trade during the final years of 2008 included a fall in the Peruvian exports, leading to the slowdown in economic growth, indicating the theory of prices. However, authorities reacted quickly and initiated counter-cynical measures. For instance, the central Bank offered plenty of liquidity stimulus strategy that was equal to 2.5 percent of GDP in the year 2009. It therefore began to raise the interest rate to the present level at 3%. In the year 2010, recovery was realised so quickly that GDP increased at the rate of 9%. From that time to date, Peru has maintained a stable economic growth that has seen it produce surpluses for the international market. Depreciation or the fall of trade and investment thus relate as indicated by the Solow model below. The commodity advantage of Peru According to Kamin, Schindler, and Shawna, Peru can trace its partnership with other countries for a long period of time. It is this same tradition that has helped to push the country into a thriving economy today. AT the same time, much of Peru’s success depends on its export of copper, oil and gold. Fortunately, international mining companies tend to continue having interest in these valuables, thus maintaining its global image. The production Possibility Curve (PPC) below shows the maximum production of copper and gold. Difficulties that the above countries may run into, as emerging markets One of the major challenges that the above emerging markets might face is boosting productivity so that they can continue developing in the competitive world of business. The biggest struggle will most likely to be labour reform, which might not be easy to achieve in the long run. This means that identifying labour markets might still be rigid even when time changes. On top of this, the cost of fines continues to rise, and payroll deductions may not reduce anyway. The two countries will have to seek for appropriate ways to be more flexible and at the same time maintain a balance with the rights of labour, which is not something to be achieved within a short period (Bekaert 80). It is also clear that the above emerging markets are moving towards a variation of state capitalism. Probably, this may imply a delay in reforms that favour the productivity of the private sector and economic share, as well as a greater economic obligation for public enterprises, trade protectionism, imposition of capital controls, resource nationalism, and industrial policies. Further, while Turkey seems to run contemporary account surpluses, it is in real sense running deficits. These deficits will most likely be financed in risker techniques such as more debt than equity, more foreign currency debt as compared to domestic currency debt, and more short-term debt compared to long-term debt. For the case with Peru, the idea of non-tariff barriers will most likely imply a negative effect on trade. Works Cited Aguiar, Mark, and Gita Gopinath. Emerging market business cycles: The cycle is the trend. No. w10734. National Bureau of Economic Research, 2004. Bekaert, Geert. "Market integration and investment barriers in emerging equity markets." The World Bank Economic Review 9.1 (1995): 75-107. Guimaraes, Roberto Pereira, and Cem Karacadag. The empirics of foreign exchange intervention in emerging markets: the cases of Mexico and Turkey. Vol. 4. International Monetary Fund, 2004. Kamin, Steven, and Karsten Von Kleist. The evolution and determinants of emerging market credit spreads in the 1990s. No. 68. Bank for International Settlements, Monetary and Economic Department, 1999. Kamin, Steven, John Schindler, and Shawna Samuel. "The contribution of domestic and external factors to emerging market devaluation crises: An early warning systems approach." FRB International Finance Discussion Paper 711 (2001). Larrain, Guillermo, Helmut Reisen, and Julia Von Maltzan. Emerging market risk and sovereign credit ratings. No. 124. Organisation for Economic Co-operation and Development, 1997. Luo, Yadong, and Rosalie L. Tung. "International expansion of emerging market enterprises: A springboard perspective." Journal of international business studies 38.4 (2007): 481-498. Ercel, Gazi. "Globalization and the Turkish economy." Transcript of Presentation at Vanderbilt University (2006). Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Emerging markets Essay Example | Topics and Well Written Essays - 1000 words”, n.d.)
Emerging markets Essay Example | Topics and Well Written Essays - 1000 words. Retrieved from https://studentshare.org/macro-microeconomics/1490770-emerging-markets
(Emerging Markets Essay Example | Topics and Well Written Essays - 1000 Words)
Emerging Markets Essay Example | Topics and Well Written Essays - 1000 Words. https://studentshare.org/macro-microeconomics/1490770-emerging-markets.
“Emerging Markets Essay Example | Topics and Well Written Essays - 1000 Words”, n.d. https://studentshare.org/macro-microeconomics/1490770-emerging-markets.
  • Cited: 0 times

CHECK THESE SAMPLES OF Analysis of Emerging Markets: Turkey and Peru

Countrys Analysis of Turkey

From the paper "Countrys analysis of Turkey" it is clear that generally, the EU enjoys a good relationship and the EU is ranked a top import and exports whereas Turkey is considered number seven in the EU's top imports and fifth in the case of exports.... The economic system in the republic of turkey can be classified as either capitalist or communist.... Considering that turkey is developed or undeveloped may be very complex, this is because the country is divided into two in terms of development....
12 Pages (3000 words) Term Paper

Turkeys Textile Sector Analysis

This thesis "turkey's Textile Sector Analysis" discusses the importance of the textile, clothing, fiber, and yarn sector in turkey.... The study finds that turkey is one of the leading cotton-growing nations in the world.... turkey is a major cotton grower but is no longer a major cotton exporter.... With the aim to recommend what other markets or countries with a declining position in the textile market could learn from the way turkey managed to turn around their textile sector and which strategies they could take over to overcome their declining position, this study was conducted, three objectives were laid down in the first chapter and all three have been achieved....
27 Pages (6750 words) Thesis

Valuation of Nonlisted Companies in Emerging Markets

n the past few years, emerging markets such as China, India, Thailand, and other south east Asian countries have caught the attention of the developed world.... It is very important to critically examine the valuations of these non-listed companies in emerging markets, before a foreign or even a domestic investor puts in his capital.... he group concluded that there was a need for better corporate governance, meeting compliances, increase in size and capital ploughed in, transparency and working towards shareholders' benefit in non listed companies in the emerging markets to help the economy which, in many case was dependent on the success of these family-owned entities....
4 Pages (1000 words) Essay

Potential for Setting up a Business of Freezers

Instead of investing in developed countries, it is more interested in setting up businesses in the emerging markets of Africa, Europe, and Asia.... It wants to invest in one of the three emerging markets of Egypt, Turkey, and Dubai.... The essay "Potential for Setting up a Business of Freezers" focuses on the critical analysis of the potential of three developing regions for setting up a business of freezers, namely Egypt, Turkey, and Dubai.... If a person wants to set up a new business or to expand his/her existing business, it is very important to conduct a rigorous analysis of economic, political, social, and technological environments of various areas before selecting any particular area for locating his or her firm....
17 Pages (4250 words) Essay

Screening Technique for International Investment in the Emerging Markets of the Telecommunication Industry

"Screening Technique for International Investment in the emerging markets of the Telecommunication Industry" paper develops a methodology to evaluate the attractiveness of international investment in emerging nations.... The methodology developed by Estrad based on downside risk with respect to a benchmark return and several alternative risk variables has been selected to evaluate the attractiveness of international investment in the telecommunication industry in the emerging markets....
12 Pages (3000 words) Research Proposal

The Importance of the Textile, Clothing, Fiber and Yarn Sector in Turkey

This paper "The Importance of the Textile, Clothing, Fiber and Yarn Sector in turkey" focuses on the fact that apparel manufacturing is one of the most globalized industries in the world.... Italy continues to lead in the luxury segment and turkey is closely connected to Italy.... turkey is emerging as a critical regional player.... Major restructuring is taking place in the sector due to intense competition from low-cost products from China in the European Union and the US, both of which are the principal markets for turkey's textile sector....
27 Pages (6750 words) Thesis

Institutional Environment and Sovereign Credit Ratings

Hence these credit ratings can directly impact the ability of firms in that country to be open for global capital markets.... 66 irrespective of developed or emerging countries.... In the paper “Institutional Environment and Sovereign Credit Ratings” published in the Financial Management in August 2006: 53-79, the authors examined the cross sectional determinants of sovereign credit ratings of 86 countries....
10 Pages (2500 words) Assignment

Investment Opportunities in Turkey

It is recommended that foreign investors storm turkey and exploit the wide range of investment opportunities that are available.... The paper "Investment Opportunities in turkey" is an engrossing example of coursework on finance and accounting.... The objective of this essay is to explore turkey as a country full of investment opportunities and are up for grab from foreign investors like us here in the UK.... A survey was conducted to identify the key investment opportunities that turkey has to provide and how they can be financed....
10 Pages (2500 words) Coursework
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us