Risks and Challenges in Doing Essay

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As a means to gain access to several million people who live a Western lifestyle, South Africa can be a good country to enter, but as a growth story it is much less exciting. Only when the GDP per capita of black and mixed-race South Africans begins to grow rapidly will the country be a truly attractive one for most companies. Arguably, the Human Development Index is a better measure, because it can reflect the overall potential of a nation like South Africa, where the development of one segment of the population is more critical to the market's potential than GDP, which is driven by another segment of the population.

A fourth reason why average per-capita income is not always the best indicator of an emerging market's potential lies in the Gulf States. Many Gulf States have very high average GDP per capita figures, driven by oil revenues. The lifestyle of most of the people in these nations, however, is strictly emerging market. The per capita income of the average person in a Gulf nation is much, much lower than the per capita GDP would suggest.

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The GDP figure is severely skewed by the value of oil, most of which goes to the government of those nations. Complicating the issue that that many Gulf States have locals as the minority, sometimes below 20% of the population. Wages earned by foreign workers are often repatriated rather than spent locally. For the most part, foreign workers are not beneficiaries of government largesse because they are not citizens. If the government in the UAE, for example, spends some of its oil wealth on education and social programs for Emirati citizens, these benefits only accrue to 20% of the population. For a foreign company, the massive wealth of these nations is not only dependent on a single commodity, but that wealth does not reflect the wealth level or social benefits that 80% of the population will receive, and therefore the wealth also does not reflect the true growth potential of those markets.

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