Determinants of sustainable growth in emerging economies

In an unstable market economy, an important task for the development of companies is to predict the future financial condition, the right choice of strategy and control over the level of financial risks. One of the problems of financial forecasting is the construction of a model that reflects the relationship between indicators of the financial position and the number of sources of funding and linking the model with the desired goal.
In general, the economic growth of the organization is an inevitable stage of its development. Moreover, economic growth is one of the priority goals of business. Economic growth in the microeconomic sense is usually understood as an increase over time in volumetric indicators of activity, such as revenue from product sales, total assets, profit, equity, and so on.
Among the scientists involved in the development of models of economic sustainable growth, the works of R. S. Higgins, J. Van Horn, Ross, Vizvanathan, Lerner and Carleton, Zakon, which are accepted for further research, should be noted.
The aim of the study is to define the determinants of sustainable growth for companies in developing countries, provide instruments for their monitoring and management.
Research objectives:
- indicate which countries are developing;
- conduct a literature review on the determinants of sustainable growth in developing countries;
- to consider varieties of determinants of sustainable growth;
- present the methodology of the analysis;
- to analyze the determinants of sustainable growth.
The object of research is the economic growth of the enterprise.
The subject of the study is the assessment of economic growth and the factors influencing it.
The theoretical basis of the study was made up of textbooks, periodicals of domestic and foreign scientists on the topic of the study.
The methodological base was formed by the models of sustainable economic growth by R. S. Higgins, J. Van Horn, Ross, Vizwanathan, Lerner and Carleton.
The structure of the course work is presented as follows: introduction, theoretical chapter, consisting of three paragraphs, analytical chapter, consisting of two paragraphs, conclusion, references.
 
CHAPTER 1. THEORETHICAL APPROACHES TO UNDERSTANDING OF DETERMINANTS OF SUSTAINABLE GROWTH
1.1 Developing countries
Developing countries (more precisely, less developed countries) theoretically include those states that have a lower level of GDP per capita compared to others. This term is not based on scientific evidence.
Developing countries are characterized by underdeveloped industry and a high degree of economic dependence on developed countries. Some of these less developed countries are generally recognized as developing, such as Argentina, while at the same time inheriting an educated population and many other features of developed countries. In addition, developing countries have preferences for exports to developed countries.
Since there is no strict definition, in practice developing countries are usually referred to as countries that are not members of the OECD. Therefore, according to the requirements for OECD membership, it can be concluded that developing countries tend to have low standards for democratic governments, free market economies, industrialization, social programs and guarantees of human rights for their citizens. At the same time, such countries with a low average GDP per capita as Mexico and Turkey were admitted to the OECD, where civil wars and clashes call into question the degree of ensuring the rights and freedoms of man and citizen (the right to life, which is ignored), democracy and lack of corruption. Therefore, there is no single generally accepted definition of the term, and the level of development of the so-called developing countries can vary widely. Some developing countries are not underdeveloped and have average living standards, and developing Qatar ranks first in the world in terms of GDP per capita. There are quite a lot of such countries with high GDP per capita and high living standards among developing countries. Therefore, the most characteristic feature of a developing country is the structure of morbidity and mortality, which is not typical for developed countries, and if in developing countries with high GDP per capita migrants suffer from diseases that are practically absent in developed countries, then in the CIS countries and many East Asian countries and Africa, epidemics of these diseases affect the indigenous population. But among the countries with the most unfavorable epidemiological situation are not only Russia and other CIS countries, Haiti, Afghanistan, Pakistan, India, Bangladesh, Thailand, Indonesia, the Philippines, China, Brazil, Ethiopia, the Democratic Republic of the Congo, South Africa, but also the OECD member Mexico.
Countries with more developed economies than others, but which have not yet fully demonstrated the signs of a developed country, are grouped under the general term «newly industrialized countries». At the same time, there is an opinion that the politically correct term «developing country» is not applicable to any country that is underdeveloped, since in a number of countries there is practically no development. Such countries, while being recognized as developing, are at the same time classified as least developed countries or failed states.
Development requires modern infrastructure. Developed countries, by comparison, tend to have economies based on continuous, self-sustaining economic growth.
According to Morgan Stanley, developing countries now account for about half of world GDP, for comparison, earlier, in 1997-1998, their share was 37% .
The development of a country is determined by statistical indicators such as GDP per capita, life expectancy, literacy rate and others. The UN has developed the Human Development Index, a composite of the above statistics, to measure the level of human development for countries for which data is available.
Developing countries, in general, have not reached a significant level of industrialization relative to their population and have an average or low standard of living. There is a strong correlation between low incomes and rapid population growth.
Other terms are sometimes used, such as less developed countries, economically underdeveloped countries, underdeveloped countries, or Third World and non-industrialized countries. Conversely, countries on the other side of the spectrum are called developed, economically developed, First World, and industrialized countries.
To mitigate the euphemistic side of the word developing, international organizations have begun to use the expression economically underdeveloped countries for the poorest states, which in no way can be classified as developing. That is, economically underdeveloped countries are a subset of less developed countries. This may gently indicate that standards of living among developing countries are not the same.
The concept of developing countries exists under one name or another in a variety of theoretical systems from different directions – for example, in the theory of colonialism, liberation theology, Marxism, anti-imperialism and political economy.
The International Monetary Fund classifies countries into advanced countries and developing countries. As a criterion, the following is used: the level of per capita income, export diversification, the degree of integration into the global financial system. The IMF classifies the following countries as developing countries (Table 1).
Table 1 – Сlassification of IMF
Europe Albania, Bosnia and Herzegovina, Bulgaria, Georgia, Kosovo, Moldova, North Macedonia, Montenegro, Serbia, Ukraine, Turkey
CIS Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Turkmenistan, Uzbekistan
Asia
Bangladesh, Bhutan, Brunei, Cambodia, China, Fiji, India, Indonesia, Kiribati, Laos, Malaysia, Maldives, Marshall Islands, Micronesia, Mongolia, Myanmar, Nepal, Palau, Papua New Guinea, Philippines, Samoa, Solomon Islands, Sri - Lanka, Thailand, East Timor, Tonga, Tuvalu, Vanuatu, Vietnam
Latin America and the Caribbean Antigua and Barbuda, Argentina, Bahamas, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominica, Dominican Republic, Ecuador, El Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Suriname, Trinidad and Tobago, Uruguay, Venezuela
Middle East, North Africa Afghanistan, Algeria, Bahrain, Djibouti, Egypt, Iran, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Pakistan, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, UAE, Yemen
Tropical Africa Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Central African Republic, Chad, Comoros, Democratic Republic of the Congo, Republic of the Congo, Côte d'Ivoire, Equatorial Guinea, Eritrea, Ethiopia, Gabon, Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritius, Mozambique, Namibia, Niger, Nigeria, Rwanda, Sao Tome and Principe, Senegal, Seychelles, Sierra Leone, South Africa, South Sudan, Swaziland, Tanzania, Togo, Uganda, Zambia, Zimbabwe
At the beginning of the 21st century, under the influence of dynamically developing China and India, the region of East and South Asia has become a new pole of growth for the world economy. As the authors of the IMEMO forecast noted, it is these countries that will become the new leaders of globalization, making the main contribution to the high world dynamics, which calls into question the unconditional dominance of the former leader .
Along with India and China, the economies of Indonesia, Malaysia, Hong Kong, Singapore, the Philippines, Pakistan and the Republic of Korea developed quite dynamically. The high dynamics of development was ensured by a record level of private capital inflows, both in the form of direct and portfolio investments, as
well as high external demand for the products of this region, combined with active demand in the domestic market of these states.
A noticeable improvement, starting around 2004, was noted in the economies of Latin American countries, where, after 5 years of stagnation and crisis, an increase of 5.7% was recorded. Economic activity was driven by expanding exports and improved terms of trade, as well as tightening monetary policy in the two largest countries, Brazil and Mexico.
As for the African continent, in the new millennium most of its countries experienced the longest period of sustained economic growth since independence.
It is noteworthy that in the pre-crisis period, high economic growth rates were generally characteristic of the traditionally most backward part of the continent - sub-Saharan Africa, where GDP growth was higher than the overall African indicator, amounting to 6.8%. The economic recovery in the region was driven primarily by strong global demand for raw materials, but was also largely supported by domestic demand (especially for investment capital), the successful implementation of measures aimed at ensuring macroeconomic stability and the implementation of structural reforms, which contributed to an improved business environment. and private capital inflows.
For the economic growth of most developing countries, external factors have always played a significant role, and in the context of the globalization of the world economy, their role has increased even more. The process of accumulation and reproduction in developing countries continues to largely depend on the terms of trade, capital inflows, and the attraction of technologies from outside.
With the exception of a few highly industrialized countries in Latin America and Southeast Asia, as well as the successful industrialization of China and India, the exports of developing countries «still rely mainly on the exploitation of natural resources and the use of unskilled labor». This factor, according to the authors of the UNCTAD Report, reduces their ability to gain a foothold in world markets and increase labor productivity.
In recent decades, the strengthening positions of developing countries in the world economy have led to an increase in the growth rate of their foreign trade exchange and their role in world markets. The share of exports of the developing world in international merchandise trade in 1980 was 29.4%, by 1990 it had fallen to 24.3%, demonstrating a steady increase thereafter: 31.9% in 2000, 37.8% in 2007, 39% in 2008 and 39.5% in 2009. The share of developing countries in world imports also showed similar dynamics. In 1980 it was 23.9%, in 1990 it slightly decreased and did not exceed 22.4%, but already in 2000 it increased to 28.8%, and in 2007 to 33.3%. During the crisis years, this indicator increased to 35% in 2008 and to 36.7% in 2009. All these data testify to the constant increase in the role of developing countries in world trade, including in times of crisis.
At the same time, the growth of this indicator was not continuous and was differentiated in different countries and individual regions. Thus, the developing countries of Asia increased their share in world merchandise exports from 17.9% in 1980 to 30.8% in 2009, incl. East Asia - from 3.7% to 16.8%: and China - from 0.8% to 9.7%, respectively. With regard to world imports, the share of Asian countries as a whole increased from 1980 to 2009 from 13 to 27.9%, including East Asian countries - from 4.1 to 14.7%, and China - from 0.96% to 7.97%. The countries of Latin America and the Caribbean practically retained their positions in exports and imports at the level of 5.6-5.8%, while the countries of Africa reduced their exports from 5.9% in 1980 to 3.5% in 2008, and for imports - from 4.7 to 3%, respectively. At the same time, in 2000, the share of African countries in world trade was even smaller and did not exceed 2.3% in exports and 1.9% in imports, so that in the 2000s the role of Africa in world trade still increased.
Thus, in this paragraph, the developing countries of the world are represented. Developing countries are Albania, Bosnia and Herzegovina, Bulgaria, Georgia, Kosovo, Moldova, North Macedonia, Montenegro, Serbia, Ukraine, Turkey, Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Turkmenistan, Uzbekistan, Bangladesh, Bhutan, Brunei, Cambodia, China, Fiji, India, Indonesia, Kiribati, Laos, Malaysia, Maldives, Marshall Islands, Micronesia, Mongolia, Myanmar, Nepal, Palau, Papua New Guinea, Philippines, Samoa, Solomon Islands, Sri - Lanka, Thailand, East Timor, Tonga, Tuvalu, Vanuatu, Vietnam, Antigua and Barbuda, Argentina, Bahamas, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominica, Dominican Republic, Ecuador, El Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Suriname, Trinidad and Tobago, Uruguay, Venezuela, Afghanistan, Algeria, Bahrain, Djibouti, Egypt, Iran, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Pakistan, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, UAE, Yemen, Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Central African Republic, Chad, Comoros, Democratic Republic of the Congo, Republic of the Congo, Côte d'Ivoire, Equatorial Guinea, Eritrea, Ethiopia, Gabon, Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritius, Mozambique, Namibia, Niger, Nigeria, Rwanda, Sao Tome and Principe, Senegal, Seychelles, Sierra Leone, South Africa, South Sudan, Swaziland, Tanzania, Togo, Uganda, Zambia, Zimbabwe.
It can be concluded that a significant number of countries belong to developing countries.
1.2 Literature review of approaches to understanding of determinants of sustainable growth
Sustainable growth is a growth rate at which the amount of borrowed capital (financial leverage) does not increase and the risks of bankruptcy are minimal. The sustainable growth rate is the only possible calculated (theoretical) growth rate of revenue (profit), secured by financial resources, assuming that the key indicators of the company's operating, financial (including dividend) policy are constant. Models of sustainable growth in operating activities allow not only to determine the rate of sustainable growth, but also allow you to determine the factors influencing this growth .