Emerging Markets in the Digital Age

The technology sector in emerging markets is providing us with many interesting opportunities—from hardware to software to various forms of e-commerce and entertainment.

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My colleagues and I have been actively speaking about the evolution taking place in many emerging markets over the past few decades. We’ve seen dramatic shifts occurring, with the often one-dimensional economic models of the past giving way to new and diverse growth drivers. This evolution includes the rapid embrace of new technologies and the rapid digitalization of economies. Here, Carlos Hardenberg, senior vice president and managing director at Templeton Emerging Markets Group, further addresses the topic.



Looking at emerging-market economies as a whole, we’ve seen a dramatic transformation from the models of the past, which were often based on commodity exports. We’ve seen a new generation of highly innovative companies located in emerging markets moving into higher value-added production processes and services. We think it’s a very exciting time for investors in this space.



The technology sector in emerging markets is providing us with many interesting opportunities—from hardware to software to various forms of e-commerce and entertainment.



Autonomous driving is an example of the growing clout of emerging-market companies. Many producers of the components and infrastructure to make autonomous driving a reality are located in emerging markets, particularly in Asia. And, they are highly specialized. For example, sensors, cameras, other lightweight components and software to enable autonomous driving are oftentimes produced in emerging markets.



Another example is in mobile-phone technology. Some 80% of the components of one popular mobile phone are made in emerging markets, from the battery to the camera to the casing (see image below).

We know how technology has touched nearly every aspect of our lives. It has transformed how we communicate with each other, how we shop, work and play. This is true for consumers across the globe, even in what one might consider the least-developed economies. It has been estimated that 40-50% of the world’s population has access to the internet, and 70% of youth aged 15-24 use it.1 It wasn’t all that long ago that no one did.

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TOP TRADE, ELECTRIC AND ELECTRONIC EQUIPMENT COMPANIES (2015)
Scoring Methodology by ERNST&YOUNG


 
#
COMPANY NAME
MCR TOTAL SCORING
 
1 SAMSUNG ELECTRONICS ROMANIA SRL 3,5000
2 GERSIM IMPEX SRL 3,3125
3 SIEMENS SRL 3,1875
4 TAIRA YAMAMOTO TRADING SA 3,0000
5 HUAWEI TECHNOLOGIES SRL 2,8125
6 ELBI ELECTRIC & LIGHTING SRL 2,6250
7 LESSOR SRL 2,6250
8 DATANET SYSTEMS SRL 2,5625
9 ABB SRL 2,5000
10 WORLD COMM SRL 2,4375