Over the past decade, the corridors of trade and investment have increasingly been occupied by emerging markets—engaging with each other, “E2E.” This development is bound to upset complacent attitudes in mature economies about long-held dominance in strategy, innovation and talent.
Wander around any of the plush shopping districts that dot Brasilia today, and it is hard not to notice a subtle yet profound change: Chinese-made cars prominently displayed in fashionable new showrooms.
Similarly, at Beijing’s airport, aircraft made in Brazil increasingly transport China’s growing legion of domestic tourists; and in Chinese factories, Brazilian ore and oil keep the machines whirring night and day. Burgeoning Sino-Brazilian trade flows—totalling some US$77 billion in 2011—attest to this growing economic interdependence, with China having already surpassed the United States to become Brazil’s largest trading partner in 2009. This pattern of deepening trade is not unique to China and Brazil, but is emblematic of a wider web of economic relationships forming between emerging markets. Trade between India and China, for example, hit a record high of almost US$74 billion in 2011 and may surpass the US$100 billion mark as early as 2015.
Commentary about emerging markets often focuses on their high growth rates. But this represents only part of the story. What often gets overlooked is the integration that is occurring between emerging markets—most prominently through trade but also increasingly via investment and flows of talent.