The plight of the less essay

The plight of the less developed countries has become one of the most hotly debated issues in international affairs. World-wide organizations have been established with the common purpose of uniting the less developed countries to obtain resources from the developed countries. Opinion leaders are almost unanimous in their belief that the developed countries have a duty to aid the poor countries. Broadly defined, an emerging market is a country making an effort to change and improve its economy with the goal of raising its performance to that of the world’s more advanced nations.

Emerging markets however are not necessarily small or poor. China, for example, is considered an emerging market. It has vast resources and a population of more than a billion people. Bangladesh is also an emerging market. It is less endowed with resources and has yet to launch a satellite. Still, both countries have gone to considerable lengths to make their economies strong, more open to international investors, and more competitive in global markets. Antoine W. van Agtmael, an employee of the World Bank’s International Finance Corporation, is credited with coining the term “emerging markets ”in 1981.

But the concept of investing in less developed countries with potential for economic expansion has been a part of individual and institutional investment strategies since the 19th century. Emerging markets are the recipients of a variety of international financial support programs to boost their economies. These include loans and other assistance from such multi-national organizations as the International Monetary Fund and the World Bank, foreign aid from wealthy nations like the United States, and special trading status with reduced tariffs for their exports to more advanced countries.

Some international investors favor emerging-market stocks and bonds because of the potential for high return in a relatively short period of time. There is a great deal of risk involved in these investments because emerging markets are by definition in a state of transition and subject to unexpected political and economic upheavals. The values of their stocks, bonds, and currency can change drastically and without notice. It is true that capital generated in the industrialized countries finds its way to the less-developed and emerging markets.

Capital flows from industrialized countries to developing countries accelerated in the 1980s and tripled between 1990 and 1996. According to the global association of financial firms, “private capital flows to “emerging markets” reached their lowest level in 10 years in 2002, dragged down by a global recession, security concerns and US-Iraq war. ” Events in Iraq provide challenging conditions as much for emerging markets in the Middle East as throughout the world. Investor confidence and attitudes have proved as fragile as weak economies.

According to Gary Hufbauer, senior fellow at the Institute for International Economics, external debt relative to exports in most Latin American countries exceeds well over 100%, and in Brazil hits about 400%. Excluding Japan, in Asia 50% to 80% is the medium range, he said. While emerging market performance has been largely stagnant over the past year, some successes stand out. For example, “Russia has received huge inflows and has rewarded investors with significant, albeit unfinished, reforms.

Elsewhere in countries such as the Philippines a middle class is rapidly emerging that is providing fast-growing appetite for consumer credit and other banking services. ” Noteworthy is that Chile and Mexico, the only investment grade sovereign credits in Latin America, are among the most open economies in their home region in terms of trade and investment flows. In conclusion, it must be said that for successful existence, emerging markets need to have consistency in their polices.It should be so because a substantial portion of the cause of the poverty of the less developed countries is directly attributable to their own governmental policies.

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