Globalization in Emerging Markets, 19.10.2022

„Globalization and Emerging Markets: A Win-Win Situation?

There is no general accepted definition of emerging markets (EM) but they share some key attributes. EM are middle-income economies that are characterized by high growth rates, fast industrialization and increasing integration into the global economy. However, they also have imperfect institutions, underdeveloped financial markets, poor infrastructure and immature legal systems. As an orientation, the IMF (2021) counts 20 countries as EMs including the BRICS but also Egypt, Indonesia, Philippines, Iran, Mexico, Poland and Saudi Arabia. Those 20 countries represent 34 percent of the world’s nominal GDP in US dollars and 46 percent in purchasing-power-parity terms.

The globalization wave that started 30 years ago is closely intertwined with the integration of emerging markets into the global economy. The economic opening and pro-market reforms in CEE, China, Southeast Asia and Latin America, the removal of trade barriers and improved technology, especially in transportation and information/communication, facilitated this intensification of worldwide commercial relations. Multinational companies expanded their operations globally to tap the huge market potential in the fast growing and big EMs and moved parts of their value chain to foreign low-cost locations. In the last years, globalization has changed its character and tempo (“slowbalization”). The expansion of global supply chains stopped, regional trade agreements and national protectionism have been on the rise. The change from an US-dominated unipolar to a multi-polar world order where big EM have a stronger say is creating more frictions and risks in the global system. The outbreak of the COVID-19 pandemic, the US-China trade war and the further Russian invasion into Ukraine put further stress on the global trade system. Disruptions in global food, commodity and energy markets have led to shortages, unseen price surges for gas and oil and inflationary pressure. And above all looms climate change and the necessity to reduce global warming.

The recent events and developments caused us to question the value of globalization, namely of creating highly integrated networks of production and trade networks, finance and product markets on a global scale. How do we see globalization today.

  • Have EM benefited from globalization so far?

  • Will EM suffer more than advanced economies from a potential de-globalization?

  • Does the trend towards regional diversification offer opportunities for EM? Which EM are attractive investment destinations today?

  • To what extent did European/Austrian multinational firms take advantage of EMs as markets and places for manufacturing and sourcing so far?


We discussed these questions with our guests representing different perspectives on the topic:

  • Ulrich Lammer, Strategy Director, RHI Magnesita

  • Gerald Mayer, Senior Manager Research, Analyses & International Relations, Oesterreichische Kontrollbank (OeKB)

  • Hans Stoisser, Founder and Managing Director, ECOTEC/NextAfrika

Moderator: Arnold Schuh

The main conclusions can be summed up as follows.

RHI Magnesita - The corporate perspective

In the refractories business there are only a few global players such as RHI Magnesita. The merger of Austrian RHI with Brazilian Magnesita back in 2017 made only business sense when using it for a transformation that combined the strengths of both corporate groups. Growth in emerging markets was a priority as the market shifted to Asia and Middle East representing about 2/3 of the global demand. China with a >50% world market share is a difficult sales market for foreign MNCs, as local firms dominate. However, China is critical for the sourcing of raw materials. While a local-for-local production might mitigate geopolitical risks, it also highlights the necessity to keep up international trade and investment relations. India has the highest growth potential and tries via an India-for-India policy to reduce the dependency on Chinese imports. RHI Magnesita’s transformation program is aiming at balancing its presence – 70% of sales are in Americas and Europe – with the growing markets in Asia.

OeKB – The export credit agency’s view

The Austrian export credit agency (ECA) acts as important supporter of Austrian firms, especially SMEs, expanding to emerging and developing markets. It has a long-standing experience in risk sharing with other ECAs and and adapts conditions to the demands of firms, for instance, by reducing Austrian local content requirement to 25% in project business. OeKB covers 99-100% of the political risk and 95% of commercial risk in case of default. The regional distribution of outstanding export and investment guarantees is as follows: 37% Asia, 37% Europe (incl. Russia, Turkey), 13% Africa and 13% Americas. While the 2021 ranking is led by Russia followed by China, India and Turkey, this year the agency expects Brazil, Turkey, Malaysia and India among the frontrunners. As the geopolitical risk is rising (and coverage for it is hard to get on the commercial market), the OeKB’s services will gain in importance.

Hans Stoisser – The African perspective

Hans Stoisser has worked as entrepreneur and consultant in different African countries and projects since the 1980s. He is author of the book „Der schwarze Tiger: Was wir von Afrika lernen können“ (2015) and “Kesho Business - Warum Afrika der Pioniermarkt der europäischen Wirtschaft werden muss” (2021). 2018 he began to organize “Learning Journeys” to Silicon Savannah in Kenya, Rwanda and Senegal together with local partners (

Stoisser has followed the developments in Africa for four decades. Foreign firms always faced the dilemma of spotting the enormous market potential but at the same time being disappointed as business success was not realizing (as fast) as expected. That changed with the rise of the digital society and economy in Africa. Now it is possible to reach markets regarded as inaccessible before. Local innovations are addressing pressing social issues such as transferring money easily and cheaply via cell phone (M-Pesa/Safaricom), shipping medication and blood to distant and hard to reach hospitals via drones (Zipline) or offering access to affordable quality healthcare through diagnostic devices and solutions based on digitalization (Ilara Health). Digitalization also helped to link African business to the world economy via building training institutions for software engineers and offering their services to customers in advanced economies. Furthermore, European telecom companies such as Orange and Vodafone learned from their experiences in Kenya and started exporting the efficient mobile payment system to Europe, demonstrating that innovations originating from Africa can be strong business concepts abroad too. However, European firms are often too slow, inflexible and less committed to increase their presence in African countries - the Chinese, Southeast Asian, Indian and Turkish competitors are better prepared for those low-income markets.

Globalization and Emerging Markets: A Win-Win Situation?

All three panelists agreed that emerging markets benefited from globalization. Without the opening of their economies, the physical and digital integration into the global economy and information and knowledge exchanges via international cooperations, digital channels and the access to the WWW, the economic catching-up would not have happened. Now it is time that European firms intensify their efforts to learn how to compete better in those markets. Not just on the sales but also on the local value adding and sourcing side, not just alone but also in cooperation with local and other partners.