Crisis Responses for Export-Driven Emerging Economies

Exploring the effects of the financial crisis on emerging markets exporters.

Facing the Ill Winds

Booz Allen Hamilton has explored the effects of the financial crisis on emerging markets exporters in a study called, “Facing the Ill Winds: Crisis Responses for Export-Driven Emerging Economies.”

The study shows that emerging market exports are impacted by three primary challenges:

• Shifts in demand in key markets for goods and services,
• Low liquidity and limited financing for importers, and
• Protectionism among trading partners, which could increase tariff and non-tariff barriers.

The study indicates that there is no single strategy that may work best in every crisis situation. Export markets and trends, local firm capabilities, and policies must all be closely but quickly analyzed before mapping a way forward. Flexibility is key, as is accelerating the provision and analysis of information, and targeting any limited public sector support in a way that exploits the specific weaknesses of the main competitors.

“Facing the Ill Winds” suggests that good policy responses can not only help counter the crisis, but also reveal opportunities. In fact, the crisis could help exporting countries, which can take advantage of decreased competition.

Booz Allen Principal Ricardo Benn, Senior Associate John Mennel, and Senior Advisor Andrew Vonnegut led the analysis highlighted in this study.

study posted August 26, 2009