ECN3014 International Economics Assignment: Emerging Economies Review

This report provides a comprehensive review of six scholarly journal articles focusing on international economics, specifically examining the impact of emerging economies on global trade. The review is structured around three key themes: the causes of the sharp division in economic performance between high-income and developing countries, the challenges associated with recent international financial crises, and the role of emerging economies in driving the current global economy. The analysis highlights the influence of international trading blocs, such as South-South and North-South trade, on economic growth, and the challenges posed by biased financial policies. Furthermore, the report discusses the role of outward foreign direct investment (OFDI) and the disintegration of production processes in fostering economic development in emerging markets, emphasizing the interconnectedness of global trade and finance. The findings underscore the significance of trade integration and FDI in the growth of emerging economies, and the impact of financial policies on global economic stability.

Running head: INTERNATIONAL ECONOMICS 1
International Economics
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Institution affiliation

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Introduction
As a result of the contemporary worldwide financial crisis, there has been a
sharp division in the economic performance of the high income as well as the
emerging market countries. Consequently, the countries which suffered most
because of the global financial crisis include nations of the European Union, the
United States of America and Japan. To the contrary a majority of the emerging
economies barely paused during the 2008 economic depression. A good example of
such economies include India and China whose economies are growing strong each
day and are the one responsible with powering the recovery of the present
international economy. In light of this statement, this paper provide a short review in
regard to the subject matter “Emerging Economies in Global Trade” by giving a
review using the following journals discussed below. Accordingly, this paper offer the
reader six scholarly journals listed below. Certainly, to make sure that the review is
undertaken accordingly, the paper uses the following inquiry questions which act as
the directive for this review. These questions include:
 What is the cause of the sharp division in the economic performance between
the high-income and the developing-market countries?
 What are the challenges associated with the recent international financial
crisis?
 What is the role of the emerging economies associated with the new
multinational trade prospect?
Accordingly, this paper review is structured by sorting the journal articles into
three major themes that is the cause of the sharp division in the economic
performance, challenges associated with the financial crisis and the role played by

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the emerging economies in powering the current global economy. Therefore, the first
two journal articles discuss about the cause of the sharp division in the economic
performance, then the following two articles provide a review about challenges
associated with the financial crisis and lastly but not least the last two articles provide
a review about the role played by the emerging economies in powering the current
global economy
Theme 1: cause of the sharp division in the economic performance
Hanson, G. H. (2012). The rise of middle kingdoms: Emerging economies in global
trade. Journal of Economic Perspectives, 26(2), 41-64.
The subject matter in this journal article is provide a review on the literature
regarding different approaches in which the low as well as middle income nations
have started to grow their economies particularly China and India. Indeed, the
leading middle income nations sin the development of the economies in the
multinational market has grown immensely between 1994 and 2008. Certainly, this
growth has been facilitated by the upcoming of novel trading patterns experienced in
the South-South trade (Hanson, 2012). The changes in the global trade are as a
result of the integration of the middle as well as low-income countries joining the
worldwide economy. Unlike between 1950s and 1980s where trade was completely
conquered by the flow of trade between countries with high incomes which greatly
contributed to the international GDP. Similarly, most of the emerging nations
maintained high obstructions to imports. Subsequently, initially the global economic
literature involved the exchange of products and services specifically between based
in the North –North trade bloc. As a result, the North-North trade started to
experience stiff competition through the development of the South-South trade bloc

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and North-South trade. Therefore, the forming of the South-South trade has
significantly led to the industrialisation in addition to urbanization in India and China
which have greatly been driven by the high demand for raw materials required to
build factories and cities in this region.
Feenstra, R.C., 1998. Integration of trade and disintegration of production in the
global economy. The Journal of Economic Perspectives, 12(4), pp.31-50.
According to this article it provide a review regarding how the assimilation of
trade and the dissolution of products has contributed to the rise in the international
economy (Feenstra, 1998). Accordingly, over the last few decades there has been a
remarkable amalgamation of the international economy which has been made
possible through trade. Initially, countries with big economies used to trade less with
other nations and mostly traded locally. Nevertheless, through the rise in trade
integration of the global markets it has led to the breakdown of the production
process. As a result, services as well as manufacturing processes which used to be
done within country’s boundaries has been expanded such that it is now being
carried out multilaterally.
Based on the above two journal articles it reveals that the primary intention of
these authors is to bring to the attention of their audience that the rise of the global
economy is because of the formation of international trading blocs. Accordingly, the
low and middle-income nations have been able to progress sand develop their
economies out of integrating their trading activities and a good example in this case
is the South-South and North-South trade integration. These articles show a
similarity since they both review about the cause that lead to the rising in global
economy among middle-income economies.

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Theme 2: challenges associated with the financial crisis
Didier, T., Hevia, C., & Schmukler, S. L. (2012). How resilient and countercyclical
were emerging economies during the global financial crisis? Journal of
International Money and Finance, 31(8), 2052-2077.
This article review about how the developing market nations moved on
through the 2008 and 2009 worldwide financial crisis. Nonetheless, while it is
believed that the developing economies seem to have shown a better performance
during the period based on the development rates (Didier, Hevia, & Schmukler,
2012). Consequently, these nations also faced contraction in their development in
the GDP as well as the industrial production in consideration of the greater pre-crisis
development rates. The only advantage is that most of the economies of the merging
countries recovered at a rapid pace and robustly as compared to the developed
nations. Even though on average the economies of emerging countries seem to
have performed better during the crisis period unlike the developed nations, there is
heterogeneity amongst some of these nations. Generally, countries with low income
seem to be secluded from the cyclical pattern surrounding the crisis.
Obstfeld, M. (2012). Financial flows, financial crises, and global imbalances. Journal
of International Money and Finance, 31(3), 469-480.
The topic under review by this article is the relationship between the global
imbalance of the dawn of the millennium and the recent international financial crisis.
Accordingly, before the outbreak of the monetary crisis in 2008, all along the mid-
2000 this era experienced a robust economic performance world over. During this
period, the rate of inflation was low with the economic development standing high
which lead to the booming of global trade that leads to the expansion of monetary

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flows (Obstfeld, 2012). However, the financial crisis is a as a result of the
international imbalance influenced by the economic policies. For instance the United
States capacity to fund macroeconomic imbalance by allow easy borrowing.
The authors of these articles show a similarity in their argument by showing
that the major cause of the international financial crisis is as a result of formation of
biased financial policies which allow easy borrowing from abroad.
Theme 3: The role played by the emerging economies in powering the current
global economy
Luo, Y., Xue, Q., & Han, B. (2010). How emerging market governments promote
outward FDI: Experience from China. Journal of world business, 45(1), 68-79.
In regard to the subject matter under review this article talk about the various
ways in which outward foreign direct investment (OFDI) has resulted in the upsurge
in the emerging economies over the recent past. Therefore, this article explore
different ways through which OFDI is enhancing the development of economies
developing countries. Basically, the article reveals that the development of emerging
economies has be fuelled by the multinational trading activities. Indeed, global
enterprises have the capacity to pursue resources as well as beneficial significance
from overseas through OFDI which in return has proofed to be lucrative (Luo, Xue, &
Han, 2010). FDI has shown to be lucrative to most of the developing economies in
the sense that through the participation of international companies in the local
businesses it motivates the shift of advanced technologies to the host nation.
Therefore, in the process this foster human capital development which is achieved
through training of employees. On the same note, the practise play a key role in
supporting corporate institutions through exposing the host nation towards advanced

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economies, corporate governance as well as exemplary business practices.
Certainly, from the macroeconomic point of view it reveals that FDI is a more stable
form of capital movement.
Timmer, M. P., Erumban, A. A., Los, B., Stehrer, R., & de Vries, G. J. (2014). Slicing
up global value chains. Journal of Economic Perspectives, 28(2), 99-118.
Accordingly, this source review about various ways through which
governments of developing countries does to enhance their markets. The article
shows that the global economy has been evolving rapidly through the rise in
international trade in services and goods. In the beginning, this process only
included trade integration between countries in Europe and the triangle between
Japan and the United States. As a result, the integration of trade led to the formation
of East-Asia trade which led to the formation of novel industrialising nations in Asia.
The most recent integration has been illustrated by China and India. Indeed, the
increase I the global markets has been made possible through the breaking up of the
production process since practices which used to be undertaken from the local
economies has been shifted to off shore (Timmer, Erumban, Los, Stehrer, & De
Vries, 2014). Certainly, this led to the separation of the manufacturing process such
that this process does not have to be performed in one place. As a result, the
unbundling of practices which is also referred to as disintegration as well as
coordination of practices across the world. Therefore, the ability to trade good and
services from dissimilar places led to the international production. Subsequently, this
approach led to the formation of international networks coming up in the
manufacturing sectors like electronics, automobile and textile industries. For that
reason, there has been an increase in the competitive pressure across the world.

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The authors of these articles exemplify some similarity in terms of integrating
the trade practices as well as OFDI approach used by emerging countries to support
the progression of their economies. Indeed, through the breakdown of manufacturing
industries and encouragement by FDI these initiatives have shown to be lucrative for
the emerging economies.
Summary
In summary the main findings from the reviewed journals articles are the
following. Firstly, the major cause of the international financial crisis is as a result of
formation of biased financial policies which allow easy borrowing from abroad.
Secondly, the rise of the global economy is because of the formation of international
trading blocs. Lastly, but not least, the breakdown of manufacturing industries and
encouragement by FDI these initiatives have shown to be lucrative for the emerging
economies. Accordingly, these findings have exhaustively answered the paper
review inquiry questions asked in the induction part in different ways.

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References
Didier, T., Hevia, C., & Schmukler, S. L. (2012). How resilient and countercyclical
were emerging economies during the global financial crisis? Journal of
International Money and Finance, 31(8), 2052-2077.
Feenstra, R.C., 1998. Integration of trade and disintegration of production in the
global economy. The Journal of Economic Perspectives, 12(4), pp.31-50.
Hanson, G. H. (2012). The rise of middle kingdoms: Emerging economies in global
trade. Journal of Economic Perspectives, 26(2), 41-64.
Luo, Y., Xue, Q., & Han, B. (2010). How emerging market governments promote
outward FDI: Experience from China. Journal of world business, 45(1), 68-79.
Obstfeld, M. (2012). Financial flows, financial crises, and global imbalances. Journal
of International Money and Finance, 31(3), 469-480.
Timmer, M. P., Erumban, A. A., Los, B., Stehrer, R., & de Vries, G. J. (2014). Slicing
up global value chains. Journal of Economic Perspectives, 28(2), 99-118.

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