There is no doubt that emerging markets have become critical shapers of the global economy. Growth in such economies is outstripping that of developed nations. Long-term trends suggest, for instance, that China’s economy could surpass that of the US by 2025, and China’s growth rate could be overtaken by India’s by 2015 and by Brazil’s by 2025. The effect has been a continuous blurring of the distinction between ‘developed’ and ‘emerging’ economies, indicating a convergence between the two once-clear categories. Decades ago, developed economies were primarily those in Western Europe, North America, Japan and Australia. Over time, more complex global linkages between labour, capital and trade have shifted the traditional boundaries.
Given such macroeconomic convergence, it is no surprise to see a convergence of opinion amongst the CEOs from both developed and emerging market companies. For example, as they are increasingly competing on an equal basis, CEOs in both sets of countries in PwC’s 11th Annual Global CEO Survey had surprisingly similar responses on their main source of competitive advantage, with technological innovation leading the way (see Exhibit 1). This underscores how the rules of competition are converging around similar principles for all global companies, whether they are based in developed or emerging nations.
Exhibit 1: Firms from emerging and developed countries identify similar competitive advantages
