Best of Both Worlds – Inspiring Growth Globally

Samara Ali

Problem, awareness, realization, then transformation – this is the economics lifecycle that emerging and developed markets have experienced for decades. Let’s address these four stages and the resulting quest for solution.

Developed economies such as the United States continue to assess the impact of falling interest rates and driving data through artificial intelligence, while ensuring their stronghold in economic impact – after all, these economies account for 29% of the global foreign direct investments as of 2022.

But there’s a need for an added perspective here – the recognition of emerging economies as a force to be reckoned with. The problem is an outdated belief, which views these economies as a commodities market that is unable to plug-and-play with the investment strategies and financial infrastructure that can connect a globalized world. This is far from the truth now, as the emerging markets have now grown from 24% to 31% in information technology and communication services, with a growing middle-class at the helm of it.

The lack of such acknowledgment actually inhibits growth in developed economies. The more such economies understand the importance of convergence, the more we would develop a highly optimized financial infrastructure that the interconnected world can benefit from. Take for example, the payment infrastructure in Canada – home to more than eight million immigrants. Canada is gradually implementing institutional strategies to accommodate seamless cross-border transfers and payments, paving the way for growth in its financial services industry. For instance, the payment gateways utilized an asynchronous messaging formatting system across financial institutions which meant that simple remittance transactions became time-consuming and cumbersome. However, with the incorporation of ISO20022 and a complementing high-value payment system such as Lynx, the message formatting becomes more uniform, which strengthens cross-border transactions and paves the way for growth across developed and developing economies.(Payments Canada)

Developing economies are more than pulling the weight of transformation. Saudi Arabia has enabled an economic acceleration by enhancing women’s participation by more than 50%, whereas Ethiopia has opened six new sectors in Foreign Direct Investments, leading to $5.4 million FDI retained to date (World Bank).

But for economic progression to amplify, it takes two to tango – developed economies must make a greater effort to understand the under-researched developing markets: this includes surveying the surge of digital transformation, growth of financial technologies, and subsequently the emerging needs of an evolving financial infrastructure, which both economies would benefit from. That’s how transformation will be shape-shifting.