Business Case Studies & Business Publications

Growth and Investments in Emerging Marke...

Yang, Dennis;Maide...

Case

Growth and Investments in Emerging Markets

Yang, Dennis; Maiden, Stephen E.

GEM-0231 | Published December 16, 2024 | 34 Pages Case

Collection: Darden School of Business

Product Details

In the summer of 2024, Antoine W. van Agtmael, the economist and renowned global investor widely credited with coining the term emerging markets (EMs), had to finalize a presentation entitled “Investing in Emerging Markets Under Uncertainty.” After four decades in which EMs had become central to global growth, trade, and investment, van Agtmael faced a difficult question: Had the US–China trade war, the COVID-19 pandemic, and rising geopolitical tensions fundamentally changed the rationale for investing in EMs? This case examines the defining features of EMs through the lenses of international organizations and global financial institutions, with emphasis on income level, growth, market access, and institutional development. It explores the opportunities that have drawn multinational companies and investors to EMs, including low-cost production, high returns to selected forms of foreign direct investment (FDI), and rapidly expanding consumer markets. At the same time, it highlights the countervailing risks associated with institutional voids, high transaction costs, policy uncertainty, exchange-rate and commodity-price volatility, and geopolitical disruption. At the University of Virginia Darden School of Business, this case is used in second-year MBA and executive MBA programs; it is suitable for courses on global business and investment. It can be used on a stand-alone basis without prerequisites, or it can be paired with other courses on economic development, global business, and ongoing political and geopolitical challenges. This examination of EMs would also be valuable for executive training programs, as it offers insights relevant to business leaders operating globally.

(1) Understand the key features of EMs through the lenses of international organizations and global financial institutions. (2) Explore the institutional origins and current states of market imperfections in EMs. (3) Evaluate the opportunities and risks of investing in EMs through alternative channels: FDI, outsourcing, and portfolio allocation. (4) Analyze recent challenges to EM investments in the context of trade wars, the global pandemic, and rising geopolitical tensions.