MBA 15th Batch

July, 2023 IB – 514: Globalization

of Emerging Markets
Asmina Akter

Compiled by
MEHERAZ AL HASAN
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Contents

Emerging Economies ................................................................................................................. 1

A. Characteristics (ChatGPT) .............................................................................................. 1
B. Characteristics (Slide) ..................................................................................................... 2
C. Risks (ChatGPT) ............................................................................................................. 2
D. Classification process...................................................................................................... 3
E. Impact on Developed economies .................................................................................... 4
Bangladesh as frontier, developing and emerging economies ................................................... 5
Influence of G7 and G20 on global economic system ............................................................... 7
Group of Seven (G7) .............................................................................................................. 7
Group of Twenty (G20).......................................................................................................... 8
Emerging Groups ....................................................................................................................... 9
1. BRICS ............................................................................................................................. 9
2. ASEAN ......................................................................................................................... 10
3. CIVETS......................................................................................................................... 10
4. MENA ........................................................................................................................... 10
5. North-South Gap ........................................................................................................... 11
Articles ..................................................................................................................................... 12
The Conditions for Growth .................................................................................................. 12
Six Secrets of Success .......................................................................................................... 12
The Four-tiered Structure of Markets................................................................................... 12
Three Strategies .................................................................................................................... 12
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Emerging Economies
An emerging market economy is the economy of a developing nation that is becoming more
engaged with global markets as it grows. Shortly, high growth developing economies called
emerging markets. An emerging market economy is transitioning from a low income, less
developed towards a modern, industrial economy with a higher standard of living.
A. Characteristics (ChatGPT)
Emerging markets are countries that are experiencing rapid economic growth and
industrialization, transitioning from a developing to a developed status. They exhibit several
key characteristics:
1) Economic Growth Potential: Emerging markets typically have high growth rates
compared to developed economies. They often possess abundant natural resources,
a growing middle class, and favorable demographic trends, which contribute to their
economic expansion.
2) Market Size and Population: Emerging markets are often characterized by large
populations, offering significant consumer bases and potential markets for domestic
and international companies. The size of the market provides opportunities for
businesses to scale and expand.
3) Infrastructure Development: Emerging markets often prioritize infrastructure
development, including transportation, communication networks, power
generation, and urban development. These investments help facilitate economic
growth and attract foreign direct investment (FDI).
4) Rapid Urbanization: Emerging markets experience rapid urbanization as people
migrate from rural areas to cities in search of better job opportunities and living
standards. This urbanization trend leads to increased consumption, demand for
housing, and infrastructure development.
5) Technological Advancements: Emerging markets often embrace technology as a
means to leapfrog traditional development stages. They may adopt and integrate
new technologies, such as mobile banking, e-commerce, and digital services, to
address infrastructure gaps and enhance efficiency.
6) Increasing Middle Class: The emergence of a growing middle class is a significant
characteristic of emerging markets. As incomes rise, consumption patterns change,
and demand for goods and services increases, leading to opportunities for
businesses to cater to this expanding consumer segment.
7) Structural Reforms and Liberalization: Many emerging markets undertake
structural reforms to liberalize their economies and promote entrepreneurship,
investment, and international trade. These reforms often include deregulation,
privatization, and simplification of business regulations.
8) Volatility and Risk: Emerging markets can be more volatile and subject to greater
economic and political risks compared to developed economies. Factors such as
currency fluctuations, political instability, regulatory changes, and varying levels of
institutional strength can impact investment opportunities and business operations.
9) Increasing Foreign Direct Investment (FDI): Emerging markets are attractive to
foreign investors seeking growth opportunities and higher returns. FDI plays a
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crucial role in capital inflows, technology transfer, and fostering economic

development in emerging economies.
10) Diverse Industries: Emerging markets often have diverse economies, spanning
various sectors such as manufacturing, services, agriculture, and natural resources.
This diversification helps mitigate risks and provides opportunities for investment
in multiple industries.
It is important to note that these characteristics can vary across different emerging markets, as
each country has its unique economic, political, and social factors influencing its growth and
development.
B. Characteristics (Slide)
1) An emerging market economy is an economy that transitioning into a developed
economy
2) Emerging market economies can offer greater returns to investors due to their rapid
growth
3) They also offer greater exposure to some inherent risks due to their status
4) Over time, emerging markets typically adopt reforms seen in developed markets
5) High growth economies that use market liberalization as their main means of
growth
C. Risks (ChatGPT)
Emerging markets present certain risks that investors and businesses should consider when
operating or investing in these economies. Some of the key risks associated with emerging
markets include:
1) Political and Regulatory Risks: Emerging markets may have less stable political
systems, higher levels of corruption, and less developed legal frameworks, which
can lead to policy uncertainty, regulatory changes, and political instability. These
factors can impact business operations, contracts, and property rights.
2) Economic Volatility: Emerging markets are often more susceptible to economic
volatility due to factors like currency fluctuations, inflation, fiscal imbalances, and
external shocks. Economic downturns or financial crises in these markets can have
a significant impact on businesses, investments, and consumer purchasing power.
3) Currency and Exchange Rate Risks: Currency volatility in emerging markets can
pose risks to businesses and investors. Fluctuations in exchange rates can impact
the value of investments, the cost of imported goods and raw materials, and the
profitability of exports.
4) Liquidity and Market Risks: Emerging markets may have less developed and less
liquid financial markets compared to developed economies. This can limit the
ability to buy or sell assets easily, increase transaction costs, and create challenges
in accessing capital or hedging against risks.
5) Legal and Governance Risks: Weak legal systems, inconsistent enforcement of
contracts, and inadequate protection of intellectual property rights are common
challenges in emerging markets. These factors can increase business risks,
discourage investments, and hinder long-term growth.
6) Infrastructure and Operational Risks: Emerging markets often face challenges
related to inadequate infrastructure, including transportation networks, power
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supply, and telecommunications. Insufficient infrastructure can hamper business

operations, increase costs, and limit market reach.
7) Social and Cultural Risks: Cultural differences, social unrest, and labor issues can
pose risks to businesses operating in emerging markets. Local labor laws, workforce
dynamics, and social factors need to be carefully considered to maintain good
employee relations and minimize disruptions.
8) Environmental Risks: Emerging markets may have weaker environmental
regulations, which can result in increased environmental risks, pollution, and
resource depletion. Companies operating in these markets may face scrutiny and
reputational risks if their practices do not align with global sustainability standards.
9) Information and Transparency Risks: Emerging markets may have limited
availability or reliability of information, making it challenging for investors and
businesses to assess risks accurately. This lack of transparency can hinder decision-
making and increase uncertainty.
10) Geopolitical Risks: Emerging markets can be exposed to geopolitical risks, such
as regional conflicts, trade disputes, or sanctions. These factors can disrupt supply
chains, impact market access, and create uncertainties for businesses.
It is essential for businesses and investors to conduct thorough risk assessments, understand
the specific risks of each emerging market, and develop strategies to mitigate and manage these
risks effectively. Local knowledge, partnerships, diversification, and risk management tools
are some of the approaches used to navigate the risks associated with investing in emerging
markets.
D. Classification process
Emerging market economies are classified in different ways by different observers. Levels of
income, quality of financial system and growth rates are all popular criteria but the exact list
of emerging market economies can vary depending on who you ask.
Various sources list countries as “emerging economies”. A few countries appear in every list
(BRICS, Mexico and Turkey).
For example, to identify an emerging market, International Monetary Fund (IMF) looked at
(Miles to go – 2021, published by IMF):
• Systemic presence: The size of the country’s economy (nominal GDP), its population,
and its share of exports in global trade
• Market access: The share of a country’s external debt in global external debt, as well
as whether it is included in global indices used by large international institutional
investors and the frequency and amount of international bonds issued
• Income level: A country’s GDP per capita in nominal US dollars
They derive a score for each economy not considered advanced, using five weighted variables:
• 0.40×nominal GDP +
• 0.15×population +
• 0.15 ×GDP per capita +
• 0.15×share of world trade +
• 0.15×share of world external debt
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If a country is ranked in the top 20 for 2010–20, it receives a score of 1 for that variable.
Otherwise, it is assigned zero. The final score is calculated as the weighted sum of the
individual scores. This approach identifies the following countries in the emerging market:
• BRICS – Brazil, Russia, India, China and South Africa
• Saudi Arabia, United Arab Emirates, Turkey, Iran, Indonesia, Malaysia, the
Philippines
• Argentina, Chile, Colombia, Egypt, Hungary, Mexico, Poland, Thailand
These 20 emerging market countries account for 34 percent of the world’s nominal GDP in US
dollars and 46 percent in purchasing-power-parity terms. These countries are also featured in
commonly used indices for emerging markets, such as those of J.P. Morgan, Morgan Stanley
Capital International, and Bloomberg.
E. Impact on Developed economies
The influence of developed economies is being challenged by emerging groups like BRICS
(Brazil, Russia, India, China, and South Africa) and other emerging economies in several ways:
1) Economic Growth: Emerging economies, particularly BRICS countries, have been
experiencing robust economic growth rates, outpacing those of many developed
economies. This growth has allowed them to increase their share of global GDP,
contributing to a shift in economic power. Currently, the majority of annual global GDP
growth occurs in these parts of the world.
2) Trade and Investment: Emerging economies have become significant players in
global trade and investment. Their expanding domestic markets, abundant resources,
and lower labor costs have attracted foreign direct investment and led to increased trade
relationships with both developed and developing countries. This has created new
avenues for economic cooperation and challenged the dominance of developed
economies in international trade. They have witnessed growth in trade and investment
from 32% in 2000 to 46% in 2019. In addition, approximately 15% of FDI was destined
for emerging economies in 2000 but in 2019 this figure had increased to 46%.
3) Regional Integration: Emerging economies have strengthened regional integration
initiatives, such as the Association of Southeast Asian Nations (ASEAN), the Eurasian
Economic Union (EAEU), and the African Union (AU). These regional blocs enhance
economic cooperation and trade among member countries, promoting the rise of new
regional economic powers and reducing the dominance of developed economies in
these regions.
4) Geopolitical Influence: Emerging economies are gaining geopolitical influence on the
global stage. Countries like China and India, in particular, have become major players
in international diplomacy and are actively shaping global governance and institutions.
They challenge the traditional dominance of developed economies in setting global
agendas and decision-making processes.
5) Technological Advancements: Emerging economies have made significant strides in
technological innovation, particularly in areas such as information technology,
telecommunications, and renewable energy. This has allowed them to leapfrog certain
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stages of development and compete with developed economies in key sectors,

challenging their technological leadership.
6) Development Cooperation: Emerging economies are increasingly engaged in
development cooperation efforts, providing financial aid, infrastructure investments,
and technical assistance to other developing countries. This alternative source of
development assistance challenges the traditional aid models of developed economies
and promotes South-South cooperation.
7) Shift in Financial Centers: Emerging economies, particularly China, have emerged as
global financial powerhouses. The establishment of institutions like the Asian
Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB) by
emerging economies offers alternative financing options to developing countries,
reducing their reliance on traditional institutions dominated by developed economies.

These factors collectively contribute to the changing dynamics in the global economy and
challenge the influence of developed economies. However, it is important to note that
developed economies still retain significant economic, technological, and institutional
advantages. The evolving global landscape reflects a shift towards a more multipolar world,
with emerging economies playing an increasingly influential role alongside established
developed economies.

Bangladesh as frontier, developing and emerging economies

Bangladesh was first listed as an LDC in 1975. According to United Nations Conference on
Trade and Development (UNCTAD), Bangladesh will graduate from LDC to Non-LDC
developing country on 24th November, 2026. As per UN’s requirement, a LDC listed country
can be upgraded in the list of developing through meeting at least two of these three criteria:
1) Gross National Income (GNI) per capita
2) Human Assets Index (HAI)
3) Economic Vulnerability Index (EVI)
Bangladesh was well ahead in the gross national income (GNI) criterion: its per capita income
was $1,827 in 2019 against the threshold of $1,222. In the HAI criterion, the country's score
stood at 75.4 points, well above the requirement of 66. In the EVI, a country's score has to be
less than 32. Bangladesh's score was 27.3.
According to Wikipedia, Bangladesh’s economy is the 37th largest in the world in nominal
terms and 25th largest by purchasing power parity. Bangladesh is seen by various financial
institutions as one of the Next Eleven, an emerging market, a middle-income economy and a
frontier market. In the fiscal year 2021-22, the country registered a GDP growth of 7.2% after
the global pandemic. The country’s target is to become a higher middle-income country by
2031 and a developed country by 2041.
Industrialization in Bangladesh received a strong impetus after the partition of India due to
labor reforms and new industries. Between 1947 and 1971, East Pakistan generated between
70% and 50% of Pakistan's exports. Modern Bangladesh embarked on economic reforms in the
late 1970s which promoted free markets and foreign direct investment. By the 1990s, the
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country had a booming ready-made garments industry. Remittances from the

large Bangladeshi diaspora became a vital source of foreign exchange reserves. Agriculture in
Bangladesh is supported by government subsidies and ensures self-sufficiency in food
production. Bangladesh has pursued export-oriented industrialization.
According to International Monetary Fund, a new group of countries is getting more and more
attention, including from global investors. These are fast-growing low-income countries often
referred to as frontier economies. Within Asia, this group includes countries such as
Bangladesh, Cambodia, Mongolia, and Vietnam. They are located in the world’s fastest-
growing region and benefit from favorable population dynamics. (International Monetary
Fund, 2015).
This new “frontier” group is generating considerable interest among development, investment,
and academic communities and policymakers. Although there is no formal definition, frontier
economies are increasingly regarded as a separate group of low-income countries that warrants
special attention. Compared with other low-income countries, they tend to be dynamic
economies that have experienced rapid growth and, in most cases, demonstrated a fair degree
of macroeconomic stability over an extended period of time.
Bangladesh can be analyzed as a frontier, developing, and emerging economy, depending on
the perspective and criteria used for classification. These terms are not universally defined and
can vary based on different organizations and researchers. However, I will provide an analysis
based on common characteristics associated with these categories.
Frontier Economy: A frontier economy refers to a country that is at an early stage of
development, with limited infrastructure, institutions, and economic diversification. It typically
faces significant challenges in terms of governance, economic policies, and social
development. While Bangladesh has made progress in recent years, it still faces several frontier
economy characteristics:
1) Infrastructure: Bangladesh has been investing in infrastructure development, but
there are still gaps, particularly in transportation, energy, and telecommunications. The
quality and coverage of infrastructure remain challenges, hindering economic growth.
2) Institutions: Institutions play a vital role in supporting economic development and
good governance. While Bangladesh has made efforts to improve institutional
frameworks, there is still room for enhancement in areas such as corruption,
bureaucracy, and legal systems.
3) Human capitals: Frontier economies often face limitations in human capital
development. While Bangladesh has made strides in improving education and
healthcare, challenges such as low literacy rates, skill mismatches, and inadequate
access to quality education remain.
Developing Economy: A developing economy typically demonstrates significant economic
growth and progress in various development indicators. Bangladesh has experienced notable
advancements in recent years and can be considered a developing economy based on the
following factors:
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1) Economic growth: Bangladesh has achieved robust economic growth, with an

average annual GDP growth rate exceeding 6% over the past decade. The country has
seen expansion in sectors like ready-made garments, remittances, agriculture, and
services, contributing to overall development.
2) Poverty reduction: Bangladesh has made substantial strides in reducing poverty
levels. According to the World Bank, the poverty rate declined from 44.2% in 1991 to
20.5% in 2019, indicating progress in poverty alleviation efforts.
3) Export orientation: The country's economy heavily relies on exports, particularly in
the ready-made garments sector. Bangladesh has successfully positioned itself as a
global exporter, diversifying its export markets and attracting foreign direct
investment.
Emerging Economy: An emerging economy refers to a country that exhibits rapid economic
growth, structural transformation, and increased integration into the global economy.
Bangladesh showcases several characteristics of an emerging economy:
1) Industrialization: Bangladesh has experienced a notable shift from an agrarian-based
economy to an industrialized one. The ready-made garments sector has been a key
driver of industrialization and export-oriented growth.
2) Foreign Direct Investment (FDI): Bangladesh has seen an increase in foreign direct
investment inflows in recent years, particularly in sectors like manufacturing,
infrastructure, and energy. The government has taken steps to attract FDI and create a
favorable investment climate.
3) Technological advancements: The country has embraced technological
advancements, particularly in the information technology sector. Bangladesh has
experienced growth in the digital economy, mobile banking, and e-commerce,
indicating progress in the digital transformation.
It's important to note that the classification of an economy can be subjective and can change
over time. Bangladesh's position as a frontier, developing, or emerging economy can vary
depending on the specific indicators, time frame, and perspective taken into consideration.

Influence of G7 and G20 on global economic system

Group of Seven (G7)
Group of Seven (G7) is called a group of advanced economies. It is an intergovernmental
political forum consisting of United Kingdom, United States, Canada, Germany, Japan, French,
Italy and the European Union as non-enumerated member. The group was formed in 1973.
Russian having been a formal member of this group since 1997 to 2014. Due to its annexation
of Ukrainian region of Crimea, Russia was formally removed from the group in 2017.
The group was a leading global economic policy forum prior to the G20. As of 2020, G7
members account for over half of global net wealth (at over $200 trillion), 30 to 43 percent of
global gross domestic product, and 10 percent of the world's population (770 million
people). Members are great powers in global affairs and maintain mutually close political,
economic, diplomatic, and military relations.
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Besides, some of the G7 influences on global economic system are discussed below:
1) Economic policy coordination: The G-7 serves as a platform for discussions on
economic policies, including fiscal, monetary, and trade policies. The member
countries aim to coordinate their actions to address global economic challenges,
promote stability, and sustain economic growth.
2) Crisis management: During periods of economic crisis, the G-7 plays a crucial role
in coordinating responses. For instance, during the 2008 global financial crisis, the G-
7 countries worked together to stabilize financial markets, implement fiscal stimulus
measures, and support struggling economies.
3) Global governance: The G-7 has a significant influence on global governance.
Discussions held within the G-7 often set the agenda for other international
organizations, such as the International Monetary Fund (IMF) and the World Trade
Organization (WTO). G-7 countries' policies and positions can shape the direction of
global economic rules and regulations.
4) Foreign policy: Although the primary focus of the G-7 is economics, it also addresses
broader geopolitical issues. Member countries often discuss and coordinate their
positions on international security, climate change, and other global challenges,
exerting influence beyond economic matters.
Group of Twenty (G20)
The Group of 20 (G20) is an intergovernmental forum comprising 19 countries and
the European Union (EU). In other word, it can be refereed as the premier forum for
international economic cooperation. It was formed in 1999. It is important to note that the G20
members do not necessarily reflect the 20 largest economies of the world in any given year.
There is no formal criteria for G20 membership. In view of the objectives of the G20, it was
considered important that countries and regions of systematic significance of the international
financial system be included. Aspects such as geographical balance and population
representation also played a major part. Bangladesh is included in guests list.
It works to address major issues related to the global economy, such as international financial
stability, climate change mitigation, and sustainable development. Since its formation, the
group has been studying, reviewing and promoting high-level discussions of policy issues
concerning the promotion of international financial stability.
One of the member countries holds presidency for one year. India holds the presidency of the
G20 from 1st December, 2022 to 30th November, 2023. The G20 summit is held annually under
the presidency.
The group has replaced the G8 group as the main economic council of wealthy nations. Since
the G20 has overshadowed the G7, it has become a major forum for global decision making,
central to designing a pathway out of the worst global financial crisis in almost a century. In
order for the G20 countries to continue to build on their collective success in the management
of the global financial crisis, it is imperative for them to place more emphasis on global trade
and financial reform.
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The G20 is composed of most of the world's largest economies finance ministries, including
both industrialized and developing nations; it accounts for around 80% of gross world
product (GWP), 75% of international trade, two-thirds of the global population, and 60% of
the world's land area. Most of the economic growth within the G20 is coming from the BRICS
(and other emerging and so called “frontier” markets) rather than from the advanced
economies.
Besides, some of the G20 influences on global economic system are discussed below:
1) Broader representation: The G-20 includes both developed and emerging economies,
providing a more diverse and inclusive platform for economic discussions. This broader
representation recognizes the increasing significance of emerging economies in the
global economy and ensures their perspectives are taken into account in decision-
making processes.
2) Global economic governance: The G-20 has become the premier forum for global
economic governance. Its meetings bring together leaders from major economies,
allowing for comprehensive discussions on key economic issues, policy coordination,
and cooperative decision-making.
3) Financial regulation and stability: The G-20 has played a vital role in strengthening
financial regulations and promoting financial stability. It has led efforts to reform the
international financial system, including addressing issues such as capital standards,
banking regulations, and the functioning of global financial institutions.
4) Trade and protectionism: The G-20 addresses trade-related issues and has advocated
for open and fair trade. It has made commitments to resist protectionism and support a
rules-based multilateral trading system, although consensus on specific trade policies
can be challenging to achieve.
5) Development and global challenges: The G-20 has increasingly focused on
development issues and addressing global challenges such as poverty, inequality,
climate change, and sustainable development. It recognizes the interlinkages between
economic, social, and environmental factors in achieving sustainable and inclusive
growth.

Emerging Groups
1. BRICS
BRICS - Brazil, Russia, India and China and South Africa, is a group of five emerging
economies. It was formed in 2001 with four member countries excluding South Africa (joined
in 2010). Since its formation, it is clear the BRICS have been seeking to form a political club.
They are also members of G20.
Most of the economic growth within the G20 is coming from the BRICS (and other emerging
and so called “frontier” markets) rather than from the advanced economies. Government of
each member countries meet annually. They compete with G7 advanced economies. The
combined BRICS hold less than 15% of voting rights in both the World Bank and the
International Monetary Fund.
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Brazil is considered as one of the third largest coffee producer. Russia is valued for third largest
oil producer which supply approximately 11% of world’s total oil demand. South Africa is
doing well in capital intensive primary and manufacturing products.
Research suggests that if everything goes right, the BRICS economies could become a much
larger force in the world economy by 2050. Research also forecasted that they could account
for over half the size of G7 by 2025 if everything goes right. As of 2021, the GDP of BRICS
stood at 23.5 trillion which is 69.26% of 33.93 trillion of G7. It has already more than half in
two years ago. In term of population, BRICS stood at 3.0 billion whereas G7 stood at 987
million.
According to Asian Development Bank, Asian economies such as China and India are expected
to play an important role in global economic governance, as the rise of emerging market
economies are heralding a new world older.
According to IMF, as of 2019, China is the 2nd largest economy and India is the 5th largest
economy respecting in nominal basis. India has just recently (April, 2023) overcome China in
term of population with 1.426 billion. Both India and China have 2.9 billion population
collectively which is more than one-third of world’s population. The population size (India and
China) was 1.4 billion in 1970. Besides, both countries together share 19.46% of global wealth
in nominal term and 27.18% in purchasing power parity (PPP) term. In addition, China’s
contribution to global growth in 2022 was 34.9% and India’s was 15.4%. Both of them
contributed 50.3% of global growth in 2022. These two countries will dominate the top 10
advanced economies by 2050.
2. ASEAN
Book page: 48
3. CIVETS
Book page: 29
4. MENA
The Middle East and North Africa (MENA) is a diverse region, affected by economic and
political transformations, but with a potential for more and better growth. The majority of
MENA countries are Arab countries. The Middle East and North Africa are incredibly diverse,
consisting of indigenous populations, ethnic groups, and religious groups. Just a few of the
ethnic groups within the MENA region are Arabs, Kurds, Persians, Turks, Assyrians,
Circassians, and the Yazidis. This region includes approximately 21 countries, according to
The World Bank. MENA, is an important energy resource-rich region of the world. Centrally
located between the West and Asia, MENA countries are home to much of the world's oil and
natural gas reserves. As emerging markets, investors look to these countries as growth
opportunities; however, the risk of regional conflict remains high. Due to the strategic
importance of their oil reserves, countries in the MENA region have been affected by major
local conflicts as well as interference by foreign powers.
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Challenges of MENA group

• Governance Failings: The Arab Spring protests were primarily fueled by the
concentration of political and economic power in the hands of a narrow elite, lack of
rule of law, and corruption. Over the past decade, these failings have not only continued
but worsened, contributing to the spread of political discontent and even militancy.
• Economic Vulnerability: The poor economic and political conditions that sparked the
Arab Spring have not improved. The vulnerable populations in non-oil exporting
countries have risen significantly in the past decade. The middle class is facing
heightened economic vulnerability due to failing social protection systems and rising
income inequality.
• Limited Intergenerational Mobility: The limited intergenerational mobility in the
MENA region is contributing to the spread of political discontent and even militancy.
The poor economic and political conditions are exacerbating the problem.
• Regulatory Practices: The regulatory practices in the MENA region continue to be the
least transparent and inclusive in the world. This contributes to the concentration of
political and economic power in the hands of a narrow elite and undermines
accountability institutions.
• Governance Indicators: Governance indicators in the region’s non-oil exporting
countries have not improved. Public sectors have expanded in size, experienced chronic
skill shortages, and become increasingly ineffective. Countries in conflict have faced
widespread institutional degradation and wholesale loss of human capital.
• Loss of Human Rights and Civil Liberties: Access to information has become more
limited, and the space for civil society has severely compressed, as authoritarian
practices and national security imperatives have made a strong comeback.
• Security Challenges: The MENA region has been subject to proliferating conflicts and
increased repression, up-ending long-standing geopolitical dynamics, contributing to
instability, and challenging the security of the region.
• Climate Change: The MENA region is among the most vulnerable to the impacts of
climate change, including water scarcity, desertification, and rising temperatures, which
could exacerbate existing challenges.
• Intersectional Inequalities: Individuals in the MENA region face a range of
intersecting and compounding inequalities, including those tied to income, wealth,
education, gender, employment, and healthcare. These types of inequality inhibit social
mobility and adversely impact society, the economy, and long-term stability.
5. North-South Gap
The unequal relationship between North and South, or the center and periphery of the world
economy is the subject of concern for inevitable components of the universally agreed goal of
development: reducing inequality (Raffer Kunibert, 2002). In the 1980s, the Brandt Line was
developed as a way of showing the how the world was geographically split into relatively richer
and poorer nations. The countries of the Global North have well-developed, mature economies
and are both wealthy and politically stable. They also tend to be the most technologically
advanced countries and their population growth is low. Most are located in North America,
Europe, and Northern Asia, although a handful of southern countries, including Australia and
New Zealand, are usually considered part of the Global North. The Global North has roughly
25% of the world's population, but earns 80% of the wealth and tends to dominate the Global
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South both politically and economically. Countries in the Global South, by comparison, are
those whose economies are still developing. They tend to be located in Africa, South America,
and Southern Asia—though, perhaps ironically, more Global South countries are located in the
Northern Hemisphere than in the Southern Hemisphere. Global South countries also display
faster population growth than those of the Global North.
Despite very significant development gains globally which have raised many millions of people
out of absolute poverty, there is substantial evidence that inequality between the world’s richest
and poorest countries is widening. In 1820 western Europe's per capita income was three times
bigger than Africa’s but by 2000 it was thirteen times as big. In addition, in 2013, Oxfam
reported that the richest 85 people in the world owned the same amount of wealth as the poorest
half of the world’s population (The Globsl North/South Divide, 2020).
Issues of North-South divide includes- distribution of income, economic competition, standard
of living. Lack of trade, single crop farming, abundance of debt, colonialism results in lower
standard of living in the southern part. There are many causes for these inequalities including
the availability of natural resources; different levels of health and education; the nature of a
country’s economy and its industrial sectors; international trading policies and access to
markets; how countries are governed and international relationships between countries; conflict
within and between countries; and a country’s vulnerability to natural hazards and climate
change.

Articles
The Conditions for Growth
Study from: Article – 01 (Page: 13)
Six Secrets of Success
Study from: Article – 02 (Page: 01)
The Four-tiered Structure of Markets
Study from: Article – 03 (Page: 04)
Three Strategies
Study from: Article – 03 (Page: 05)

The End for 1st In-course Examination