Thursday, January 26, 2012

Chasing Emerging Markets

The most exciting development of the last two decades was the rapid expansion of the emerging markets.

Third world countries that used to wallow in dire poverty have begun to take shape as vibrant modern economies.

During the Bush era, the emerging markets surged forth as the primary growth areas in the world economy.

Intelligent business leaders have learned that they need to identify and chase growing markets. As the emerging markets were the primary growth area in the world, American companies were wise to seek a part in the action.

I dislike that some companies have outsourced jobs simply to cut costs; however, I believe the driving economic force behind outsourcing was the desire of US companies to diversify their portfolio and to chase opportunities in the exciting growth of the emerging markets.

There are many voices calling for a new age of protectionism, and for the United States government to begin penalizing firms for investing in the emerging markets.

I find this new atmosphere of protectionism troubling.

The call to penalize American businesses for investing in the emerging markets will not stop growth around the world. Programs to penalize American companies for participating in emerging markets will simply hurt the interest of American businesses, while triggering trade wars against our nation.

I agree that rhetoric against companies that outsource to lower employee costs is effective. However, since it is impossible to determine the intent behind actions. there is no way to separate those firms seeking to engage in emerging markets from those simply seeking to lower costs. As the former is far more important than the latter, I'm inclined to push compelling rhetoric aside and say that America companies should seek opportunities in the emerging markets and we should avoid the protectionisth stance.

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