Emerging Markets Century How a New Breed of World Class Companies is Overtaking the World

INTRODUCTION The Emergence of Emerging Markets "There are no markets outside the United States!" The year was 1974. I was a young banker, still wet behind the ears, working at Bankers Trust Company in New York. I had been asked to conduct a study on recycling petrodollars. Helping governments overseas to invest on a truly global basis seemed like a logical concept. But when I interviewed the bank's trust department (at the time among the largest in the United States), an intimidating executive tugged on his red suspenders and wrathfully snarled: "There are no markets outside the United States. The man had at least two decades of experience in the banking industry on me. My own perspective was, for better or worse, different. I had grown up in Holland and had owned a few shares of Philips, Shell, and Unilever as a boy. Little did my interlocutor at Bankers Trust (nor I, for that matter) know that the great inviolable institution we worked for would one day be taken over by Deutsche Bank -- a global rival from one of these "nonmarkets." Experiences like this made me skeptical of conventional wisdom. They taught me to rigorously scrutinize faulty assumptions that even the experts -- in some cases, particularly experts -- all too frequently make as a matter of course. Ever since taking a course in development economics at the Netherlands School of Economics from Professor Jan Tinbergen (a brilliant econometrician who later became the first Nobel Laureate in economics) I had been fascinated with the fate and fortunes of what was then known disparagingly as "The Third World." Later, as a graduate student in Russian and East European studies at Yale in the late 1960s, I realized that central planning and communist ideology had little future, and longed to find out how foreign investment might help or hurt Third World development. At Bankers Trust, I gained some exposure to a few of the more exotic forms of Third World economic development. I helped Iran Air lease airplanes and hire crews in Ethiopia, was involved in financing Ghana's cocoa exports, and grew wise to the ways -- many of them laughably one-sided -- that developed nations interacted with what were in many cases recent European colonies. Less than a year into my first job at Bankers Trust, I surprised no one more than myself by becoming suddenly, uncharacteristically, and inexplicably bored with analyzing American companies for the bank's credit department. For some reason, the dynamism of the world seemed to lie elsewhere. I managed to convince my open-minded superiors at the bank that it would be useful -- not just to me personally, but also to the bank -- for me to take a trip to Asia to study foreign investment in the region. My trip turned out to be, as the popular parlance of the time had it, a mind-blowing experience. At the Seoul airport in 1971, the military policeman at immigration cocked his gun when he mistook the sunglasses in my pocket for a weapon. Seoul looked like a city in the Soviet Union, which I had just crossed on the Trans Siberian railroad: shabby, chilly, and poor. No skyscrapers yet loomed over the cramped center city and antiaircraft guns were starkly visible on just about every street corner. Even after a decade of 9 percent growth, Korea's per capita income stood at a dismal $225 (it is now over $10,000) although that was already three times higher than that of India. Still, the executives I met were already dreaming of export markets when they were not conducting their compulsory military training exercises. That first trip to Asia took me to an exotic continent in which the war in Vietnam was still raging, to a Japan stuck in its first postwar slump, to a China still closed to outsiders like myself, and to an India nervously watching Bangladesh separate itself from Pakistan. Cars that looked like throwbacks to the 1950s were the only ones to be seenvan Agtmael, Antoine is the author of 'Emerging Markets Century How a New Breed of World Class Companies is Overtaking the World', published 2007 under ISBN 9780743294577 and ISBN 0743294572.