Role of economic and political freedom in the emergence of global middle class

The study examines the role of the economic freedoms such as regulatory efficiency, open markets and limited markets, political freedom and rule of law in the growth of the global middle class through international business activity in 34 emerging markets during the period of 1994–2011. The analysis suggests that some dimensions of freedom are more critical than others in making these markets attractive locations for international business and this in turn leads to domestic growth and thus growth of the middle class in these countries. The results also reveal the existence of a feedback loop, whereby the growing middle class becomes a driving force for further expansion of international business activity and economic growth.     

Ostentation and funk: An integrative model of extended and expanded self theories under the lenses of compensatory consumption

In the last decade, economic growth have created in Brazil and other emerging countries a ‘new middle class’, a group that left the poverty line and entered the consumption markets. In this scenario, a musical movement with many traces of this ‘new middle class’ has emerged. Known as Funk Ostentação (ostentation funk), the movement is formed by young singers whose lyrics and promo videos refer to the consumption of designer's clothes, cars and aspirational products. We have studied Funk Ostentação by means of its promo videos, personal interviews and a group discussion with its fans (young adults) and found meaningful relations between consumption and identity building. We developed a framework that integrates the extended and expanded self theories under the lenses of compensatory consumption. This framework can be applied to studies with other groups that have similar characteristics of vulnerability with other niches of the ‘new middle class’ in emerging markets.     

Aspirations and entrepreneurial motivations of middle-class consumers in emerging markets: The case of India

The world is eyeing emerging markets where increasing numbers of consumers are entering into a new segment called the middle class. In emerging markets, this new segment of the population, as it moves up the economic ladder and seeks a better life, is considered the backbone of the economy. In this study, India is chosen because its economic progress, and changing cultural and demographics shifts, have set the stage for fundamental change of the country's middle class consumers, who are exhibiting new life-aspirations and entrepreneurial pursuits. While India's middle class continues to grow in size and importance, the existing research fails to fully address questions regarding their aspirations or life goals, entrepreneurial motivations, and demographic characteristics.This study attempts to fill the void by focusing on life goals, attitudes, and behaviors of the middle class consumers. Specifically, this study focuses on their aspirations and entrepreneurial motivations. The data collected from India reveals interesting insights about this important segment of India's people. Their demographic profiles suggest that they are well-educated, employed full-time and own assets. Furthermore, these middle class consumers express their confidence in attaining life aspirations such as financial success and personal growth. They tend to seek more opportunities for accomplishing life goals and display entrepreneurial motivations.     

Does the spillover of China's economic growth exist? Evidence from emerging markets

This paper primarily investigates if China affects emerging markets economies triggered by its rapid economic growth and the trend of economic globalization over the world. Our results indicate that China's economic growth causes a significant spillover effect on the economic performances of emerging markets, varying across the detected structural break in 2006 and the degree of economic globalization between China and 25 emerging economies over the period 2000–2012. The results herein support the formation of an inseparable interdependence between China and those emerging economies.     

Mapping the trading behavior of the middle class in emerging markets: Evidence from the Istanbul Stock Exchange

Predicted to grow above 4.9 billion by 2030, with an overall spending capacity of $56 trillion, the rise of the middle class in emerging markets has attracted global practitioner and academic attention. How this new wealth will be invested is a central question; yet our understanding still remains fragmented. Drawing on the literatures of international business, behavioral economics and finance and using high-frequency stock market data, we examine and map the trading behavior of the middle class in Turkey, one of the fastest rising economic powers of the East. We find that middle class traders exhibit discernible differences to professionals, with respect to risk attitudes and stock preferences (e.g. prefer lower-risk, smaller-size and ‘value’ stocks). In addition, while they typically hold small portfolios and tend to realize lower gains than professionals, their role has become considerably influential to the direction of the entire market.     

中等收入国家沉浮对中国经济发展的启示

纵观世界经济发展进程，大部分国家进入中等收入阶段后，因快速发展过程中积累的问题不断凸显，很容易出现经济增长的停滞和徘徊，掉进“中等收入陷阱”，迟迟不能进入高收入国家行列，只有少数国家或地区成功跨越。当前，我国已进入中等收入国家行列，正处于艰难爬坡的关键阶段。总结中等收入国家沉浮的经验和教训将有利于中国规避“中等收入陷阱”，确保国民经济稳中求进并书写新的传奇。     

How western marketers respond to the new middle class in emerging market cities: The case of Italian fashion marketers

This paper deals with Italian Fashion Marketers (IFMs) expanding internationally through the opening of retail stores. Its main contributions are twofold. Firstly, an explanation is proposed for the reasons that IFMs decide to go international. In particular, it appears they are driven by the search for new customers, specifically among the middle class in emerging markets, where they have the advantage of being able to capitalize on brand equity, such as the Italian origin of their offerings. Secondly, the paper reveals some discernible patterns in new retail store internationalization, pointing out trends and choices in terms of the specific international markets targeted. In this regard, the main countries and cities where IFMs establish and cultivate a retail presence are identified, and comparisons made between emerging vs. developed countries as target markets.Some major implications of the findings are then discussed. In particular, the paper proposes an analysis that aims to contribute to filling a significant theoretical gap in the literature – the rising role of the middle class in urban areas and the potential response of western companies. Some managerial implications for companies engaged in expansion abroad are moreover addressed and six formal research propositions advanced.     

How Islamic banks deal with problem business situations: Islamic banking as a potential model for emerging markets

Models of emerging markets often ignore corporate crises and business failure and are based on research in western economic situations, assuming western institutional patterns and attitudes. This study is based on an empirical analysis of companies in the GCC region of companies within the Islamic Banking System. A “sharp‐bending” orientation model is used to review the role of banks and their methods of managing difficult client situations, triggering early problem‐recognition, and the sequence of recovery. As many emerging markets have large Moslem populations and as Islamic banking continues to be a vibrant growth sector, these findings have wider implications. © 2005 Wiley Periodicals, Inc.     

Indian ocean rim trade bloc: Prospects and problems

This article advances the view that regional integration among ten nations along the Indian Ocean rim will have positive economic and political consequences for all the members. Emergence of this geographically large area with one-fourth of the human population will be good for financial markets and the global economy as well. Planned regional arrangements will offer major benefits to outsiders, for example, Gulf countries, by stimulating growth and enhancing market forces. Traditional enmity between India and Pakistan, however, and the economic and political adjustments that South Africa is undergoing after the first free election may prevent cooperation in the region, not to mention the fact that the area has deep economic problems with mass poverty and low per capita incomes. Problems aside, there are hopeful signs, both economic and political, that encourage the Indian Ocean rim nations to seriously consider establishing a regional trade bloc. For example, a substantial middle class is emerging in the area. Industrialization is slowly progressing, challenging the dominance of the agricultural sector. India, however, will have to take the initiative in the matter. The size of her economy and her pre-eminence as a regional political force equip India to play the key role in the establishment of a regional agreement in the area.     

The new middle class in emerging markets: How values and demographics influence discretionary consumption

The rise of new middle‐class consumers in rapidly transforming emerging markets has attracted the attention of Western business executives. What they know about this growing segment of customers will determine whether they succeed or fail in these markets. The present study examines the factors that drive the discretionary consumption of this new middle class, including the effects of consumerist values, religious values, occupation, education levels, and ownership of fixed assets. The study draws its insights from data gathered from 391 new middle‐class consumers in Ankara, the second‐largest city in Turkey. The findings provide important implications for businesses, both indigenous and foreign. An overall implication is that managers ought to understand and qualify the new middle class in emerging markets not simply by their access to disposable income but by deeper attitudinal and behavioral characteristics.     

The new middle class in Turkey: A qualitative study in a dynamic economy

Although the middle class phenomenon is a widely investigated topic within a wide range of academic fields such as sociology, political sciences, anthropology, the current study concentrates on the middle class from a marketing perspective in the context of an important Emerging Market—Turkey. The definition we adapt in this study pertaining to the new middle class includes the households that have gained substantial disposable income and have experienced substantial lifestyle changes since the market liberalization reforms which commenced in the 1980s. We first present the importance of the middle class in emerging markets (especially the BRIC), the concept of middle class and the new middle class phenomenon. We then review the literature on the new middle class in Turkey and we explore whether secular and conservative subgroups of the new middle class differ in consumptional and attitudinal dimensions. Finally, we offer preliminary insights based on a qualitative study with 36 new middle class consumers in urban Turkey.     

Challenges and opportunities of new retail horizons in emerging markets: The case of a rising coffee culture in China

Economic growth and a rising middle class consumer base make emerging markets an attractive prospect for many international businesses. Changing patterns of retail in these countries present opportunities for business expansion that many are keen to capitalize on, but also present challenges for reaching their ambitions. This article examines the growth of the coffee shop industry in China—considering its key dynamics and drivers—in order to address questions about successful retail expansion in emerging markets. We aim to explore how changing consumer cultures have contributed to a rapidly growing industry and what strategies businesses have used to enter the market and maintain growth, as well as considerations for potential retail success in the future.     

An empirical analysis of the determinants of the P/E ratio in emerging markets

The determinants of the P/E ratio of emerging equity markets have not been examined, despite the growing importance of these markets. This study, modifying the methodology of prior studies, empirically evaluates the importance of economic growth and credit risk as the determinants of the P/E ratio of 21 emerging markets. Annual data for the period 1992–1999 are used with seemingly unrelated regression (SUR) techniques to obtain cross-section and pooled-data estimates. The multivariate results indicate the significance of growth and the univariate results, the significance of both growth and credit risk. These results are consistent with those of studies of developed equity markets. Tests for structural differences in the equations for the 8-year period are not significant. The findings are supportive of growth (earnings potential) as a determinant of cross-country variation of the P/E ratios in emerging markets. Growth-oriented policies are important for emerging equity markets (EEM) to function as profitable financial centers and a source of domestic capital.     

Is the cure worse than the disease? The effect of emerging market MNEs on host country corruption

In recent years, there has been an exponential increase in the amount of foreign investment by emerging market multinational enterprises (EMNEs). While it has been debated whether EMNEs strengthen or weaken the institutions in host countries they invest in, the literature has paid limited attention to how EMNE investment impacts corruption in other emerging markets, one of the most significant destinations of EMNEs. Following Hoskisson et al. (2013), we categorize two types of emerging markets as targets of EMNE investment, a) low-income emerging markets and b) middle-income emerging markets, based on their institutional and market development. Building on the theory of firm-specific advantages (FSAs) and the institutional advantage (IA) of EMNEs, we reason that EMNEs enter foreign markets in accordance to where their skills and competencies can be effectively utilized, and this impacts corruption in the host country. We make two key arguments: (1) EMNEs predominantly use their IA in low-income emerging markets, which in the long term increases corruption in the host market, and (2) EMNEs predominantly use their FSAs to gain competitive advantage in middle-income emerging markets, which decreases corruption in the host market. Empirical analysis of Chinese outward FDI from the 2008-2018 period supports our hypotheses. Our research contributes to both the literature on EMNEs and corruption.     

Black middle class township shoppers: a shopper typology

Due to an increase in spending power amongst Black middle class, this growing segment has become a lucrative investment opportunity for many retailers in South Africa and most emerging markets. The purpose of this study is to segment township consumers according to their demographics, life stage, attitudes towards township shopping centres and Living Standards Measure, to understand shopping patterns of township consumers. A survey among Soweto Black middle class township respondents was conducted, and maximum likelihood factor analysis was used to identify attitudes towards township mall factors. The study revealed five factors namely entertainment, convenience, mall essence, staff and mall basics, which were all consistent with previous studies, with the exception of staff and mall basics, which was revealed in this study. A K-means cluster analysis was then used to segment township shoppers according to their attitudes. Four shopper segments were discovered, namely disappointed crusaders, upcoming loyals, social seekers and local loyals, which, despite investigating shopper attitudes in place of shopper behaviour alone, were similar to well-establish shopper typologies. Each segment was profiled according to demographic variables, attitudes as well as shopping patterns. Results, therefore, suggest that retailers and developers need to consider the unique needs and differences among Black middle class consumers when developing retail strategies as they reveal unique characteristics from typical shopper typologies. Given similarities in some emerging countries such as India, the findings of this study could be generalized to other middle class consumers from emerging markets. Similar shopper segments may arise, which may be consistent with previous shopper typology studies and new segments unique to emerging market middle class consumer may be unveiled.     

Transforming Business Models in Fast-Emerging Markets–Lessons from India

There is a need for understanding the entrepreneurship and business models in the emerging economies, especially the fast-expanding ones, from a different perspective as compared to the developed economies. The consistent gross domestic product (GDP) growth rate, significant socioeconomic potential, untapped needs of the population, and economic growth potential in the fast-expanding emerging economies like the BRIC nations (Brazil, Russia, India, and China) have changed the paradigm for investment, thereby creating a new economic development reality and focus for the global companies. However, achieving success in these emerging markets has its own unique mix of challenges. This requires a transformative and innovative mind-set toward conceptualization of a working business model that can fit into the reality of the socioeconomic and cultural challenges of these emerging markets. Further, the business model changes and alignment in these emerging markets require closer analysis and understanding of the global trends as well as ability to leverage the emerging technologies and linkages. The objective of this article is to explore the magnitude of opportunities and emerging business models transforming the socioeconomic landscape in fast-expanding emerging markets. In doing so, the article attempts to provide an overview of the emerging business model typologies and patterns that will enable the global companies to make better-informed decisions and build their presence in the fast-expanding emerging markets. © 2015 Wiley Periodicals, Inc.     

Private Equity Finance as a Growth Engine: What It Means for Emerging Markets

Entrepreneurship has long been considered crucial for economic development. An important element of entrepreneurship is the willingness and ability to mobilize private capital from both domestic and foreign sources. The private equity sector in the Middle East and North Africa (MENA) illustrates the role that private capital can play in the development of emerging markets. Data on the employment generation and growth performance of private equity provide evidence that it is an important driver of economic growth globally. This paper draws on initial evidence from the MENA region to illustrate the sector's potential there and in emerging markets generally. It then recommends a new generation of reforms to fuel this growth engine. A survey of MENA’s private equity industry survey conducted for this paper assesses these developments and the sector's need for proactive reforms to support it. It also shows that international financial market interest in private equity finance does not seem to have abated with the recent market bust. The paper concludes by identifying priority areas for future policy and research. JEL Classification O160     

Measuring transparency and disclosure at firm-level in emerging markets

Transparency and disclosure are integral to corporate governance. In this paper, we use a new dataset to analyze Transparency & Disclosure scores (T&D score) in 19 emerging markets for 354 firms representing 70% of S&P/IFCI Index market capitalization over the 3 years ending in 2000. We analyze differences across countries, economic sectors and trend over the 3 years. We find that the Asian emerging markets and South Africa have significantly higher transparency and disclosure compared to the Latin American, Eastern European, and Middle Eastern emerging markets. The gap between the Asian emerging markets and South Africa over other emerging markets has increased over the last 3 years. We do not find any significant differences in T&D scores among economic sectors. Changes in the T&D scores over the last 3 years, however, differ by economic sectors for the 6 markets with the largest investable market capitalization and/or number of observations, viz. Brazil, Poland, South Africa, India, Thailand, and Korea. We then study the relationships between T&D scores and cross-holdings for the 6 emerging markets. For the 6 markets except Korea, correlation between cross-holdings and T&D scores is negative. For the 6 markets except South Africa, correlation between price-to-book ratios and T&D scores is positive. We conclude with a discussion on further research.     

动荡中的全球经济

目前,欧美的经济形势并不乐观。美国经济泡沫破裂之后,至今仍然没有恢复,增速非常缓慢,失业率居高不下,贫富不均现象越来越严重,很多美国人将失去自己的房屋。欧洲经济衰退的危机和风险也非常严重,前景也比较悲观,且目前欧洲普遍采用财政紧缩政策,会产生负面影响。而新兴市场特别是中国很有可能保持增长,当然为保增长,中国必须转变发展方式,实现经济增长的转型。文章认为,美国最严重的问题并不是金融和赤字问题,而是没有增量的需求问题,是严重的失业问题。为更好地应对危机,恢复经济,应充分发挥政府的作用,正确处理储蓄及储备之间的关系,让市场更加高效、稳定运行。文章指出,2012年全球经济增长的水平和稳定性将比2011年进一步提升,但长期来看,全球经济的稳定性在一定程度上取决于国际社会是否有能力对全球货币和经济系统进行相应的改革。当今世界,需要一个全新的经济政策、经济秩序来更好地反映经济力量再平衡的过程。新兴市场将在全球治理以及全球机构重组的过程中发挥重要作用。中国应在创建新的全球经济秩序和推动全球货币与经济体系改革方面发挥更为积极的作用,要在关注全球经济动荡的同时,更多关注全球变暖问题。     

The role of stock markets on environmental degradation: A comparative study of developed and emerging market economies across the globe

It is well established in the literature that stock markets increase both economic activities and energy consumption across countries. Therefore, it is commonly believed that stock markets are expected to have a significant effect on CO₂ emissions. However, it is not known whether these stock markets can contribute to more or less CO₂ emissions. Hence, the goal of this study is to examine the impact of stock market indicators on CO₂ emissions across a global panel of both developed and emerging market economies. The results establish that stock market indicators have a significant negative and positive impact on carbon emissions in developed and emerging market economies, respectively. Furthermore, the findings illustrate the presence of the Environmental Kuznets Curve (EKC) hypothesis, implying that stronger stock markets lead to a further decline in carbon emissions. Given these findings, the study argues that the role of stock markets in the abatement of CO₂ emissions significantly varies across both developed and emerging market economies. Significant implications have to do with the fact that developed markets might have initiated effective policies on listed firms to minimize carbon emissions, while emerging markets are yet to achieve this.