Reemerging Markets

10th April 2014
Productivity and innovation will be the true markers of success in the new global economy.

The concept of “emerging markets” came up in the last few years as an idea associated with the future of the world. Demographics, territorial scale, low production costs, easy access to commodities – all signs of change in the geo-economic axis.

Countries such as the BRICs (Brazil, Russia, India and China) reached the status of “engines of growth.” Export-driven growth in China; “transition economy” for Russia’s market; “outsourcing” and technological innovation in India; and “import substitution 2.0” in Brazil kept these economies booming – and social tensions quelled.

They successfully adapted to both the “deep globalization”, which gained steam with the end of the Cold War, and the “deglobalization” logic of “every-nation-for itself” that has influenced international behavior since the 2008 crisis.

This context brought about a naïve expectation. The BRICs were destined, slowly but surely, to lead a process of convergence involving emerging markets and the development pattern of advanced economies. In case of crises however, we would see a much desired “decoupling” – the inflexibility of development markets, and the dynamism of emerging ones.

In the last few months, those pro-convergence drivers seemed to change course. The honeymoon with emerging markets apparently came to an end. Their economies have been slowing down. In contrast, the United States and Japan are recovering. Although sluggishly, Europe is coming out of its recession. This has of course taken a toll on the outlook for the direction of international capital flows.

But this supposed “end of the affair” with emerging markets has taken many to rush to superficial conclusions: no more talk of convergence or decoupling, but instead a return to the old  “North-South” economc hierarchy.

In reality, performance in the coming years will be judged less by what we today label either “advanced” or “emerging” economies, and more by a countrys ability to competitively shape up to the “reglobalization” now in the making.

Reglobalization, the new age in world affairs we are stepping into,  does not comprise a renewed set of tenets and trends that allows us to believe we continue to operate in a scenario where the “world is flat”.

Reglobalization will not promote a sharp verticalization of cross-border dynamics of regional economic, political and legal integration. Regional entitites will not take precedence over nations  as the main actors in global affairs. It will not aspire to bring about a far-reaching communion of different world views. It will not come under a new global compact stitched together by most nations at either the United Nations or the World Trade Organization.

Reglobalization will be more “superficial” than the idealized “End of History” kind of world order we might have experienced at some point since the Cold War was dismantled.  It will be mostly focused on trade, investment and the strengthening of global production networks. It will also be more selective –  and therefore emerge as the result of the proliferation of multiple FTAs (free trade agreements) at both bilateral levels or else involve some of the most powerful economic regions of the world. On the one hand, this is what may come out of the current negotiations involving  the United States and Europe (the so-called “TTIP”, the Transatlantic Trade and Investment Partnership). On the other, similar dynamics are observd in a process involving the US and other countries bordering the Pacific in the Americas, Asia and Oceania.

Chinas success or failure in turning itself into a consumption-led economy producing high value-added goods will also be central to how reglobalization might take shape. In it, there will be little room for the Asian “neomercantilism” practiced by China since Deng Xiaoping stipulated that the color of the cat doesn’t matter, so long as it catches the mouse. Reglobalization will also offer less of a privileged platform for regional cooperation projects forged as of the ideological predilection for autarkic neo-developmentalism advocated by countries like Venezuela or Argentina.

Thus, those we once called “emerging markets” may very well stagnate. But the same is also true of “advanced economies” who set aside the imperatives of hard work and constant reinvention – and revel at expensive, ill-budgeted welfare states. Opportunities will decline for those countries which, having integrated themselves into a trade bloc or regional economic and political community, flirt with the luxury of fiscal irresponsibility and the granting of unsustainable labor and social security benefits without gains in productivity to support their economies. Mediterranean Europe – with the severe adjustment that it has been undergoing for a few years now – obviously comes to mind.

Whether this or that country might have at one point been coined “developed” or “emerging”, they will greatly gain by letting go of the certainty that either their “advanced status” or their “rise” are inevitable. In the global race for competitiveness and development, nothing is automatic or ever-lasting.

Reglobalization will belong to those countries that create business-friendly ecosystems, well-established and transparent market rules, and steadfast connections to transnational economic networks.

Those countries, whether they might have once belonged to one or another side of the old North-South economic geography, will be the true “Reemerging Markets”in the years to come.

Subscribe to latin trade magazine
Click here to begin a subscription for Latin Trade magazine, available both in print and online.
Subscribe to
Click here to begin an online subscription to, with its extensive ranking, indices, and market intelligence on Latin America.
Subscribe to free Newsletter
Subscribe here to our free newsletter – getting the latest business headlines from Latin America in your inbox every day.
Forgot your password
Aenean sollicitudin, lorem quis bibendum auctor, nisi elit consequat ipsum, nec sagittis sem nibh id elit. Duis sed odio sit amet nibh vulputate cursus a sit amet mauris. Morbi accumsan ipsum velit. Nam nec tellus a odio tincidunt auctor a ornare odio. Sed non mauris vitae erat consequat auctor eu in elit.Aenean sollicitudin, lorem quis bibendum auctor, nisi elit consequat ipsum, nec sagittis sem nibh id elit. Duis sed odio sit amet nibh vulputate cursus a sit amet mauris. Morbi accumsan ipsum velit. Nam nec tellus a odio tincidunt auctor a ornare odio. Sed non mauris vitae erat consequat auctor eu in elit.

Access Denied

Please log in or register

Read Our Latest Issue




Latin Business Traveler 26 Apr - 4:43 PM
Black Market Currency Trading: Worth the Risk?
Exchanging dollars for local currency in Venezuela and Argentina can make sense, but carefully consider all the options first.Business travelers arriving in Venezuela and Argentina will quickly learn that trading U.S. dollars or Euros for local currency on the black market has become an ingrained part of daily routines. Spurred on by skyrocketing or wildly fluctuating exchange rates stemming from both countries' difficult economic conditions, many visitors simply abandon any attempt at legal currency exchange. Before deciding whether or not to dabble in these technically illegal transactions, however, it's important to carefully evaluate the risks and rewards of playing the black-market game. Company Credit Card or Reimbursement: Stay OfficialFor well-healed corporate travelers who either benefit from a generous per diem reimbursement rate from their company or who can simply put all of the expenses on the company credit card, it makes sense to avoid the possible pitfalls of the black market altogether. Even in Venezuela, where the high cost of such basic expenses as hotel rooms, dining and taxi rides make doing business in New York or London look downright inexpensive by comparison, the risk of running afoul of the law will likely outweigh the benefit of hefty savings on daily expenses. Tighter Budget: Consider Black-Market Exchange in VenezuelaFor those on a tighter budget, however, the 50% to 75% savings that black market currency exchanges provide may quickly add up to big savings. According to, a site that evaluates the cost of living of 732 cities in the world, Caracas ranks as the seventh most expensive place on earth. Venezuela's highly overvalued Bolivar currently trades on the official exchange rate at 4.3 Bolivar to 1 U.S. dollar. Given the vociferous hunger for dollars and Euros in that nation, black-market exchange rates of up to four times the official level can be obtained for sums of $1,000 or more. Even for a significantly smaller amount, those who hold cherished greenbacks, or even Euros, can receive two to three times more Bolivares than the official rate would permit. Visitors arriving at Maiquetía, the international airport that serves Caracas, will quickly be approached and invited to exchange currency if they project even the slightest appearance of a foreign businessperson or tourist. During a typical stay in the country, such visitors will be approached time and time again and invited to change dollars at a very beneficial rate. A discrete inquiry to a hotel bellman or taxi driver will also open the door to black market-type transactions. In Argentina: Little Black-Market AdvantageIn Argentina, the cost of living is not as inflated. So, although the same basic structure of unofficial currency trading exists, the financial benefits of black-market ventures, compared to the situation in Venezuela, are somewhat more modest. The Argentine Peso currently trades at just less than 5 pesos to 1 U.S. dollar. The black market rate of around 7 pesos to the dollar represents about a 40% benefit. Avoid Illegalities by Negotiating to Pay in DollarsA common practice that negates the outright illegality of black market trading is offering to pay for goods and services with dollars. If the offer is accepted - and given the high demand for U.S. currency, it often is - the rate in Argentina generally falls between the official and black market rates, producing a net benefit of about 20%. In Venezuela more than double that benefit can be anticipated. Before deciding to exchange currency via the black market, consider the risks and the benefits, and always remember that it is illegal. Just like jaywalking, however, many do it without giving it a second thought.