RSS FeedBy M. Isi Eromosele
The global market of today is a place where there is free trade across national and international borders. In the process of this continuing development, emerging market countries have slowly become integrated to global capital and currency markets. This has led to their ability to tap into a larger savings pool of developmental funds, the acquisition of new technology and the chance to spread their risk.
The above scenario has now become a major element of most countries’ fiscal policy. However, possible advantages need to be set in opposition to the risks inherent in financial shocks from global markets that could undermine these emerging market countries, resulting in serious financial and societal outcome.
The past two decades saw a huge growth in private funds stream from developed economies to emerging ones. This transfer of funds was universally perceived as a constructive development. However, this trend was later reversed as the emerging economies suffered a series of financial setbacks that stunted their growth in economic development. While some emerging economies have recuperated, most continue to experience financial vulnerability that has been exacerbated by the recent global economic recession. This uncertainty has greatly reduced the necessary flow of capital funds to the emerging economies.
The financial weakness in the economies of the emerging markets has been worsened by poor fiscal policy administration in their local financial institutions as well as private and state-owned companies. Additionally, there has been poor supervision of financial regulations and bankrupt financial systems.
During the past few years, some progress has been made toward rectifying these inadequacies by the governments in emerging economies. A synchronized international assistance package is obviously needed to help these countries. Additionally, improved risk management and superior transparency are also essential.
It is absolutely necessary for emerging economies to participate in the planning of any internationally sponsored package that would assist them. The role of emerging market economies in helping to set up a new international financial scheme has to be established. In the past, representatives of emerging economies have not been part of the process that formulated global financial policies.
Recent history has shown that the financial policies set up by developed countries had resulted in fiscal shocks that damaged the economies of the emerging markets. It is imperative that the global capital and currency markets be made completely sound to help establish continued growth in emerging economies.
It must be said that the emerging economies also bear some responsibilities in creating global financial instability, especially in their poorly manages financial systems. What is sorely needed is for developed countries to help emerging economies establish good fiscal and monetary policies as well as assist them to better adhere to international financial regulations, standards and codes. There is also a need to help them handle their addition to the global financial markets. This would involve having international financial institutions and agencies support the emerging markets in their quest for financial stability and economic growth.
M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance
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