China Research

A discussion forum on emerging markets, mainly China – from a macro, micro, institutional and corporate angle.

Emerging markets and a strong dollar

May 27, 2024

Emerging markets are usually more sensitive to weak current account balances than advanced countries. A deficit in the balance on current account urges for a currency inflow since it implies a debt for imports vis-a-vis other countries that has to be paid. This inflow can be done in the three following ways:

¤ by receiving currency reserves via foreign direct investment (which often does not work as an available or sufficient financial source),

¤ by borrowing money in foreign currency (mostly in U.S. dollar, USD), or

¤ by selling stocks, bonds, etc to foreign investors (if such financial products exist in the emerging country and foreign demand for these papers is there).

Statistics show that emerging markets borrow the lion share of their foreign credits in USD which may be challenging in times when the American dollar is strong on global currency markets. This is actually the case. Serving existing debt in USD uses to be even much more challenging.

By the way: During a meeting the other day with American financial analysts, I heard the view that the USD historically tended to be strong when investments in research and development (R&D) in the U.S. were high. This is explained by an increasing demand for American technology stocks and also foreign action for FDI in the U.S., thus leading to a high demand for the dollar and therefore to the strengthening of the American currency. I am not quite sure about the general validity of this suggested correlation. But it can be observed that such conditions can be found these days.

Back to emerging markets. What we can see today is an increasing willingness of certain emerging markets to avoid or decrease new borrowing in USD. However, this is not easy to achieve since USD markets function by far as the biggest global supplier of new loans, also to emerging markets. 

The ongoing situation with the strong dollar is, of course, particularly difficult for emerging countries with high indebtedness in USD. Such countries may be found in all continents – countries that are or have been reporting growing pressure on their currencies in 2024 such as the Nigerian Naira, the Egyptian Pound, the Turkish Lira, the Indonesian rupee, the Argentine peso or the Brazilian real (watch for this the following IMF table: Of course, some of these and other weak currencies of emerging markets have also been impacted by other negative factors than the strong dollar, for example domestic political ones.

At the same time, there are also countries trying to reduce their exposure to the dollar (which also can be seen in the IMF table quoted above). Indonesia is such an example. However, such a trend will not be easy to achieve – but Thailand actually managed it in the past few decades. Perhaps another option may gain momentum as it is currently the case in South East Asia, i.e. trying to expand borrowing within the region at the expense of the USD.  

Conclusion: Analysts of emerging markets should watch the further development of the USD and its impact on indepted emerging markets.

Hubert Fromlet Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board

Science and female equality – reflections on the International Womens’s Day

March 6, 2024

The International Women’s Day (IWD) on March 8 has become a global phenomenon – widely acknowledged and celebrated. Theoretically, there is a broad understanding in most countries regarding the importance of female equality both politically, institutionally, economically, socially and psychologically. Practically, much more could be done for female equality – and should be done! Both in advanced and emerging countries.

Science has a lot to tell

In my view, science can give different explanations for the benefits of improving female equality. The following five conclusions from scientific research could be mentioned in the first place – most of them having an impact on economic growth and well-being (which is not the same):

¤  The impact of improved institutions on economic growth.
Research has shown for quite a number of years that improved institutions mean a lot to the quality and sustainability of economic growth. Nobel Prize winners such as R. Coase, D. North, E. Ostrom and O. Williamson are particularly famous in this respect. More lately, D. Acemoglu / J.Robinson, D. Rodrik and T. Persson have done extended work on the importance of institutions. Looking more closely on institutional research reveals clearly that better institutional conditions also mean improved conditions for economic growth – but also that extended female participation in these processes logically works as a driver of such desirable economic developments. Examples for progress may be better institutional conditions for female education, health, wages, and child care. 

¤  The impact of female human capital formation on economic growth.
Research has shown for quite some time (R. Lucas, R. Barro, P. Romer, G. Mankiw, etc.) that improvements of human capital formation (education) also outside the pure institutional sphere can contribute substantially to better economic growth. Consequently, when further focus on female capital formation happens, we have a widened source of economic growth.

¤  The impact of enlarged female labor supply. 
A substantial number of countries in the world have already – or will have – increasing demographic problems in the forthcoming decades (China, Japan, Russia, Germany, the Baltic countries, and a number of other European countries, see

 A major contribution to a future solution of the enormous burden of labor force shortage can most certainly emerge from an increasing female labor participation, both in volume and in quality terms. Such a development can also contribute to better international competitiveness.

¤  The impact of psychological satisfaction on productivity. 
Psychology often plays a neglected role in economic analysis, even, for example, in productivity studies for scientific work (J. Astegiano). Particularly important is the potential role of improved female labor productivity and what it means to economic growth (OECD, see

¤  The impact of better economic conditions on the society. 
Since an extended and broadened female labor market participation leads to better medium- and long-term GDP growth, chances of a stable society with good ethics should increase as well (B. Friedman). 

Conclusion – science shows the importance of women in the economy
Putting together the brief reflections above should demonstrate that there is sufficient scientific analysis that underlines the positive impact on economic developments by increasing  and improving gender well-being and improved female participation on labor markets. These processes should be considered as win-win developments – on both macroeconomic and microeconomic levels. This conclusion can be applied to both more advanced and emerging countries.

Hubert Fromlet Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board

International Women’s Day – relevant to both advanced and emerging countries

March 7, 2023


On March 8, it is time again to celebrate the international Women’s Day. Sure, better female equality has been achieved in the past few decades. But not enough!

During a lot of meetings during the years with students, researchers, male and female entrepreneurs or corporate officers, politicians and other professionals, I have got the clear impression that the female role in supervisory boards and boards of directors until now has been regarded as – by far – the most relevant gender equality issue. However, this view is definitely too narrow though very necessary.

Instead, there is another group of corporate and non-commercial organizations with insufficient female equality: competent women in middle management and below. These women still seem to be without strong and influential lobby – indeed a shame!

Lagging statistics

One major problem in this context is the statistical uncertainty about the total relative share of women being organized under the leading positions. Better statistical estimates are desirable. Some kind of idea, however, can be found in a publication by the World Bank by the name of (also for emerging countries). Here, the participation share of women in middle management is in most advanced countries around 30-40 percent, in the case of Sweden somewhat higher. The average seems to be located at around one third on country levels – not really satisfactory.

Altogether, the potential for improvement is still high. Analysts should be provided with much more statistics on gender equality on both broadening and deepening levels – and researchers should deal more with female encouragement and promotion on lower organization levels.

Theory and practical application from female gender research

No advanced exercises are necessary to give the “malign neglect” – as described above – an academic touch. Research on human capital formation tells us a lot about the benefits of applying education and improved competence – strongly underlined, for example, by Nobel Prize winners such as Robert Lucas and Paul Romer.

Massively improving female human capital formation also in middle female management and below could appeal to many women’s motivation and productivity – and in the longer run even to macroeconomic GDP growth if successfully spread. Furthermore, countries in particularly Europe could receive some demography-supporting input from the above-mentioned and strived gender-equality improvements.

However, theoretically possible broad proliferation of widened gender equality urges for strong practical support: from students, researchers, employers’ and employees’ organizations, male and female entrepreneurs or corporate strategists, politicians, media and last but not least from voters.

This shouldn’t be impossible in advanced countries, right?

However, also many emerging countries could work more on improved gender equality (also here with human capital mostly in the first place). If we look, for example, at the current convention of the National People’s Congress in Beijing (China’s “parliament”), the female participation rate is only about one fourth. Not really a model for the rest of the world!


Hubert Fromlet
Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board


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