THE WAL-MART EFFECT

November 3, 2009

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, says Foreign Policy.

For example:

  • 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 is responsible for the relationship between Wal-Mart debut in a country and the country's gross domestic product (GDP) growth?   Wal-Mart is just a smart and cautious investor, says Foreign Policy:

  • Wal-Mart chooses to go to places with a sizeable middle class, a move that could pay off for the company in the future.
  • The portion of the global middle class that lives in the devolving world should rise from 56 percent in 2000 to 93 percent in 2030, according to the World Bank.

Next up for the Wal-Mart effect are Russia and Eastern Europe, says Foreign Policy.

Source: Michael Wilkerson, "The Wal-Mart Effect," Foreign Policy, November / December 2009.

For text:

http://www.foreignpolicy.com/articles/2009/10/19/the_wal_mart_effect 

 

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