International Business Financial Positions

Question: Discuss about the International Business for Financial Positions. Answer: As per the video Inside Story - Building BRICS, the BRICS nation will attract the major foreign direct investments in comparison to the western countries and emerge into the fastest growing economies in the world. BRICS is a platform of cooperation formed by the five fastest growing economies in the world. The members of this international forum are Brazil, Russia, India, China and South Africa (Esposito, Kapoor and Mathur 2017). These nations should take the following steps to ensure that they maintain their distinct position in the international economy: Strengthen their Financial Positions: The BRICS countries of Brazil, Russia, India, China and South Africa should strengthen their internal economic positions. Brazil is suffering from high poverty, corruption, depletion of natural resources and deforestation (Ferraro et al. 2015). An authoritarian government rules China and its economic progress has slowed down. India has a huge population and poverty but manages to maintain its growth. Russia is the richest country in the block but is limited by various agreements with the western nations. South Africa is the poorest among them and is political less stable. The BRIC countries in order to attract foreign investment should strengthen their internal economies. They should help each other in matters like free trade, lowering of tariffs, infrastructure development and so on. For example, India is friendly to foreign trade and attracts huge investments already. The consumer intensive market of the country attracts companies from the west and the Indian companies in turn have western subsidiaries. The members like India and Russia already have strong ties with nations like the USA, France and so on. They should attract use their powers to attract more FDI from these nations. IN fact, the poor members like Brazil and South Africa can benefit from the foreign ties of India and China. Strengthening their Internal Security: One of the most important points of discussion in the BRICS summit in New Delhi, India was international security and counter terrorism. The BRICS nation should help each other in strengthening counter terrorism mechanism and defence sectors. For example, Russia, a member is investing in the defence sector of another member, India. China, on the contrary is aligned with Pakistan, the nation which keeps on supporting cross border infiltration into India. This is likely to cause a rift between India and China. China should cooperate with India in guarding her boundaries against infiltration. Materialise Development Plans: The BRICS summit in New Delhi saw the members pledging to create alternative economic and trade infrastructures to compete with the west. The new development bank, credit rating agency and medical plans drawing inspiration from the traditional medicines of these nations were some of the plans decided. The members also spoke about trade in local currencies, eastern paradigm and trade agreements to facilitate smoother international trade between the BRICS nations were a part of the agenda. These countries should actually materialise these plans to prove their metal before the western world to attract foreign investments. The countries need to build energy efficient technological up graded sectors, that would help in sustaining the development of the economy. A sustained growth rate of the economy would be quite efficient in instigating an attraction of the foreign investors towards the countries. This would empower the countries to become more powerful and develop their internal enviro nment. Improve neighbour Relationship: Narendra Modi, the India Prime Minister called for a conference with the BIMSTEC nations after the BRIC summit on international trade cooperation. The leaders included leaders from nations like Myanmar and Thailand. The members like Brazil should hold talks to the South American nations to increase trade and economic support. This will also help the BRIC nations to appear more prominent and attract foreign investments (indianexpress.com 2017). These aspects would help in analysing various ways in which the flow of foreign direct investment could be instigated in the economy of BRICS. According to Dr Tarun Khanna, emerging markets are like swords with two edges, which provide both opportunities and challenges to entrepreneurial ventures. The entrepreneurs in these markets overcome the challenges in several ways. The opportunities provided by emerging markets are: New Emerging markets: The emerging markets in the developing and the developed nations are experiencing a lot of increase in production. These markets are benefitting from international trade agreements like BRICS where the entrepreneurs can sell their goods into new markets. Nations Encourage Entrepreneurial Development: The big emerging nations like India and China are booming global producers and consumers. These two countries have huge markets with increasing demand, which encourages entrepreneurship. These markets provide opportunities to young educated entrepreneurs to start ventures. Business groups like BRICS help in expanding the markets which encourage entrepreneurial ventures ( Khanna and Yafeh 2015). Sustainable Technology to Fill up Institutional Void: Dr Khanna stressed that institutional void exist even in the most developed markets of the west due to difference in technology and actual mode of transactions. The entrepreneurial efforts like Amul are filling a lot to fill institutional void (Gao, Jones and Khanna 2017). Such ventures give opportunities to smaller entrepreneurs like milk men to start business of their own and reap the profits of pooling productivity (Prasad and Satsangi 2013). The threats provided by the emerging markets are as follows: Heterogeneous Growth: Dr Khanna emphasised on the fact that entrepreneurial venture have not succeeded in filling institutional voids in all sectors. The success of Amul did not spread into the entire agricultural sectors like fruits and vegetable in spite of several efforts. The health industry has institutional voids, which result in high cost of treatment. The benefits of Narayana Hridayalaya did not spread into the government lost quality health care sector. This institution void impairs entrepreneurial ventures because of the need of huge capital. Scarcity of Fund: The biggest threat to entrepreneurial ventures is scarcity of funds. There are several multinational companies which allow entrepreneurs to start business with their products and provide them assistance. For example, Vodafone is helping many young entrepreneur to carry on their business by promoting use of Mpesa. Infrastructural Gap: Poverty, malnutrition and illiteracy is present in almost all the emerging markets like India. The people living in the interior areas like Madurai cannot start entrepreneurial venture or get job opportunities due to lack of internet access. The NGOs and several other organisations are working towards their education. The entrepreneurs face this lack of infrastructure by starting business ventures like providing mobile money applications (Bruton, Ahlstrom and Si 2015). Government Reforms: The government of these emerging nations should reform their laws in order to encourage new business ventures. The nations need to undergo socioeconomic reforms in order tp encourage new entrepreneurs. The big entrepreneurs like Curin and Devi Sethi help the small entrepreneurs to start their businesses to fill this institution void of the government. References: Bruton, G.D., Ahlstrom, D. and Si, S., 2015. Entrepreneurship, poverty, and Asia: Moving beyond subsistence entrepreneurship.Asia Pacific Journal of Management,32(1), pp.1-22. Esposito, M., Kapoor, A. and Mathur, D. 2017. What is the state of the BRICS economies?. [online] weforum.org. Available at: https://Will BRICS countries attract the worlds major foreign direct investment as compared to west? If yes what things these BRICKS countries must do to retain their unique postion in the global economy. [Accessed 6 Apr. 2017]. Ferraro, P.J., Hanauer, M.M., Miteva, D.A., Nelson, J.L., Pattanayak, S.K., Nolte, C. and Sims, K.R., 2015. Estimating the impacts of conservation on ecosystem services and poverty by integrating modeling and evaluation.Proceedings of the National Academy of Sciences,112(24), pp.7420-7425. Gao, C., Zuzul, T., Jones, G.G. and Khanna, T., 2017. Overcoming Institutional Voids: A Reputation-Based View of Long Run Survival. Granello, D.R., 2016.The BRICS countries: strides toward Greater Representation in international institutions(Doctoral dissertation, UNIVERSITY OF OKLAHOMA). indianexpress.com. 2017. BRICS Summit 2016: Those who shelter, support, sponsor terror, as much a threat as terrorists. [online] Available at: https://indianexpress.com/article/india/india-news-india/live-brics-summit-2016-goa-joint-declaration-pm-modi-lanka-president-sirisena-bhutan-bimstec-bangladesh-latest-updates/ [Accessed 6 Apr. 2017]. Khanna, T. and Yafeh, Y., 2015. Business groups in emerging markets: Paragons or parasites?.Review of Economics and Institutions,6(1), p.60. Prasad, R. and Satsangi, R., 2013. A Case Study of Amul Co operative in India in Relation To Organizational Design and Operational Efficiency.International Journal of Scientific Engineering Research,4(1), p.1.