Monthly Archive for March, 2011

The World Economy Shifts Eastward

Published on March 24, 2011 in Emerging Markets. 0 Comments Tags: .


Danny Quah, Professor Quah, an economist at the London School of Economics, has calculated “the average location of economic activity across geographies on Earth” through the last few decades, and found that it has been moving further east. Download the paper here.

[I]n 1980 the global economy’s centre of gravity was mid-Atlantic. By 2008, from the continuing rise of China and the rest of East Asia, that centre of gravity had drifted to a location east of Helsinki and Bucharest. Extrapolating growth in almost 700 locations across Earth, this article projects the world’s economic centre of gravity to locate by 2050 literally between India and China. Observed from Earth’s surface, that economic centre of gravity will shift from its 1980 location 9,300 km or 1.5 times the radius of the planet [Source].

Why diversification is back in fashion

Published on March 4, 2011 in Emerging Markets. 0 Comments Tags: , , , .

Over the past decade the world’s corporate pecking order has been disturbed by the arrival of a new breed of multinationals from the emerging world. These companies have not only taken on Western incumbents, snapped up Western companies and launched exciting new products. They have challenged some of the West’s most cherished notions of how companies ought to organise themselves: focusing on their core activities and buying ever more services from the market [Source].

Many emerging-market multinationals are focused companies that are admired in the West: the likes of India’s Infosys Technologies (for IT services), Brazil’s Embraer (aircraft) and South Africa’s MTN (mobile phones). But others are highly diversified. In some ways these groups look like throwbacks to old-fashioned Western conglomerates such as ITT. But in other ways they are sui generis: much more diversified and readier to blur the line between public and private [Source].

A growing number of them are proving that they can compete in global markets as well as in sometimes rigged local ones. The Boston Consulting Group lists the rise of diversified global conglomerates as one of five trends that will shape the future of business.

In the long run most of these emerging conglomerates are likely to follow the same path as Western companies: focusing on their core activities and buying ever more services from the market. But Western companies also need to recognise that—for the time being at least—these diversified giants have plenty to offer [Source].