The Fragile Five: Effects on International Business Essay

The Fragile Five: Effects on International Business Essay

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South Africa, Turkey, India, Indonesia and Brazil become known as the Fragile Five because their economies are too dependent on foreign investment, which is forecast to decline this year (Thomas, L., 2014) The Fragile Five are a huge issue in today’s rising interest rates. The rising rates in these five countries are going to affect the world internationally. Should more countries be supporting the Fragile Five’s investment interests, or should they step back and allow the countries to sort it out for themselves?

Who are the Fragile Five
Who are the Fragile Five? The Fragile Five consists of five countries that in entering the progressive world. These countries consist of Brazil, India, Indonesia, South Africa, and Turkey who are “especially vulnerable through a combination of current account and fiscal deficits, deteriorating foreign currency reserves, and large short-term debt (Wright, 2014).” Until now, each of these countries had been progressing at a steady rate. “Over the past year or two, all [of the Fragile Five] have experienced slower growth, along with a heavy dependence on foreign capital, and stubbornly high inflation of between 6% and 11% (Thompson, M. , 2014).” Now growth has slowed and these countries are struggling with interest rates that are growing faster than the economy.
Other Factors in the Fragile Five’s Economy
On top of rising interest rates and inflation, the Fragile Five are facing other serious economic threats. In 2014, almost all of the countries will be facing political elections (Kurtz, 2014). Some of the countries have had political corruption and bribery, making election information unreliable, and the people unsure of the government’s ability to help them. Many of these countries are also f...


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...14, from http://www.theguardian.com/business/2014/feb/02/emerging-markets-brazil-indonesia-south-africa
Thomas, L. (2014, January 28). ‘Fragile Five’™ Is the Latest Club of Emerging Nations in Turmoil. International Business. Retrieved February 1, 2014, from http://www.nytimes.com/2014/01/29/business/international/fragile-five-is-the-latest-club-of-emerging-nations-in-turmoil.html?_r=1
Thompson, M. (2014, January 30). Worst not over for Fragile Five. CNNMoney. Retrieved February 1, 2014, from http://money.cnn.com/2014/01/30/investing/emerging-markets-fragile-five/
Wright, C. (2014, January 30). The Fragile Five Fight Back: What Happens When You Double Your Interest Rates Overnight?. Forbes. Retrieved February 1, 2014, from http://www.forbes.com/sites/chriswright/2014/01/30/the-fragile-five-fight-back-what-happens-when-you-double-your-interest-rates-overnight/




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