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April 03, 2007
WTO and Services Sector in Emerging Markets
Emerging Markets are going through a significant tectonic shift in their growth performance. Along with the jump in growth rates, the balance of payments have strengthened considerably, spearheaded by invisible flows and capital inflows in the form of FDI and Portfolio investment. at the same time, the discussions on services sector globalisation is going on at the WTO, Doha Round of negotiations. When the process of WTO started, there appeared to be a fear psychosis in India that the domestic industries may be affected by foreign invasion and capital will flow out. After 15 years of reform, the view is more optimistic due to strong growth performance, sustained investor interest in India and Capital inflows.
The banking sector is being opened up for foreign participants going beyond the mandate of WTO. The optimist view is that
a) the Indian Banks and industry will gain greater efficiency
b) they will take advantage of their spread and core competence
c) Drive towards BASEL II will benefit banks
d) a competitive financial sector will benefit consumers
The key risks are
a) ability to fine tune regulatory and supervisory architecture to mitigate cross border risks
b) the gap in financial engineering and risk management skills presently existing in the financial sector needs to be bridged fast.
( see sunandoroy.googlepages.com/workingpapers)
Posted by sunandoroy at April 3, 2007 12:52 PM
