I caught this in Barron’s today and thought it was a remarkably interesting story. Apparently, Wal-Mart (WMT) has a knack for picking emerging markets to open up shop in, as said markets tend to outperform countries that Wal-Mart skips.
From Foreign Policy Magazine:
When India’s first Wal-Mart opened this summer in Amritsar, the response was mixed, with detractors fearing that big-box stores would eventually crowd out India’s fabled “wallah” culture. What no one remarked on, however, was that Wal-Mart’s debut in a country is a bellwether for future growth. Indeed, Wal-Mart has started operations in 15 countries since 1991, and 13 of them have had boom economies, with an average of 4.4 percent annual growth since Wal-Mart arrived. Over the last five years, the economies of Wal-Mart countries outside the United States have grown 40 percent faster than the world average. So what’s going on? Does the ability to buy giant bags of Froot Loops at cut-rate prices inspire economic growth? More likely, Wal-Mart is simply a smart, cautious investor. “Wal-Mart chooses to go places with a sizable middle class,” says Nelson Lichtenstein, a historian who just published a book on Wal-Mart’s rise. And Wal-Mart’s attention to middle-class growth could pay off for the company in the future.
According to the article, the Wal-Mart effect may next be felt throughout Eastern Europe and in Russia.
Visit FP Mag for the rest: