Doing Business in Emerging Markets

Progress and Promises

Sudhir Rana, Avinash K. Shrivastava, Sudhir Rana, Avinash K. Shrivastava

• Publisher: Routledge India
• Year: 2021
• Print ISBN: 9781032057927
• eBook ISBN: 9781000434958
• Edition: 1
• Topic: Business
• Subtopic: Economic Theory
• Index: Business

This volume presents a comprehensive analysis of the business, financial and economic aspects of emerging markets. Using case studies from India, Turkey, Bangladesh and Africa, it discusses themes such as megaprojects, infrastructure and sustainability; cross-border mergers and acquisitions; a new paradigm for educational markets; exports competitiveness; work engagement in service sector; mobile banking and crowdfunding; and venture capital flow into emerging economies, to focus on the trade, foreign investment, financial, and social progress of these economies. The chapters review the current state, learnings, changing scenarios, business practices, and financial and economic perspectives across emerging markets while examining progression, challenges and the way forward.

With its rigorous approach and topical content, this book will be useful to scholars and researchers of management studies, business management, financial management, business economics, international business, finance and marketing, development studies and economics. It will also interest policymakers and practitioners in the field.

1 Megaprojects, infrastructure, and sustainability in emerging markets

Gerardo del Cerro Santamaría

DOI: 10.4324/9781003199168-1

Megaprojects – urban regeneration schemes, transport and energy infrastructure, industrial corridors, city clusters, new towns, innovation districts, science and technology parks, sports infrastructure – are reconfigured and reterritorialized spaces in which the role of the local, regional, and national elites, as well as the role of national and sometimes transnational capital, are usually prominent. Megaproject design and implementation often meet the need of bringing together and harmonizing several scales of power, not only because increased urban competitiveness and global visibility are perceived as essential outcomes in the development of these projects, but also because, in diverse socio-political contexts, the configuration of political power exhibits different and distinct relationships between the local, regional, national, and global domains of social action.

It is important to note that, in a context of planetary urbanization (Brenner & Schmid, 2011), virtually all megaprojects are urban in nature and location or are built to have a direct effect on cities and the urbanization process, particularly urban development and competitiveness, because megaproject construction has been a major response to adapting to neoliberalism and globalization in the urban realm, as discussed below. In fact, megaprojects actively contribute to a situation of increased planetary urbanization. Hirschman (1967, vii, xi) calls megaprojects “privileged particles of the development process” and points out that often they are “trait making”, that is, they are designed to ambitiously change the structure of society, as opposed to smaller and more conventional projects that are “trait taking”, i.e. they fit into pre-existing structures and do not attempt to modify these.

Urban megaprojects present themselves in many different packages and resist easy definitions, but the close link between megaprojects and development is evident. One could conceptualize UMPs as large-scale urban development projects that sometimes have an iconic design component, that usually aim at transforming, or have the potential to transform, a city’s, or parts of a city’s, image, and are often promoted and perceived by the urban elite as crucial catalysts for growth and even as linkages to the larger world economy. In an era marked by the shift in urban governance from managerialism to entrepreneurialism (Harvey, 1989), and one in which cities are thought of as nodes in a global network of relationships, the urban elite often perceive linkages to the global economy as fundamental to ensuring sustained local economic development. Regaining global visibility (a concept discussed by Grubbauer, 2013) is not only a quintessential economic strategy; it also serves the purpose of symbolic or representational transformation, which is especially useful for regions and cities with distinct political identities. Both objectives – the material and the symbolic – are present in many cities’ recent, concerted attempts to regain status as globalizing metropolises through the use of urban megaprojects in urban revitalization (Bunnell, 2013). Revitalization itself is a political strategy that questions approaches stressing the exclusively economic and financial character of globalization.

The causal context of megaprojects – the logic of development and competitiveness – has consequences for the planning and management of megaprojects. In order to meet their goals of contributing to urban and national growth and development, megaprojects need to be shaped as public–private institutional arrangements participated in by elites and coalitions, at various spatial scales, that are able to provide the necessary funding and expert knowledge to implement these complex structures. By “development” we mean both the infrastructural development epitomized by megaprojects as well as the neoliberal context of globalization (fostered by developmental states that have turned into entrepreneurial states) within which megaprojects take place and are implemented (Mazzucato, 2015 Castells & Himanen, 2015).

Background of the study

Development and competitiveness

In order to understand the links between megaprojects, development, and competitiveness we need to briefly discuss the processes of globalization and neoliberalism as causal contexts within which the recent wave of megaprojects came about. Megaprojects have arisen from a complex set of geographic, economic, and, above all, political processes of restructuring occurring throughout the world since the late 1970s and early 1980s. This period has seen the widespread ascendency of globalization, neoliberalism, and, as an urban manifestation of these processes, megaprojects, which are inherently tied to a global logic of development and competitiveness.

Globalization and neoliberalism have manifested themselves in four global processes that motivate megaprojects: (1) city-based international competition; (2) the mobility and growth of knowledge economies; (3) the redirection of global investment from physical to human capital; and (4) the dominance of market-rule ideology and politics (Harris, 2017).

Megaprojects are a product of political and economic changes rhetorically framed around a lesser state intervention. However, these projects are “clearly, and almost with no exception, led by the state and often financed by the state” (Moulaert et al., 2003, 551). This degree of state participation symbolizes the tension between the ideology and the practice of neoliberalism, which is crudely revealed in megaprojects.

A complex reorganization of the relations between the state and the economy is generated under neoliberalism. The state actively enables and promotes market-based regulatory agreements that favour the private sector (often in the form of “public–private partnerships”), and so urbanization depends on this peculiar and perverted form of mobilization of state power to a greater degree than in previous stages (Brenner & Theodore, 2005). In a way, this is a clearly neoliberal version (the “entrepreneurial state”) of what was formerly called the “developmental state”, whose paradigmatic example is the Chinese government, controlled by the all-powerful Communist Party of the People’s Republic of China.

The Chinese entrepreneurial state began to manifest itself when the teams of the Engineer Corps of the Chinese People’s Liberation Army started the construction of the Shenzhen Special Economic Zone (SEEZ), once they had concluded their work in the reconstruction of Tangshan after the 1976 earthquake. The first skyscraper in the SEEZ, the International Foreign Trade Centre, opened its doors in 1985, and it was, at that time, the tallest building in China. The IFTC was inspired by the Hopewell Center of Gordon Wu in Hong Kong and rapidly became a widely replicated type of building throughout China. From that skyscraper, Deng issued his historic call to the free market in January 1992.

The rhetoric from megaproject protagonists will always embrace a globalization discourse in which international economic competitiveness is paramount for the prosperity of the city and the state. Both in times of genuine bust and in times of obvious boom, this rhetoric dominates public discourse, frames objectives, and guides decision-making processes, despite rarely being operationalized in official project-management processes. The structural change that these projects are aiming to bring about, who precisely stands to benefit, and, more importantly, what alternatives might be available all remain shrouded in a generic “glossy globalization” discourse that glorifies potential investment and growth while obscuring real urban displacement and socio-spatial polarization (Marcuse, 1997).

In times of real failure, or times of evident boom, this global rhetoric dominates public discourse, frames objectives and guides decision-making processes, although it is rarely operationalized in official project management processes, which obey other types of priorities. Megaprojects represent a globally embedded approach to city-making, development, and competitiveness spanning cultural and geographical contexts. It has become the hegemonic approach to growth, development, competitiveness, wealth-creation, and prosperity advocated by urban pro-growth coalitions and elites.

Megaprojects, megaregions, and competitiveness

As the urbanization process develops relentlessly around the world and global city-regions become economic units of development and competitiveness in their own right, the role of megaprojects (particularly transport and energy infrastructure, innovation districts, industrial corridors, city clusters, new towns) in providing the infrastructure of development expands.

These megaprojects, and the megaregions where they are built, obey a simultaneous logic of dispersion–concentration of economic activity. The combined action of technology and trade favour the global dispersion of economic activity. In turn, the benefits of mutual proximity of innovation activities and decision-making centres promote economic concentration in large megaregions, which thus exemplify the extension and intensification of the functional relationships of global cities in large megaregional spaces. Recently, 40 megaregions were identified around the world, representing 18% of the world’s population, two-thirds of the world’s economic activity, and 86% of patented innovations (Florida, 2007). From this point of view, megaregions are the new urban form of globalization (Harrison & Hoyler, 2015).

In the United States there are several differentiated super-regions, defined by economics and demography: the northeast corridor, from Boston to Washington, D.C. (Bos–Wa); Northern California, around San Francisco; Southern California, around Los Angeles; the Great Lakes area, with Chicago as its epicentre; the Arizona Sun Corridor, from Phoenix to Tucson; the Front Range Corridor, from the city of Salt Lake to Denver and Albuquerque (New Mexico); the Cascadia Belt, from Vancouver to Seattle; the Piedmont Atlantic group, from Atlanta, Georgia, to Charlotte, in North Carolina; the Gulf Coast area, between Houston, Texas, and New Orleans; the Texas Triangle area, with Houston, Dallas, Austin, and San Antonio; and Florida, which includes Miami, Orlando, and Tampa. It is estimated that the aggregate population of these megaregions will reach 277 million people in 2025, equivalent to 80% of the projected U.S. population for that year. The total gross product of two of these regions (Bos–Wa and Southern California) is equivalent to one-third of the gross product of the United States.

Federal policy can focus on helping these nascent archipelagos thrive and help others to emerge, in places like Minneapolis and Memphis, by collectively forming a grid of metropolitan productive regions efficiently connected through infrastructure megaprojects, better roads, railroads, and fibre-optic cables. Although the 50 states continue to be the basic organization of the political system, the country is reorganizing itself around regional infrastructure lines and metropolitan clusters that ignore state and even national borders (Khanna, 2016). These city-regions are more economically relevant than most American states, and the connectivity, through infrastructure megaprojects, of these urban groups determines the long-term economic viability of Americans to a greater extent than the state in which they live.

In the coming decades, more than half of the population growth of the United States and almost two-thirds of the economic growth measured in terms of output, will take place in the U.S. megaregions. These demographic and economic concentrations will be increasingly connected by their economies, population patterns and land use, infrastructure systems, topography, environmental systems, and by a common culture and history. As they consolidate, they will experience great governance and decision-making challenges that cannot be resolved at the urban or metropolitan level.

Bruce Katz, of the Brookings Institution, has pointed out that of the 350 major metropolitan areas in the United States, cities with more than three million people have recovered much better from the financial crisis (Katz, 2018). Meanwhile, smaller cities, such as Dayton, Ohio, are faltering and have been losing economic power, as have innumerable small disconnected towns across the country. The 50-state model means that federal and state resources are concentrated in a state capital – often a small isolated city – and assigned with little sense of the whole.

The U.S. Congress was once a world leader in regional planning. The Louisiana Purchase, the Pacific Railroad Act (which funded Iowa’s railroad expansion to San Francisco with government bonds), and the Interstate Highway and Highway System are examples of the federal government’s action on economic development on a continental scale. The Tennessee Valley Authority was an agent for the renewal of post-Depression infrastructure, job creation, and industrial modernization across ...

Table of contents

• Cover
• Half-Title
• Series
• Title
• Copyright
• Contents
• List of figures
• List of tables
• List of contributors
• Doing business in emerging markets: progress and promises: An introduction
• 1 Megaprojects, infrastructure, and sustainability in emerging markets
• 2 Developing a conceptual framework for determinants of export competitiveness in emerging markets
• 3 The Learning Organization for attaining inclusive growth: A new paradigm for the emerging educational market
• 4 Investment motivations and institutional quality: Cross-border mergers and acquisitions by Turkish MNCs
• 5 Africa through times: Recent successes and lessons for emerging markets
• 6 Towards enhancing work engagement in the service sector in India: A conceptual model
• 7 Opportunities and challenges of sustainable marketing practices in emerging markets
• 8 Indian–Russian bilateral relations: Two emerging giants and their business relationship
• 9 Mobile banking for financial inclusion in a developing economy: Evidence from Bangladesh
• 10 Crowdfunding in the emerging markets
• 11 Spillover effect of quantitative easing on venture capital flow into the emerging economies: A case of India
• Index