Risks and Rewards in Emerging Market Investments

In light of the recent currency crises in East Asia, this article questions the accepted wisdom that emerging market securities deserve to be included in global portfolios primarily because of their low correlations with more conventional asset classes. The authors suggest that the basic cycle of emerging market loans and securities appears to have been compressed, and its swings accentuated, by the herd-like behavior of global institutional investors. This is not the irrational behavior of crowds infected by investment euphoria, but the rational behavior (however volatile) of a large number of institutional investors with huge stakes in the market, each trying to outperform or at least keep up with the others. While stressing the benefits of foreign capital for emerging nations, Smith and Walter also point to the adverse consequences of abrupt shifts in investor sentiment and capital flows. Citing a recent World Bank study, the authors suggest that the effect of portfolio equity inflows on many developing economies has been a “glut” of foreign exchange and liquidity, which tends to cause inflationary pressure and appreciation of real exchange rates. Such currency appreciation can in turn have unwanted “real” effects, such as increases in trade deficits. Going somewhat “against the grain of the Washington Consensus,” the authors suggest that emerging nations undertake a gradual, though steady movement toward adoption of freemarket policies. In particular, they cite with approval attempts by more successful emerging nations such as Chile and South Africa to limit portfolio capital inflows to avoid this problem of excess liquidity. As the authors conclude, “At no point in their development did now-established countries like Japan, Germany, South Korea, Taiwan, Singapore, Spain, and Chile adopt a totally free-market approach. They moved purposefully over decades in that direction, but only at a pace that could be accommodated by the accompanying political thinking and infrastructure-building.”     

Conflicts between antidumping and antitrust law in the EC

Antidumping policy aims at protecting single firms or industries from distortions in trade with third countries. A broad definition of dumping can, however, lead to protectionist measures which conflict with antitrust policy. To what extent is this the case in the EC?     

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Managing in an economic crisis: The role of market orientation in an international law firm

This research paper contributes to the understanding of the relationship between market orientation and performance in the context of a law firm during a time of economic crisis. The contribution is twofold, adding to the fairly limited research on market orientation within law firms, and to the limited research on the role of market orientation in times of economic crisis. The findings, from the questionnaire survey and semi-structured interviews within practice groups of a large multinational law firm, conclude that market orientation is important during an economic crisis. Those practice groups with higher market orientation scores withstand the increased turbulence and outperform those practice groups with lower market orientation scores.