Career Opportunities in Emerging Markets

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					                                                                     Issue 2         December 2008



   Career Opportunities in Emerging Markets
   Associate Director, Student Services, UCSO: Laura Barnes Paley
   Director of Undergraduate Career Services: Susie Clarke
          Recently there has been a lot of press on how to win the race for talent glob-
ally with a special emphasis on emerging markets. Why are emerging markets impor-
tant? Because they are growing at compounded rates of 40% while western econo-
mies are struggling with low single digit growth. Many companies are starting to peg
their prospects for growth to Brazil, Russia, India and China (‗BRIC‘ countries), so how
can your career benefit from an experience in emerging or global market experience?
There are many personal and professional advantages to gaining global experience,
including:
           Personal growth through awareness of strengths.
           Demonstrates to employers that you are willing to take risks and step outside
            your comfort zone by taking a global experience. Interning or studying
            abroad in an emerging market also requires a lot of flexibility and independ-
            ent problem solving – these are important skills needed for a successful ca-
            reer in business anywhere in the world.
           Ability to understand another culture and operate within different cultural Kelley‘s study abroad program in São Paulo (above) gives students the
                                                                                            opportunity to visit Brazilian companies. (Photo courtesy of Maniza.com)
            norms is a huge benefit to students. Like countries, companies have differ-
            ent cultures too. No matter where you work or what country you are in, you will find it easier to adapt to a new environment
            more quickly than your counterparts who haven‘t tried it before.
           An internship in an emerging market is more likely to be in a smaller office (even if it‘s for a large global company) and there-
            fore provides a better view of what the company is doing in that country. The difference in size typically results in the ability
            to work on higher-level projects and find solutions to real business problems. This increases your visibility, as well as the
            chance to see the end result of your work as it is implemented real time. (Continued under “Career” on page 6)


A Look Inside:
                                          A Glimpse into Panama
                                          Sarah Tague — setague@indiana.edu
Brazil                   2
                                                Emerging markets are typically classified                  South Carolina and the service industry consti-
Dubai                    3             as low income economies that are experiencing                       tutes two-thirds of Panama‘s GDP. These activi-
India                    3             rapid growth in industrialization and are desired by                ties include operating the Panama Canal, bank-
                                       investors because of promising future development.                  ing, the Colon Free Zone, insurance, container
Vietnam                  5             Panama attracts many tourists due to its location                   ports, flagship registry, and of course tourism.
Croatia                  4             warranting desirable temperatures and lush land-                    The remaining one third is composed of manu-
                                       scaping. The sudden increase of tourism has re-                     facturing and agriculture; including production of
                                       cently bolstered interest in Panama‘s economy.                      bananas, rice, corn, coffee, sugarcane, and
 An Interview with                    Currently, there is an upward trend for property                    shrimp, according to the CIA World Factbook.
  Professor Rugman                     investment in Panama due the surge in tourism and                             Panama‘s currency is the balboa,
  about the BRIC Coun-                 promise of future return on large property ventures.                which is set at a fixed rate with the American
  tries                                Investment incentives include ―0% tax on newly                      dollar. The fixation to the American dollar gives
                                       built homes for the first 20 years and also 0% tax                  the Panamanian economy more stability and
 India’s Villages
                                       on income earned outside Panama‖ which is a                         also increases foreign investors‘ confidence. It
 Dubai’s Distress?                    large attraction for foreign investors wishing to                   also causes less hassle for foreign exchange of
 International Busi-                  spend ample amounts of time outside the country                     goods and services on the account that the dol-
  ness Forum                           partaking in global business practices.                             lar already has a known and set exchange rate.
                                                Comparatively, Panama, is the size of                      (Continued under “Panama” on page 6)


 Page 1                                                                                                                         The Emerging Markets Journal
BRIC Countries, Moving at Full Speed, Hit a Brick Wall
Loren Steinfeldt — lsteinfe@indiana.edu

          From São Paulo to Moscow, the ef-
fects of the current financial crisis have taken a
devastating toll. While the S&P 500 has lost
41% of its value year-to-date (as of December
4), the emerging market powerhouses of Rus-
sia, China, Brazil and India have experienced
declines in their major financial markets of
70%, 70%, 57% and 45%, respectively. Cou-
pled with significant currency devaluation and
increasing uncertainty, Foreign Direct Invest-
ment in these emerging markets will dwindle in
the coming year.
          ―The market for finance is global,
while the demand for manufacturing is regional
and demand for labor is locally-driven,‖ said
Alan Rugman, a Kelley professor and chair of
the International Business program. This helps
explain why the U.S. financial crisis has af-
fected nearly all industries on a global scale.
Rugman noted, ―American and European de-
mand for Chinese manufacturing is down sig-
nificantly. In turn, China demands less oil from
Africa.‖
          The G.D.P. of China is expected to                        China has seen a dramatic plunge in its stock market. (Photo courtesy of Newsweek)
grow 7.5% in 2009, a slowdown of the
(estimated) 2008 growth of 9.6%, according to        gas have decreased, Russia‘s market has suffered                         prices, India and China ex-
The Economist. It is currently experiencing its      the most.‖                                                               perience sustained growth.
slowest growth rate in five years.                             The Economist forecasts Brazil‘s 2009                          For oil-importing countries like
          Russian economic conditions have           GDP growth rate at 2.4%, compared to 5.3% this                           India and China, cheaper
fared even worse. In spite of a 14% increase in      year.                                                                    prices result in lower inflation
consumer prices over the last year, Russia‘s         Similar to Russia, natural resources play a vital role                   and reduced input costs for
growth rate will decelerate from 7% in 2008 to       in Brazil‘s economy. Brazilian oil company Petro-                        goods and s er vi c es.
3.7% in 2009. Rugman attributes Russia‘s eco-        bras accounts for over 40% of the country‘s stock                        (Continued under “BRIC” on
nomic turmoil to the market for commodities.         market, according to Lombard Street Research. As                         page 5)
―Russia‘s economy is heavily focused on natu-        Brazil and Russia incur losses from decreased oil
ral resources. Since the price of oil and natural


Credit Crunch Hits Brazil, Analysts Still Predict Growth
Dylan Freisner — dyjfries@indiana.edu

          Throughout the eighties and nineties,         tal requirement, and maintained re-                  crunch had reached Brazil.
hyperinflation, foreign economic influences, and        serves at the Central Bank to prevent                          The impact of the credit crunch
poor governance plagued Brazil, causing high            any sudden fluctuations in currency                  on Brazil‘s economy was more severe
financial volatility. The country went in and out of    value. ―Brazil‘s economy has been                    than the impact foreseen by the govern-
financial crises on a regular basis, hindering the      traveling with the brakes on…and at                  ment. Credit lines have been reduced to
nation‘s economic development. Conversely, un-          times like this that can be an advan-                about half of what they were in August.
der President Luiz Inacio Lula de Silva, the past       tage‖ says Eduardo Gianetti of IBMEC,                The average cost of financing a large
five years have been characterized by great eco-        a São Paulo business school.                         purchase has also risen 25%, causing
nomic health. Brazil managed to see record com-                   What does this mean for Bra-               the sales of automobiles, real estate, and
modity prices and high levels of both private and       zil now that the US financial crisis has             appliances to plummet. Many infrastruc-
public investment in infrastructure projects. This      spread throughout the world‘s mar-                   ture development projects have been
allowed Brazil to become the world‘s leader in          kets? In September, President Lula                   postponed, as financing these projects
ethanol production while at the same time reduc-        reassured the nation that, ―Bush‘s                   has become too costly. Even though the
ing the level of foreign influence on their economy     [financial] crisis‖ would not affect Bra-            country has been affected by the global
by retiring foreign currency denominated debt and       zil. However that same month, stock                  credit crisis, the fundamentals of the Bra-
reducing ownership of Brazilian assets by foreign       prices declined an average of 30%, the               zilian economy have kept many foreign
firms. Brazil‘s rapid growth was achieved under a       Real (Brazilian currency) lost 31% of                analysts and government officials opti-
very conservative fiscal policy. Due to the histori-    its value relative to the US Dollar, and             mistic about Brazil‘s resiliency to this
cal instability of their economy, Brazil has applied    the spread on Brazilian debt rose 170                global crisis.
the Basel Rules to all banks, set an 11% per capi-      basis points; thus proving the credit                (Continued under “Brazil” on page 4)

Page 2          Issue 2           December 2008                                                                              The Emerging Markets Journal
 Dubai’s Distress
 benfox@indiana.edu


            China and India are not the
 only emerging markets feeling the sting
 of global financial crisis. Even red-hot
 Dubai, a member of the United Arab
 Emirates, has been affected. With oil
 reserves running dry, Dubai undertook
 a high-growth, high-risk strategy to
 establish itself as a prime tourist desti-
 nation and financial hub. As a result,
 what was a small fishing village just
 thirty years ago is now an ultra-
 modern, bustling city. However, this
 extravagant building boom has come at
 a high price. Dubai has accumulated
 loads of debt at a rapid pace. Due to
 the worldwide economic slump, many
 now fear property prices could drop
                                                        Dubai, pictured above, has been trying to shield itself from the financial crisis. (Photo courtesy of Portfolio.com)
 significantly in the next year or so.
 Prices in some developments have             skyscraper made headlines in Dubai.                       wait a specified period of time before flipping a
 already fallen by 40% since Septem-          After hearing of such plans and wit-                      property. Even Dubai‘s fellow emirate, oil-rich
 ber. In addition, most of the newly-         nessing extravagance like that dis-                       Abu Dhabi, has already helped immensely by
 created luxury hotels and villas are         played at the recent $20 million dollar                   injecting $6.8 billion into Dubai‘s banks. Due to
 filled with wealthy western tourists and     grand opening of the Atlantis resort, it‘s                its deep oil reserves, some believe Dubai‘s rival
 expatriates. If the worldwide financial      clear some are still investing heavily in                 might well indeed come to Dubai‘s rescue in the
 slowdown deepens, even the rich may          Dubai‘s future.                                           near future.
 feel their pockets dry up.                            In addition, Dubai‘s ruler,                                World economies are far too intercon-
            There is good news, however.      Sheikh Mohammed is seeking to reas-                       nected for Dubai to be immune to the world‘s
 In early October, while the financial        sure investors by instituting a number                    problems. However, Dubai may indeed emerge
 crisis was front page news around the        of reforms including forming a real-                      relatively unscathed due to quick action by its
 world, the announcement of the unveil-       estate regulatory authority and creating
 ing of plans for a 1.4 km (4953 ft) high                                                               government and help from its neighbors.
                                              rules such as forcing speculators to




Did India Catch a Cold?
Josslyn Kennedy — joskenne@indiana.edu
          It‘s been said that when America              like Reliance Communications and
sneezes, the rest of the world catches a cold.          ICICI Bank fell by large percentages                               ees to work in Information Technology
This statement holds truth in terms of the eco-                                                                            (IT), Business Process Outsourcing
                                                        (more than 20% in most cases) in the
nomic crisis that the United States is facing to-       Bombay Stock Exchange (BSI). The                                   (BPO), and Knowledge Process Out-
day. The sharp decline in the US economy not                                                                               sourcing (KPO). The Economic Times
                                                        absence of foreign investing is the
only affects American citizens but the impact is                                                                           explained that "in India, around 60 per-
                                                        main reason for the downfall of these
also felt by people and corporations across the                                                                            cent of the companies operating in the
                                                        native businesses. Many global com-
globe. Although the severity of financial losses                                                                           IT-BPO sector have been working for
                                                        panies are leaving the Indian market
varies from country to country, India, in particu-      because of financial uncertainty and                               American financial corporations like
lar, has not suffered as much as others in this                                                                            Goldman Sachs, Washington Mutual,
                                                        have sold off over $9.6 billion dollars
economically unstable time.                             worth of shares in the first nine months                           Citigroup, Bank of America, Morgan
          Unlike most emerging markets, India                                                                              Stanley and Lehman Brothers. Tata
                                                        of this year.
has a well established banking system which                       India finds itself in a similar                          Consultancy Services and Satyam
has kept the country from an economic col-                                                                                 Computers have been working for
                                                        economic situation to that of the US.
lapse. According to P. Chidambaram, India‘s                                                                                Merrill Lynch, and Wipro has a number
                                                        The Federation of Indian Airlines (FIA)
finance minister, "Indian banks, save one, did          has requested a $1 billion dollar inter-                           of American corporations as its clients
not have any exposure to the subprime mort-                                                                                that are bruised by the present col-
                                                        est-free loan to bailout failing airline
gage market and hence did not suffer any first-         companies. Not only are Indian compa-                              lapse." Jobs are not the only thing af-
order consequences.‖ But as problems contin-            nies feeling the affects of the American                           fected when countries leave the mar-
ued to move into credit markets, India began to                                                                            ket. (Continued under “Cold” on page
                                                        economic crisis, but jobs outsourced to
face the crisis they averted for some time.             India are also in danger. For years, US                            5”)
          Over the past few months, companies           companies sought out Indian employ-

                                                                                                                            The Emerging Markets Journal
Brazil (from page 2)
           Brazil‘s conservative fiscal pol-     sumer spending and infrastructure devel-
icy alone should continue to lessen the          opment to resume. For this reason, Most
impact of the global capital market crisis       governmental and outside analysts ex-
on the domestic economy; yet the gov-            pect to achieve a financial surplus equal-
ernment has taken steps to further allevi-       ing 3.8% of GDP in 2009. If Brazil can
ate the pressures of the credit crunch
                                                 manage to uphold growth within the pri-
and capital market crisis. Mutual trade
                                                 vate sector, they can forestall the impact
agreements with other nations have been
a top priority for President Lula these          of the global financial crisis on their own
past three months, which are predicted to        economy, thereby returning to a period of
allow for as much as a 50% increase in           economic health.
trade volume over the next two years                                                                        The Bovespa, Brazil‘s primary stock index,
between these nations. The Central Bank                                                                     has seen a dramatic fall since the begin-
has built up reserves to maintain a flexi-                                                                  ning of the year. (Chart above courtesy of
ble exchange rate and prevent a foreign                                                                     Bloomberg)
exchange crisis, while at the same time
selling dollars to inject liquidity into the
market and free up more credit. Lastly,
the government has strongly encouraged
the merging of banks to increase holding
abilities. Last month, Unibanco and Itaú
announced a merger that will combine
over $283 billion in assets to help solve
lending problems.
           Unlike most countries hit by the
crisis which have required government
bail-outs to ensure financial stability, Bra-
zil has been able to rely on the funda-                                                                      The real, Brazil‘s currency, has lost value
mentals of their domestic economy and                                                                        to the dollar over the past year. (Chart
                                                   Brazil has experienced growth under President Lula Da
take non-legislative action to remedy the            Silva (above). (Photo courtesy of Reuters/CORBIS)       above courtesy of Yahoo! Finance)
credit crisis, ultimately allowing for con-



Helping the Indian Countryside: The Value of a Farmer
Sunjay Gorawara — skgorawa@indiana.edu

          In rural India, farmers often         is a critical need in order for the country to
trudge for miles with their produce along       become a true global power.
unpaved roads in order to put a rupee in                   Instead of nurturing the entrepre-
their pocket. This is done in spite of its      neurial spirit of the farmers, there are agri-
inefficiency and results in exploitation of     cultural mandates in India that require
the farmers. The world‘s attention has          farmers to sell their goods in wholesale
been drawn to India ever since its econ-        yards. These yards operate as a monop-
omy was opened up in 1991. However,             oly and are holding back poor farmers
what most people do not realize is that         from their potential growth, while limiting
the majority, 70%, of India‘s citizens live     change that is needed. This system was
in rural isolation. Those outside of the        designed to free poor farmers, but in order
large cities are, for the most part, not        to accomplish this goal, India needs to                         Rural development in India is key for continued economic
experiencing the booming economic               invest in its precious villages to help sus-                             success. (Photo courtesy of IFAD.org)
growth India is going through as a whole.       tain the foundation of its economy growth.
Rural development and a stronger con-                      According to Tarun Khanna, Har-                 develop a supply chain linking the urban mar-
nection between urban and rural markets         vard Business School Professor, India                      kets to the village entrepreneurs, which can be
                                                should take advantage of its strengths in                  made possible with foreign direct investment. If
     India needs to invest in its
                                                both the private sector as well as in the                  India is able to strengthen its farming base, con-
  precious villages to help sustain             local villages. Since the task of reforming                tinued growth in the private sector and the over-
   the foundation of its economic               villages is so large, corporations need to                 all economy will certainly follow.
               growth.                          make it a priority. The ultimate goal is to




Page 4                                                                                                                      The Emerging Markets Journal
  Vietnam Challenges and Opportunities
  Duc Tran — ductran@indiana.edu

            Vietnam was thrust into the        Doi Moi has in fact transformed the coun-
  world‘s spotlight during the sixties and     try in every area of its society. Roads,
  seventies of what was considered to be a     bridges, and hotels are built everywhere
  failed American war. However, victory in     by a large amount of foreign invest-
  the war did not create any boost for the     ments. Vietnam has joined the World
  economy or leave any social improve-         Trade Organization (WTO), and two
  ment for Vietnam. During the following       years ago hosted the meeting of Asia-
  two decades, the country struggled           Pacific Economic Cooperation (APEC), a
  through deep recessions, rocketing infla-    first step to attract attention from interna-
  tion and social injustices, all which        tional media once again. Vietnam‘s econ-
  dragged Vietnam into obscurity.              omy is booming in recent years, annually
            The collapse of the Soviet Un-     increasing in GDP by about 8%, second
  ion and Eastern European countries in        in Asia behind only China.
  the nineties pushed Vietnam to the edge                 Vietnam has abundant natural
  of bankruptcy and forced the country to      resources, a young labor force, a large
  change course. A new economic policy         market with over 80 million people and
  ―Doi moi,‖ translated into English as        most importantly occupies the crucial
  ―New Deal,‖ was formed. Doi moi helped       trade route between Europe, oil-rich Mid-
  restore the free market, opened up bor-      dle-East countries and Japan as well as
  ders for trade, allowed foreign as well as   China. These advantages may help Viet-
  home-grown businesses to compete             nam become one of Asian tigers in the
  freely with the state‘s centralized compa-   future.
  nies, and finally slashed out unnecessary
  regulations that interfered with business.
            Vietnam nowadays has a mixed
  centralized and free market economy.

                                                                                                     (Photo courtesy of the CIA World Factbook)




Cold (from page 3)                  BRIC (from page 2)
          The lack of foreign               For all the calamity suffered by                    Following a long and painful recovery,
expansion slows down the           the BRIC countries, smaller emerging               Rugman expects much lower growth rates
historically growing export        economies are vulnerable to even greater           among BRIC countries than seen in recent
market. To save jobs and           economic challenges. Business Week                 years. He predicts the Russian economy will be
corporations, India will have to   reports, ―Hardest hit are small, open              the slowest to recover. ―Russia‘s prospects are
sacrifice growth in order to       economies such as Ireland, Iceland, and            not as strong as other emerging economies in
                                   Taiwan (all island nations) that were ex-          Eastern Europe, whose membership in the
contain inflation. Unfortu-
                                   emplars of globalization and financial in-         European Union provide various economic
nately, what happens in the
                                   novation just a few years ago.‖                    benefits.‖
United States directly affects
                                            Of the four BRIC countries, India                   In contrast to previous crises like the
countries across the globe.
                                   is best-suited to maintain strong growth in        Asian financial crisis of 1997 and the 1998 Rus-
          The US is not in this
                                   the current environment. Rugman cites              sian financial crisis, the current situation has
economic situation alone.
                                   India‘s abundant supply of Information             spread from the developed world to emerging
Many nations are working           Technology services as insulation against          markets. By lacking precedent, the current fi-
together to find a solution to     a global recession. The Economist fore-            nancial crisis offers emerging markets few clear
this complicated issue. The        casts India‘s 2009 GDP growth rate at              solutions for economic recovery. With sensible
US needs to understand that        6.1%, nearly equivalent to the 2008 figure         economic and fiscal policies, the emerging
every decision they make in        of 6.2%.                                           economies will not only survive the financial
the process of fixing economic                                                        crisis, but can assert their supremacy in a new
concerns has an affect on
                                      According to Rugman, India is                   chapter of the global marketplace.
countries around the world.
Instead of narrowing down the         best-suited to maintain strong
problem to American issues, a
                                          growth in the current
global perspective is needed
to completely understand and                   environment.
solve the economic crisis.




Page 5                                                                                                        The Emerging Markets Journal
Panama (from Page 1)
          Another vital point in classi-
fying a country as an emerging mar-
ket is the implementation and stabil-
ity of a firm government system.
Panama is governed by a constitu-
tional democracy and the country‘s
constitution was adopted on Octo-
ber 11, 1972 making Panama a
relatively young country in regards        nama can also be attributed to many
                                                                                                      Panama — Basic Facts
to self government. In order for Pa-       other areas including the Panama
nama to create economic stability          Canal Expansion Project, costal port           Population — 3,309,679 (July 2008 est.)
for years to come, the country has         expansion, alternative energy invest-          Capital — Panama City
developed a solid foreign policy           ments, and anew cellular communi-
                                                                                          Language — Spanish
platform with the strongest ties to        cation concessions. Panama has
coming from the United States be-          the potential for future growth and            GDP (Purchasing Power Parity) — $34.81 billion
cause of location and a close work-        larger economic competition pending            GDP Growth Rate — 11.2%
ing partnership that bloomed from          confidence in foreign markets and
                                                                                          Inflation Rate — 4.2%
construction of the Panama Canal.          continued investor interest.
                                                                                                        (Source — CIA World Factbook)
          Economic growth in Pa-


Career (from page 1)                                                               Country Spotlight
                                                                                   After covering Panama in our country spotlight this issue,
        Finally, recent studies have indicated that
                                                                                   the Emerging Markets Journal will cover Croatia for the
         the trend in American CEOs with interna-
                                                                                   next issue.
         tional experience had grown from 7% in the
         early 1990‘s to 44% recently, a clear indica-
         tion that international experience is valued
         highly.
          The Undergraduate Career Services Office
(UCSO) feels that participation in study abroad, ob-
taining proficiency in a second language and partici-
pation in the Emerging Markets Club benefits a stu-
dent‘s career opportunities. Several UCSO staff and
coaches have worked and studied overseas, includ-
ing emerging market economies and can attest to the
importance in developing your skills globally. We are
happy to share our experience and knowledge or                                                      (Photo courtesy of the CIA World Factbook)
collaborate with students who are interested in secur-
ing internship opportunities in emerging market coun-
tries.
                                                                                       Career Resources
                                                                                       Looking for a job or internship abroad? Here are some
           The Emerging Markets Club                                                   resource that help.

President: Calvin Dong                                                                     International Business Forum: The IBF pro-
                                                                                            vides opportunities and information to businesses
Editor of the Emerging Markets Journal: Alan Hearth                                         and people wishing to explore foreign markets.
Vice President of Strategy: Branden Davenport
                                                                                                http://www.ibf.com
Vice President of Marketing: Brad Mason
                                                                                           Transitions Abroad: Transitions abroad provides
Vice President of Finance: Ned Doherty                                                      several guides for people who are traveling, work-
Vice President of Human Resources: Carol Maldonado                                          ing, or studying abroad.

Advisor: Alison Kvetko                                                                          http://www.transitionsabroad.com

Please contact us at emerge@indiana.edu



Page 6                                                                                                                 The Emerging Markets Journal