2014 will be the year markets shift from economic to political concerns. India, Brazil, Colombia, Indonesia, South Africa, and Turkey all have elections this year and none have a strong incumbent government. Add a newly minted and empowered middle class that are demanding more as these emerging countries diverge, resulting in protectionist measures that will cut growth, increase companies costs and cause market turmoil.
The US ability to impact global trade practices in these countries will be limited at best. Companies should plan for disruption in demand and increased costs to comply with forced localization measures. The companies best suited for this shift will be those that have made the investments local resources that go beyond minimum mandated market-entry requirements and have been highlighted as leaders in developing government defined targeted industries. Companies that have yet to take these measures, and want to continue to access these markets, should invest in resources to align their R&D and workforce to the skills that will help grow their middle class.