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Emerald Group Publishing Limited
Copyright © 2011, Emerald Group Publishing Limited
Article Type: Editorial From: International Journal of Emerging Markets, Volume 6, Issue 2
Below is a brief summary of the articles in this issue. As ever, the papers in this issue cover a range of disciplinary area and empirical perspectives, which is the lifeblood of this journal.
Our first paper is a very insightful study of Chinese MNE activity in Latin America. Much has been written about Chinese investment in Africa – less so on Latin America. Of interest is that while in Africa, most Chinese investment has been predominantly resource seeking, the authors find that in Latin America, Chinese MNEs are seeking out markets for their goods and services. Furthermore, in common with African investments, the Chinese Government has taken a direct participation by committing most of the investments itself and also by signing treaties and trade and investment agreements with more than 20 emerging markets. The findings in the paper are in line with the investment development path of Chinese companies in other countries.
István Benczes provides us with a very topical paper on Hungary’s economic development. Hungary has been in the news a lot recently following its need for an IMF/EU bailout in 2010 and now with it holding the EU rotating presidency – the spotlight is on Hungary. Benczes’ paper traces the long-term development of the Hungarian economy since the change of system in 1989. The main proposition of the paper is that the success of marketisation (liberalization, free trade, etc.) and microeconomic restructuring, a process that started well before the systemic change itself, came at the price of a deteriorated performance of public finances and a lack of fiscal discipline in general – an absolutely correct analysis. Put another way: “the hardening of the budget constraint of market participants came at the cost of maintaining the soft budget constraint of the state”. Benczes uses path dependency concepts to establish a structural and causal relationship between past and current events. Furthermore, the methodology sheds light on why Hungary’s development path has differed so much from the experiences of other Central and East European countries. Benczes argues that while much has changed, paternalism and authoritarianism has survived the systemic changes of 1989 and it now endangers the healthy and sustainable development of Hungary – a country which had a remarkable reform history but which has dramatically devalued its future prospects.
The last three papers of this issue are focused on Africa. Again – publishing research on Africa is an important aspect of International Journal of Emerging Markets and it is very encouraging to see a good supply of publishable research on the continent. First up is a paper on credit risk assessment and scoring models in Tanzania by Marcellina Mvula Chijoriga. Using a multiple discriminant analysis (MDA), data used in the study were from corporate customers of the then Tanzanian largest commercial bank, the National Bank of Commerce (NBC) in 1995. The study limited itself to short-term and medium bank loans. Owing to poor credit and risk management, most banks in Tanzania had suffered large amounts of losses in terms of non-performing assets. By the end of 1991, a total of 82 non-performing loans from various banks including NBC were transferred to the Loans and Advances Trust Fund, which was supposed to be the caretaker and recipient of the loan recoveries if a loan was later repaid.
The author uses financial ratios in the MDA model as indicators of company performance as a measure of credit worthiness and finds that if NBC had used such a model, they would have been able to have more effectively predicted loan delinquency probabilities. And they would certainly perform better than using subjective methods.
Our second paper is by André de Waal who examines efforts to build world-class universities in Africa. His particular case in the paper is of Iringa University College in Tanzania. Both economic growth and global competitiveness are increasingly driven by knowledge, and as a result of this, universities play a key role as they generate and disseminate this knowledge. Thus, the development of universities is crucial to Africa’s future.
According to de Waal, Tanzanian education institutions have several important issues to deal with that challenge their ability to be fully effective. The expansion of primary and secondary schools in Tanzania has created a large reservoir of potential students for higher education. This increase of students has created capacity problems because the higher education institutions cannot satisfy the demand. Second, financing higher education becomes increasingly difficult for the country. Before 1980, education in Tanzania was free but due to the big population in need of higher education, the government was forced to introduce cost-sharing mechanisms. De Waal uses the high-performance organization (HPO) framework to examine efforts by Iringa University College to improve its performance as an institution of higher education and while he believes that the potential is there, de Waal leaves the reader with a number of cautions. Most notably, the limited degree of openness in African culture, the relative undemocratic leadership in many African institutions including universities, the academic autonomy to which many African cultures are not used yet, and the resulting difficulties in attracting top professors and students to African universities.
Our third paper on Africa (and the final one of this issue) also examines higher education in Africa in the context of talent retention and management. As with many emerging market regions, the brain drain has been a severe problem in Africa for decades. Most migrants out of Africa initially move out of their countries of origin to pursue higher education studies abroad. Encouraging more African students to study within the continent is seen as one way of dealing with the problem. Mercy Mpinganjira’s paper aims at understanding factors influencing African students to undertake postgraduate studies abroad. The methodology used was a largely qualitative one: interviews, focus groups and a structured online questionnaire sent to 94 African students who pursued postgraduate studies at a globally recognized university in South Africa – University of Witwatersrand. South African universities are, of course, not typical of African higher education and more closely resemble their developed country counterparts.
Mpinganjira’s findings are not surprising ones given what we know about the state of African education (supported by de Waal’s paper above). First, the lack of global recognition of African universities is one of the main reasons Africans go elsewhere for their postgraduate education. Second, the lack of resources and organizational performance of African universities forces students to look elsewhere. This latter point dovetails nicely with de Waal’s work on HPOs and reflects something of a vicious circle in the sense that in order for African universities to gain global recognition, they need to be able to attract resources. Yet, an absence of existing excellence makes it risky for professors and students to move to Africa to teach and learn.
Yusaf H. Akbar