Business to determine the level of changes and growth

 

 

 

 

 

 

Business in emerging
markets

             ESSAY

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Table
of Contents
Introduction. 3
Discussion. 3
Growth and
development experience of China since 1980. 3
Growth and
development experience of sub-Saharan Africa since 1980. 7
Contrast growth and
development of China and Sub-Saharan Africa since 1980. 9
Conclusion. 11
References. 13
 

 

Introduction

This paper
discusses all about the growth and development experience of two different
countries such as China and sub-Saharan Africa. In simple words, this study
will help in understanding the past, present and future of the economy from
crisis to the achievement of sustainable growth. The growth and development has
become an important element or essential for industrialization (Akinlo and
Egbetunde, 2010). In addition, this paper will highlight the growth and
development of both the countries (China and sub-Saharan Africa) since 1980.
This growth and development of countries will be analyzed by using the
perspective of institutional theory so that actual economic condition gets
understandable. But at the same time, growth and development experience both
the countries will also be compared in order to determine the level of changes
and growth both the economy. However, this essay will develop understanding the
experience of both countries which they passed for achieving growth and
development.    

Discussion

Growth
and development experience of China since 1980

The economy growth
of China is developing rapidly with the change in the innovation system i.e.,
government of China has developed a new industrial reform for an economy. In
addition, China has achieved economic extraordinary performance by developing
market orientation reforms and opening up new opportunities in different
sectors. While analyzing the growth and development of china since 1980, it is
found that economy performance has increased continuously and consistently.      

The development
experience of China is very incredible because China has used new technology in
such an efficient manner that country economy condition developed continuously
such as increase in GDP growth rate and also achievement of sustainability
position (Zeng, 2010). The major factor behind the actual development of China
is industrialization because adoption of decentralized approach leads to the development
of the market for manufacturing companies who produces consumable products at a
low cost. This development and growth of the economy lead to encouragement of
localized entrepreneurship as well as helped in achieving comparative
advantage.

  

(Figure:
Composition of GDP, China)

This above graph clearly
stated that the reasons behind the increase in GDP growth rate are three
different elements that added value to the economy development such as
agriculture, services and industry. In other words, industry and services added
value more in development of GDP growth rate. But in oppose to it, Bloom, et
al. (2010) also stated that in present economic condition of China is unstable
because company is facing slowdown phase and that leads to influence over the
growth and development of the economy.

In early 1980’s,
China GDP growth rate increased with the support of community party that are
producing home-based agricultural and implemented market-based economic
policies. At the same time, it is also found that in period of 1989, China’s
GDP growth rate faced challenge with the decline phase because country was
unable to produce and market the innovative product in the worldwide
competitive market. In this regards to this, Lin (2011) also depicted that the
experience of China is quite impressive as it is found very relevant in many
other countries also such as Sub-Saharan Africa.

The institutional
theory also states that there are various challenges on which different
economies react differently such as factors like social, environmental and
political are creating influence over the country. The growth of China gets
developed rapidly because it effectively captured the market of other countries
like India where it exports its products for meeting the customer’s requirement
for an innovative product. At the same time, foreign direct investment is also
a factor that provided huge support to the economy in growing and developing
the economy condition by developing effective policy and procedure which
attract foreign investors directly.

Kennedy,
et al. (2012) also elaborated that defining China is
very challenging task because this county has faced an experience an
astonishing transformation in its changing economic and geopolitical
experience. In today’s global economy, Chins has achieved its second position
in world’s largest economy and planning or focusing to overtake the US position
in next coming future decades. During growth analysis of China, it is also
found by Li (2018) that China growth rate is not rapidly growing from last few
decades due to which GDP growth rate of economy has also grew slowed as
unexpected from last 25years.

 

(Source: Li, 2018)

But, on the other
hand, it is also found that major increase in the growth of China is because of
government policies and strategies as well as government focus on agricultural
development even though economy faced slow down but then also economy mange to
develop its economy rapidly which other countries can only think or dream of.
The growth and development experience was incredible for China because country
leadership’s focused on research and development strategy which played an
important role for China to transform their economy into service based economy.
Simply, China relied on placing an innovation products and services as a plan
to target the customers and develop its economy over the next five years.   

In oppose to this,
McMillan and Rodrik (2011)
also stated clearly that poverty is a main or greatest
challenging factor for all countries as same for China also. In China, now also
there are few numbers of people who are extremely living in poverty condition
in comparison to other countries such as India, Nigeria & so on. At the
same time, China is one of the largest trading economy which trades with other
countries in order to sell their innovative products and services. The Chinese
government has developed such effective policies which open market for the
foreign investors as well as for Chinese companies to expand their business in
other countries efficiently and effectively. Therefore, it can be summarized
that China economic success is remarkable because country focused on developing
their agricultural and trading business relation with other countries like
India to a large extent.    

Growth
and development experience of sub-Saharan Africa since 1980

The growth of
sub-Saharan Africa is a big challenge for the economy and government because
Africa was continuously facing the economy crisis and that lead to development
of more challenges for industry to develop their business effectively. This
economic crisis will lead to impact the industries at large as their business
operations will be effected and it will also affect their business growth.
These challenges will affect the performance of many business enterprises which
will bring many negative consequences for the country. During the study, it is
also identified that in initial periods, economy condition of Sub-Saharan
Africa got flattered to a large extent in terms of decline in per capita
income, fall in GDP growth rate (Moradi, 2010). In today’s 21st century,
Sub-Saharan Africa has become one of the fastest and largest growing economies
in all over the world. Sub-Saharan Africa contributes to around 12% of the
world’s total population but on the other hand its GDP is around just 2%.

The development
experience of Sub-Saharan Africa is very varied and cyclical because there were
different changes and reforms developed by government affected the performance
of the economy. In 1980’s, country faced ineffective development because of
poor policy development and response, external threats, in effective strategies
and rapid social transformation. In addition, the national diversity of economy
can be experienced by analyzing the GDP growth rate and financial development
of the country by overcoming the financial crisis efficiently (Sahoo et al.
2010). These all factors led the country to face various different challenges
that gave rise to ineffective development and some of the financial crises.
There was also a radical change in the Africa’s development policies because of
the changes in growth and human development disaster. Liberalization and
privatization measures also aimed at combing into the international markets and
also on the other hand it led to attract the private investments which had
replaced the public ownership which was the only notably support for the infant
industries.  It became very difficult for
the country to reduce poverty through redistribution when the country knew that
the level of incomes was not effective. The growth and development experience
found to be threat for the country because of reduction in vulnerability due to
strengthening power of fiscal and external buffers (Al-Mulali and Sab, 2012).
The results of the liberalization and the structural adjustment also lead to
have an immense impact on the manufacturing industries. Due to lateness of
independence along with the onset of economic slowdown lead to the decrease in
the import substitution in most of the SSA.

In respective to
institutional theory, it is clearly stated that there are large numbers of
factors that generally contributes to Sub-Saharan Africa country. This
contribution of factors leads to no effective experience in terms of growth and
development in today’s emerging market competition in comparison to China. In
1980’s, African economy went for some major changes and establish the market institutions
that helped the country to focus more towards the growth and development of the
economy. Every country is responsible to show a due concern towards its growth
and economy development as it will help the country to boost its GDP rate and
also will help the country to become economically feasible in the market. The
country is also responsible towards providing its public with the sufficient
resources so that they can enhance their standard of living and this will help
to increase the GDP and the economic condition of the country as a whole. On
the other hand, Akinlo and Egbetunde (2010) also explained that the successful changes
in structured form or in form opportunities in the economy clearly show the
experience as well as implication related to future growth and development.

The other
contribution factors to Sub-Saharan Africa growth lead to increase in
government actions that help in making better decision for business growth by
mitigating the political conflicts and providing support for developing
relation with other countries and sectors (Goetz, 2015). The experience
of the country Sub-Saharan Africa was very cyclical because in earlier period, country
faced crisis then it developed and attained sustainable growth but from last
two decades country again started falling in their growth level. In 1980s,
African government undertook steps for developing effective and stabilized
economic reforms and structured programs with the support of the International
Monetary Fund (IMF), World Bank and other institutional supports (Voss, 2016).
In 1989, the World Bank was left with no other option in admitting that the
overall Africans are as poor as they were used to be 30 years back. It was also
seen that between the period 1980 and 1987, the per capita real incomes in
sub-Saharan Africa fell by a quarter.

Contrast
growth and development of China and Sub-Saharan Africa since 1980

There is a
difference in growth and development experience of China and sub-Saharan Africa
in terms of economic development or financial development or in GDP growth
rate. Before 1980s, country was performing inefficiently which somewhere
affecting the growth and resulting into the economy crisis. According to
today’s scenario of 21st century, the economic condition of both the
country is somewhere stable in terms of financial or growth rate (Hassan et al.
2011). But from last few years, the growth of both China and Sub-Saharan Africa
has faced challenges related to fall in GDP growth rate in comparison to growth
of other countries.

In the research
study of Amendolagine et al. (2013), it is clearly stated that economic growth
and development is only achieved by the increase in GDP growth rate and
increase in productivity through more labor and capital. The major contrast in
the growth and development of both the countries is a technology. Fosu (2015) also
stated that the major factor of production that hinder the growth and
development of business or economy is technology because technology is
something which can help in achieving opportunities or destroy the growth level
in some uncertain situation. The contrasting experiences in China and African countries
is explaining the importance of difference in institutional and policy
environments that are getting affected by the individual behavior in respect of
adopting new technologies which raises the land and labor productivity.

While contrasting
the performance of both the countries, it is also identified that both the
countries faced ups and down in different phases of time period. The growth and
development in both the countries is also found because of increase in demand
and attract towards foreign direct investment due to globalization
(Njoupouognigni, 2010). But in comparison to Sub-Saharan Africa, China is
enjoyed its experience of growth and development because China used new
technology efficiently in order to target large market and also to develop
economic condition of the economy. In comparison to Sub-Saharan Africa, Chinese
companies are producing more innovative products which attracts the investors
to do foreign direct investment in the economy as this lead to development of
economy financially and in stability form (Kivyiro and Arminen, 2014).

Foreign direct
investment is major important part for every organization because this
investment brings development in the standard of the living, economy
development. The experience of Sub-Saharan Africa is found poor in comparison
to China because there are several factors that affected directly or indirectly
to the development of economy such as institutions, ethnic diversity and
geography (Kimle, 2014).
The slowdown in China and its rebalanced growth also affected the business and
relation with the other countries and this also created impact on the
Sub-Saharan Africa because China and Africa shares a trading relation with each
other.      

While contrasting,
it is also found that GDP growth rate is not only element which helps in
measuring the actual sustainability growth because GDP help in measuring the
development of an economy. The contrast between China and Sub-Saharan Africa in
context to experience of growth and development is wide because China is best
trading economy which also developed its relation with sub-Saharan Africa (Storeygard, 2016).
In context to poverty, the development in the standard of living has increased
in China and this shows a great experience whereas economic growth of Sub-Saharan
Africa also enjoyed experience with the reduction in poverty with the
development of strategies by the government from last few decades. This growth
and experience also lead to development in per capita income of individuals as
well as improvement in living standards are also observed. These contrast
between the experiences that China experienced reduction in poverty earlier
since 1980s in comparison to Sub-Saharan Africa where African country
experienced poverty reduction from many decades (Fosu, 2015). Thus, it can
also be stated clearly that China is experienced more growth and development in
comparison to Sub-Saharan Africa.

Conclusion

The above study
can be concluded by stating that since 1980, global economy condition has changed
to a large extent in terms of change in inflation rate, globalization and many
more. Both the countries have faced some challenges in their past decades in
order to achieve high growth rate and development of economy in terms of
industry and trade. This study help in developing understanding towards the
countries experiences towards growth and development of their economy. Moreover,
contrasting the experiences helped in identifying that factor of production,
technology of factor are major reasons that affected the growth and development
of both the countries in a positive and negative manner. The present economy situation,
both countries growth and development level is getting slow down due to eternal
threats and developing challenges. Therefore, this study can be summarized in an
efficient manner that China and Sub-Saharan Africa are more focused towards
development of economy in terms of financial and non-financial matters.

 

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