Last week I made a video about global currencies. In putting that video together, I realized there is something I have not talked about before on this channel. From a business perspective, when I look at world markets, there is an emerging market that interests me more than any other place in the world. That country is India, and so I wanted to make a short video on why India is so important. WATCH NOW!
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VIDEO SUMMARY
For those of you who watch my channel you know I don’t give investment advice on this channel. If you are thinking of investing your money in an Indian company or any company, please first speak with a financial advisor in your city. However, no matter what your job is in business, it is important to have an understanding of what is happening in emerging markets around the world.
Let us start by talking about emerging markets. There are four main emerging markets that are commonly referred to as the BRIC nations. BRIC stands for Brazil, Russia, India, and China. In 2010, people started including South Africa in the acronym and calling it BRICS. I could spend a lot of time talking about each one of these countries. Each country has problems and huge successes.
To understand the impact of these emerging markets, let’s look at the GDP of countries around the world.
Quick tip: GDP stands for Gross Domestic Product. GDP is the economic activity within the borders of a country. A simplified why of thinking about this is it is a combination of everyone’s income. So in accounting terms, if a country had an income statement, this would be the number at the bottom of that income statement every year.
If we look at the list of the top ten countries by the size of the economy, we see that China, India, and Brazil are included in the list of the top ten largest economies in the world. This is how big these countries have become. And what is amazing about these emerging markets is how fast they have grown. They were nowhere near this size twenty years ago. It is a remarkable economic story, but the real question is “what is the economic outlook going forward?”
| 2019 Nominal GDP by country (trillions) | |
| US | 21.4 |
| China | 14.1 |
| Japan | 5.2 |
| Germany | 3.9 |
| India | 2.9 |
| UK | 2.7 |
| France | 2.7 |
| Italy | 2.0 |
| Brazil | 1.8 |
| Canada | 1.7 |
| International Monetary Fund |
When we look at India, they are already the fifth largest economy in the world. But that is not what catches my attention. When I look at India, what I think in my mind is “What incredible potential.” India has so much more growth ahead in all areas: manufacturing, services, technology, and innovation. This is a country with an enormous population of smart, talented, hardworking people that know how to get results. That is what we have seen so far, and India can do even more. India could be the next global superpower if they make the right decisions. And I am going to tell you what those moves are, because it is actually very simple.
I look at things from the perspective of business history. When we look back through history, we know the type of things that causes economies to grow. Economies grow when they embrace free market policies. That’s it. Embrace businesses. Embrace the free market as a way to generate wealth.
If we were to line up all the BRIC nations in a row, India stands out as being able to embrace the free market. China and Russia are communist countries. Granted they have had market reforms that have led to their significant growth, but they are still communist countries. A good example is China’s currency is strongly managed by the central government. So the value of the currency you are using in China is not driven by the free market. That is just one example, but there are many different areas where India could turn to the world and say, “India is open for business.” India has already done a great job at this, but you could set even stronger policies and tell the global community that if they bring their investment dollars and invest it in India, that your country will embrace free market policies.
It sounds simple. To business people, that is almost a no brainer. Of course you would do that. But it is not that simple. When you look at a lot of smaller countries, they are not embracing free market policies. Because what that means is giving up control to allow the free market to work. You are giving more freedom to your business leaders to operate independently. That is a big request, but it is something that India can do better than a lot of other countries.
I will give you a very specific example. When you talk about business strategy, it is about identifying things you can do well, that your competition cannot compete with you on. When you look at India and China, for example, there is something that India can do that China will never be able to compete on: Intellectual property rights. I talk with a lot of companies in the US. These are companies that do manufacturing in China. The biggest concern China always is intellectual property rights. They are worried that their technology will be stolen, and there is no way for them to protect their intellectual property. The reason is because China is a communist country, which is a political structure with a completely different understanding of property rights. So for a whole number of reasons, China is going to have a difficult time ever competing on intellectual property rights, because of their history, their social policies, and political structure. This is something China cannot change overnight. But this is an area where India can compete. India should be looking at ways to streamline their intellectual property process and strengthen it, because intellectual property is India’s silver bullet. India can say in an even bigger way than they have done in the past to the US, Europe, and Japan, “If you come and do business in India, we will protect your property rights.”
The reason I am making this video is because I believe today is a critical moment for the future of India’s economy. Right now, the whole world is dealing with the COVID-19 crisis. Right now, a lot of US businesses who have been doing business in China are rethinking their strategies. India is in a very strategic location, halfway between the Middle East and China. India, now is your opportunity. You can stand up on the world stage in a big way and say, we stand for free markets, we stand for democracy, we stand for human rights, and if you bring your business to India, we will deliver results.
I do not know what the future will bring, but in my opinion, India remains my favorite of the emerging markets.
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Neither Zach De Gregorio or Wolves and Finance shall be liable for any damages related to information in this video. It is recommended you contact a CPA in your area for business advice.