Study shows: Competitiveness of emerging markets is on the rise
The Leibnitz Centre for European Economic Research (ZEW) has prepared the study “Länderindex Familienunternehmen – Emerging Markets” for the Family Business Foundation. This shows that, despite political problems, countries such as Turkey, Russia and China have become more attractive. In contrast, South Africa and Brazil have fallen sharply.
Factors such as the political and economic situation, taxes, labour and energy costs and also regulations are decisive indicators in the choice of a location for companies. Emerging markets have also recognised this aspect. Consequently, their attractiveness is increasing. Family businesses in particular are finding lucrative offers in these areas.
Russia, Turkey and China are catching up
If a company decides to choose Russia as a location, this brings many advantages. In addition to very positive values in the categories of taxes and energy costs, the country has a highly qualified workforce. However, because Russia has autocratic tendencies, it scores rather poorly on this point.
Turkey takes second place in this ranking. It is noticeable that this country has predominantly average values. Only taxes make Turkey extremely attractive. This is mainly due to the liberal government environment. The biggest weakness, however, is the institutional conditions.
China has also done a lot. According to the report, the government is working hard to counteract crime and corruption. Financing conditions remain good. Nevertheless, this country has a problem with the labour force. Besides low education, high wages are offset by low productivity.
South Africa and Brazil lose attractiveness
The election of Jacob Zuma has left its mark. The president, who resigned in early 2018, has lost trust among global investors. Nevertheless, the country has average to good scores in the categories of institutions, taxes and labour.
Brazil, on the other hand, shows deficits in almost all categories, which is why it is also positioned in last place. The restrictive government field as well as a deficient infrastructure are particularly conspicuous.
The consequences for Germany and the EU
The emerging economies have gradually realised what is important in order to become attractive for family businesses. As a result, they are partly endangering their own companies, as competitive pressure is increasing. Germany now needs a new reform dynamic in order to continue to keep up. In addition, imposed sanctions, especially with emerging powers such as Russia, should be abolished. As a result, political tensions would be reduced and it would be easier to intervene on issues such as human rights, the rule of law and democracy.
Here you can find the entire study.
Source Cover Image: iStock / William_Potter
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