A global pattern of easing economic growth in the first half of 2012 has impacted the “BRIC” nations – Brazil, Russia, India and China. However, I don’t think the BRIC economies have hit a brick wall. While some market participants have been waiting impatiently for governments to undertake further stimulus measures, others have wondered whether something more fundamental—and less within governmental control—might be at work. One theory in play is the concept of a “middle income trap.” The premise is that emerging countries can find it hard to sustain high per-capita growth rates beyond a certain point since benefits from technology, low labor costs and easy productivity gains run out before the accumulation of technological capital permits a transition to a higher-wage, higher-productivity economic model. Our team is not convinced that this argument holds muster for the BRIC economies—or emerging markets as a whole. Read more…
Bordering the Black Sea in Southeastern Europe, Romania offers visitors a variety of beautiful and dramatic landscapes concentrated in a relatively small land area, including modern cities and medieval villages, sweeping mountain vistas, broad plains and sandy beaches. Romania may also be one of the more attractive investment destinations in emerging Europe today, but its political environment has been characterized by some power struggles as dramatic as its scenic views. The most recent political turbulence in Romania provides an example of how politics and power struggles can thwart economic progress, but now that some of the political uncertainty has been removed, I believe Romania should be able to move forward in a productive way. Read more…
Periodically I’m afforded the opportunity to share the blog stage with my colleague Dr. Michael Hasenstab. This week Michael and I contributed our latest market views on a variety of subjects from our respective fixed income and equity vantage points in Franklin Templeton’s Beyond Bulls and Bears blog.
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