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Alexander Mirtchev Discusses the Evolvement of the Economic and Financial Crisis in Emerging Markets and the Strategic Options for the Multi-Nationals With Voice of America
Krull Corporation President Analyzes the Effect of the Massive Government Intervention on the Development of the Financial Crisis and the Prospects of Recovery in Rapidly Developing Economies and Emerging Markets, and Assesses the Upside that Multi-Nationals Can Derive in the Future From Better Positioning During the Turbulences
| Source: Krull Corporation
WASHINGTON, DC--(Marketwire - February 26, 2009) - In an interview with Voice of America
television, Dr. Alexander
Mirtchev, an economic policy expert and president of Krull Corporation, shed
light on the strategic options that
multi-national companies have in some rapidly emerging markets during the
economic crisis and beyond.
Dr. Mirtchev points out
that the recovery packages in development by the G7 economies have a direct
impact on developing economies, such as China, Brazil, and Russia, as well
as on the smaller emerging markets, and the respective measures they are
undertaking. "It is now understood that there is no truth to the view that
emerging markets are 'decoupled' from the global economy -- they are facing
the same systemic pressures as the rest of the world, and their reaction --
which varies from country to country and from industry to industry -- is
putting paid to the notion that these markets can be bundled and packaged
together as 'the same class of asset.'"
The measures they undertake to deal with the financial crisis and economic
downturn reflect the varying sets of tools and specific aims of emerging
markets, with a predictably local slant. He considers that the trend of
wide-spread state intervention in the emerging markets would probably fall
short of its intended aim, but at the same time is an unavoidable reaction
with stabilizing implications, at least in the short term.
"The economic crisis prompted what can be described as across-the-board
government intervention in the emerging markets with specific implications
about the export economies. This was, at best, an indifferent choice made
out of a number of poor choices that were facing governments worldwide,
taking into account the severe economic downturn, the public feeling of
dissatisfaction with free market capitalism, sometimes combined with
region-specific social and political pressures. It should also be
considered that the crisis is reinforcing the set of notions associated
with the so-called 'state capitalism' (in the modern lingo -- the
perception of a coherent 'Chinese Model'), on one hand. On the other hand,
rapidly developing economies and emerging markets are developing a tendency
to reconsider in practice the prevailing for the last years rhetoric and
practice of the capitalist model, demonstrated by massive government
intervention that could be here to stay."
However, Mirtchev indicated that "we could not avoid the judgment of the
markets regarding the fate of future economic growth, but would need to
provide the framework for improving market confidence in order to
positively affect the livelihood and welfare of people. It is likely that
the involvement of the state in the market works best when it aims to
achieve specific targets, relies on a clear cost-benefit analysis, and when
it sets out in advance an appropriate exit strategy and timetable."
Nonetheless, all of the emerging markets need to be made part of the global
solution to the crisis, in order for it to have success, because if "left
outside the tent" they could become part of the problem and could stand in
the way of the rebalancing of the world economy and global recovery. This
means that the new evolving global economic and financial system requires
that developed economies take into account not only the unique
circumstances, but rather the new role of the rapidly developing economy
leaders, as well as the smaller emerging markets.
"The developed economies need to engage pro-actively such markets in their
plans, in order to avoid retrenchment and isolationist policies that are
bad for competitiveness. Left alone on the margins when dealing with the
economic storm, certain smaller emerging markets, for example, those in
Latin America, Central and Southeast Asia, may have to seek temporary
solutions and shelter between powerful neighbors, which could contribute to
the fragmentation of the global market. The U.S. Administration should work
with its G8 and G20 partners to provide a platform for such a constructive
dialog, taking into account the realities of these regions."
In the current economic downturn, multinational corporations are faced with
serious choices on how to allocate their diminished resources. "The
opportunities for generating economic upside for the multinationals would
likely include specific and targeted industries within emerging markets
which will become a source of growth for the multinationals." According to
Dr. Mirtchev, "Multinationals have the capability to take advantage of the
inward focus of the developed economies. Significant segments of the
rapidly developing economies such as China, Russia, and Brazil, as well as
emerging markets such as the countries of Central Asia, for example, will
maintain economic potential -- even proportionately reduced in the global
downturn, they still have a lot of room for growth."
On the other hand, the crisis has exposed a number of vulnerabilities in
the international markets that will probably play a determining role in the
development options that multinationals would have to choose from. On this
basis, his view is that "multinationals should not only stay the course
with the developing economies and emerging markets, but even extend their
footprint in those markets, in order to position themselves better for the
global economic recovery. And these markets may represent the crucial
difference between strategic success and failure after the prolonged tough
economic times."
To view the interview, visit http://www.voanews.com/.
About Krull Corporation:
Krull Corporation is a Washington,
D.C.-based advisory and project management firm with expertise in dealing
with economic growth, industrial restructuring and modernization. Founded
by Dr. Alexander Mirtchev in 1992, Krull Corporation capitalizes on his
extensive professional experience in market developments and reforms and
focuses primarily on emerging market and rapidly developing economies. Over
the years, the firm has provided its clients with outstanding strategic
guidance and solutions. Combining a unique blend of global reach and
understanding of local markets, Krull is able to consistently produce
high quality results and returns.