Economic development is the prime objective of developing economies since they also want to achieve the status of the developed nation at the earliest (Schiffrin and Bisat, 2012). This journey involves the fulfilment of a lot of criteria such as high GDP (Gross Domestic Product) and a low level of environmental pollution. This is the essence of the notion of sustainability so that resources are used optimally and future generations can also enjoy a decent standard of living. Environmental issue and conservation of natural non-renewable resources have been a global concern but the over the years it has been identified that the level of pollution has been higher in the emerging countries because of the race to converge with the advanced nation (Department of Economic and Social Affairs, 2013). Although numerous efforts have already been put to use by all the countries in the world to make their contribution towards improving the state of environment yet in the emerging countries such efforts have resulted in degradation of the quality of environment, slowed down social progress and human misery. The rising trend in the population of the urban areas has intensified the pressure upon the resources of the cities (The Urbane Ecologist, 2013). Estimates reveal that the world population living in the urban areas had increased by 50% keeping 1990 as the base year and the predictions reveal that by the year 2025 world unban population will have an increase of 66%. All these estimates reflect that in coming years the pressure on the available resources are bound to increase and for the emerging economies the situation will be more acute. Even with the present state of technology Most of the developing countries like, sub-Saharan African nations, Latin American states, etc. depend upon exploitation of natural resources in order to earn revenue and foreign exchange (Breaking energy, 2014). Hence, with the depletion of natural resources at current rate will also stall the progress of the economic activity in near future.
The changes in the business world owing to globalisation have been one of the prime factors responsible for changing the production level of each country participating in international trade. The rise in competition has resulted in devising innovative strategies so that they can acquire greater market share. However, for the emerging economies there is high dependence on the natural resources. Hence, with the increase in international trade developing countries resort to intensify the rate at which they exploit their resources resulting higher level of environmental pollution. Most of the emerging countries ignore the effect of increased economic activity in order to secure higher competitive advantage. However, literature suggests that once these countries reach a certain level of per-capita income; resource allocation will change and production process will accommodate sustainable practices resulting in reduced level of pollution with expansion of eco9nomic activities.
This paper provides the glimpse of the current status of the quality of environment and the factors affecting its degradation in the emerging economies in the world. The environment is the ultimate source of natural resources which play a big role in the development of the business. Hence, this paper also investigates the impact of environment upon business along with other components like, political, social, financial, legal and institutional factors. All these components are important in shaping the future of the emerging economy which has intrigued the researcher to understand the transformation that emerging economies are undergoing to secure their future as a developed nation.
The aim of this research is to understand the effect of external factors upon the business of emerging economies and how these economies address their environmental issues.
In order to satisfy this research aim, the specific research objectives are presented below:
The prime question in this paper is:
What is the effect of external factors like, environment, political, social, institutional, financial and legal factors up on the business of the emerging countries?
Other questions are as follows:
Pollution is one of the by products of production since any production activity will involve certain amount of pollution (Hirschey, 2008). Researchers all over the world has observed that emerging economies are those which are still on the path of achieving development and this journey needs to be covered with high industrial production. Most of the emerging economies focus on generating higher output which will have a trickledown effect upon the per capita income of the people. Hence their the issues of environmental damage and issues of preserving natural resources while mitigating the challenge of pollution comes at a much later stage. it only when an economy has attained a significant growth level the growth objectives also include strategies improving the quality of environment the production processes become aligned to the notion of sustainability. Environmental Kuznets curve is based on this proposition.