China and India are the two most populous countries in the world. Despite relatively small growth rates when compared to the world, 1.312% for India and 0.481% for China, they still add every 22,271,565 new people to the world every year. In some cases, the size of the population has prompted government intervention, such as China’s one-child policy for urban residents. Infrastructure throughout India has struggled to keep pace with the burgeoning population. In both cases, the sheer mass of available workers has produced an economic engine built on top of cheap labor. Despite impressive growth, both of these countries have relatively fragile economies with high dependence on foreign allies. Emerging economies China and India are identified as emerging economies. Political and regional conflict and instability  over the last century has caused some setbacks economically. China has only operated as a market-oriented economy for the last few decades, during which time it has seen extensive growth. India has focused on the IT industry and has made great headway in winning business, although the appeal to Indian IT services is often the low cost relative to other sources. As a result, they have not enjoyed the high economic benefit from their IT outsourcing that might be expected. Fragile economy While both economies are growing, they are fragile. Risks for these two economies include unrest and discontent among citizens. In the case of China, the current communist government only goes back about 70 years, which is a relatively short period of time. Currency issues affect both countries. China has been under pressure from western trading partners in recent years to voluntarily increase the value of their currency against the Dollar and other currencies. Trade deficits and high exports are the reasons most often cited for this pressure. An increase in the value of the Yuan would benefit only the west, and not Chinese interests, which understandably causes reluctance on the part of the Chinese government to comply. Inflation poses a substantial threat to social programs and devaluation of the dollar conflicts with western interests. India has experienced growth economically, but their infrastructure has not kept pace. There is a stark contrast between urban and rural areas, with a great deal of...

The frontier market of Pakistan has experienced some setbacks in growth in recent years due to both political instability and economic uncertainty. In 2008, Pakistan agreed to an International Monetary Fund standby arrangement due to a crisis in its balance of payments. Economic issues have been exacerbated somewhat by the depreciation of the Pakistani rupee coupled with high inflation. Despite some recent stabilization of the economy, outside investment remains sluggish. Textiles represent the primary export and agriculture either directly or indirectly employs up to two fifths of the population. Regional conflict and ongoing tension with neighbors Afghanistan, Iran and India add political complications to growth and investment opportunities in the region. Pakistan was 143rd in the world for education expenditure as of 2009, investing roughly 2.7% of GDP. The average male will complete about seven years of education, which is slightly more than females. Despite these low education statistics, investments in communication infrastructure have placed them #9 in the world for mobile phone availability and #20 for internet users. This connectivity outside of Pakistan has produced some employment opportunity for the more educated workers. Economic Risk The country’s lack of growth has made it difficult in the past to pay on it’s moderate debts. In one case this lead to an intervention by the IMF, as stated above. The flagging economy and reticence on the part of foreign investors have reduced liquidity, which further dampens growth opportunities. The relatively weak position of the economy has also reduced leverage, which further limits growth opportunities, both domestically and internationally. Without the needed leverage or liquidity, entrepreneurship and growth for existing companies is severely limited. Political Risk A significant driver preventing growth in Pakistan is found in its relationship to its neighbors. External conflicts, such as the ongoing border dispute with India regarding the Kashmir territory in the north, have resulted in three wars. This ongoing conflict peaked when the two nations began carrying out nuclear weapons testing in the late 1990’s. Domestic insurgents, primarily in the tribal regions on the border with Afghanistan, are a continuing struggle for both political and military leaders. This domestic issue is further complicated by political instability in Afghanistan and the withdrawal of US troops from...