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Why Foreign Investors Need to Look at Political Risks in India
Finance & Accounting
Pages 10 (2510 words)
Emerging markets are the new development strategy of almost all multinational corporations at present. Several rounds of crisis in the western countries, uncertainty on the future of developed nations, and other economical and demographical issues at the developed countries had resulted in the companies looking for opportunities in the emerging economies.
Some of the emerging markets that have captured the attention of intellectuals around the world are China, India, Brazil, Russia, Mexico, Indonesia and Turkey. Among the above list, China and India are the markets with the greatest potential. These are the markets where companies enter for quick return on investments. “Even though emerging markets generally do not have the level of market efficiency and strict standards in accounting and securities regulation like advanced economies -- such as the United States, Europe and Japan -- they are most sought after by investors for the prospect of high returns, as they often experience faster economic growth as measured by GDP.” (Rediff Business, 2011) China’s economy is the fastest growing economy in the world at present. Similarly, India’s growth rate is expected to surpass even that of Japan. Studies by various organisations show that the emerging market economies are set to overtake all the G7 economies by 2020. Such studies do have enough reasons to substantiate their views. This essay will deal with the strategic expansion of IKEA with its Greenfield operations in India. India had recently opened up its market for 100% Foreign Direct Investment (FDI) in the retail sector. ...
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