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With the demise of communism, many countries in the world are striving to build their economic activity around markets and to participate in free trade arrangements, such as the World Trade Organization (WTO), European Union (EU), and North American Free Trade Agreement (NAFTA). Addresses several issues critical to understanding the unique nature of emerging markets relative to their more mature counterparts. What is the fundamental challenge in building well-functioning markets? On which sets of institutions do advanced markets rely to resolve these challenges? What makes building these institutions complex? What happens when some of these institutions are either absent or underdeveloped in an economy? How does one spot these institutional voids?

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Describes Ireland's transformation from one of Europe's poorest countries to one of its richest in just 10 years, earning it the title Celtic Tiger. The spectacular story of growth and recovery is attributed, in large part, to foreign direct investment (FDI), particularly from the United Sates. The government of Ireland has continually nurtured the climate for investment and through its investment promotion arm, Ireland Development Authority (IDA), has aggressively sought investment projects. Despite the apparent miracle, some question the FDI-focused policy and special incentives given. Their skepticism stems largely from the fact that Ireland's indigenous industry has remained on the periphery of this transformation, with limited linkages to the foreign sector. Offers an opportunity to examine the debate surrounding FDI. Was FDI the key ingredient in Ireland's success? What does it take for a country to attract FDI? Did government agencies, specifically IDA, play a role in the Irish success story? Also, analyzes other causes of growth--namely, Ireland's entry into the European Union and subsequent larger market access, as well as a sound macroeconomic policy.

By 2005, Japan's debt had risen to 163% of GDP. For more than a decade, the government had run huge deficits, trying unsuccessfully to stimulate economic growth. Interest rates, meanwhile, had been zero for years. But with slow growth and banks in crisis, nothing had worked very well until some recovery in 2004. Now, the government is trying to repair its fiscal damage in the face of continuing slow growth and huge pension and health care obligations to a population that is aging fast. Hezio Takenaka, the minister for economy and postal privatization, faces a imposing agenda--to restart the economy while lowering the deficits and reforming social security.

Presents one of the most impairing problems that affects poor communities in developing countries: the lack of drinking water supply and sanitation systems. A series of partnerships among NGOs, communities, local government, and international agencies provided a fairly effective solution in the four community groups described. Depicts a community managing its resources to satisfy its basic needs, which differs from the patronizing approach commonly endorsed by social ventures.

Investors and policymakers throughout the world were confronted with the risk of painful economic consequences arising from the large U.S. current account deficit. In 2007, the U.S. current account deficit was $731 billion, equivalent to 5.3% of GDP. The implications of the deficit were debated with intensity. At one extreme, it was argued that large deficits would eventually resolve themselves smoothly, even if they persisted for many more years. Former Federal Reserve Chairman Alan Greenspan was among those expecting a "benign resolution to the U.S. current account imbalance." Other analysts, such as economists at the World Bank, believed the large deficits raised the risk of a sharp and disorderly fall of the dollar and that necessary macroeconomic adjustment could be painful, for the United States as well as for the rest of the world. The Financial Times asked: "How long will foreigners be prepared to make such generous 'gifts' to the US?" In this environment, Berkshire Hathaway, run by legendary investor Warren Buffett, postulated that current account imbalances would lead to "some chaotic markets in which currency adjustments play a part" and announced to shareholders a plan to increase investment in overseas companies to protect against this risk. It remained to be seen what the short- and long-term implications of the current account deficit would ultimately yield.

Tetra Pak, the world's largest liquid food processor and packaging manufacturer, is among the multinational companies accused by the Chinese government of engaging in anticompetitive activities to eliminate competition in their respective markets. Concurrently, the Chinese government proposed a plan to roll out a new antitrust law in late 2005, to set up a fair market system in line with its goal to transform itself into a market economy. The new law attempts to rectify the vagueness of China's pre-existing competition policy. The government will closely scrutinize companies operating in China, especially foreign market leaders; these companies should guard against possible lawsuits. Considers the different aspects of China's antitrust policy and how companies should adapt to China's changing legal framework.

Despite years of social and political turmoil, Israel's high-tech industry had managed to flourish. Although the economic growth rate was satisfactory by 2004, the nation's unemployment rate was still high, the national debt remained a troublesome risk, and the economy seemed far to reliant on public spending. Could a country such as Israel really become one of the richest countries in the world? This case explores the context for Israel's successes and challenges.

With emerging markets like China and politically unstable countries like Saudi Arabia figuring more than ever into companies' investment calculations, business leaders are turning to political risk analysis to measure the impact of politics on potential markets, minimize risks, and make the most of global opportunities. But political risk is more subjective than its economic counterpart. It is influenced by the passage of laws, the foibles of government leaders, and the rise of popular movements. So corporate leaders must grapple not just with broad, easily observable trends but also with nuances of society and even quirks of personality. And those hard-to-quantify factors must constantly be pieced together into an ongoing narrative within historical and regional contexts. As goods, services, information, ideas, and people cross borders today with unprecedented velocity, corporations debating operational or infrastructural investments abroad increasingly need objective, rigorous assessments. One tool for measuring and presenting stability data, for example, incorporates 20 composite indicators of risk in emerging markets and scores risk variables according to both their structural and their temporal components. The indicators are then organized into four equally weighted subcategories whose ratings are aggregated into a single stability score. Companies can buy political risk analyses from consultants or develop them in-house.

It's no easy task to identify strategies for entering new international markets or to decide which countries to do business with. Many firms simply go with what they know--and fall far short of their goals. Part of the problem is that emerging markets have "institutional voids": They lack specialized intermediaries, regulatory systems, and contract-enforcing methods. These gaps have made it difficult for multinationals to succeed in developing nations; thus, many companies have resisted investing there. That may be a mistake. If Western companies don't come up with good strategies for engaging with emerging markets, they are unlikely to remain competitive. Many firms choose their markets and strategies for the wrong reasons, relying on everything from senior managers' gut feelings to the behaviors of rivals. Corporations also depend on composite indexes for help making decisions. But these analyses can be misleading; they don't account for vital information about the soft infrastructures in developing nations. A better approach is to understand institutional variations between countries. The best way to do this, the authors have found, is by using the five contexts framework. The five contexts are a country's political and social systems, its degree of openness, its product markets, its labor markets, and its capital markets. By asking a series of questions that pertain to each of the five areas, executives can map the institutional contexts of any nation. When companies match their strategies to each country's contexts, they can take advantage of a location's unique strengths. But first firms should weigh the benefits against the costs. If they find that the risks of adaptation are too great, they should try to change the contexts in which they operate or simply stay away.

Examines the overthrow of President Jacobo Arbenz of Guatemala in 1954 in a U.S.-backed coup in support of the United Fruit Co. Over the previous half century, United Fruit had built a large vertically integrated tropical fruit business that owned large banana plantations in the "banana republics" of Central America, including Guatemala. Examines the impact and role of United Fruit in the Guatemalan economy, one of the poorest in the world, and the reasons for growing hostility toward the company, culminating in Arbenz's agrarian reform policies aimed at redistributing some of the land held by United Fruit. The United States, which regarded Arbenz as pro-communist, supported United Fruit in the context of the Cold War.

In late 2004, Macau, a gaming and tourism Mecca in Asia, caught the attention of investors and casino operators around the world. From a wider perspective, the city's new casinos and resort projects are expected to have a significant spillover effect on the entire economy and society. Presents insights into the history and development of this rapidly emerging gaming market and analyzes the economic opportunities arising from such development. Drawing on the experience of Las Vegas, examines how Macau could create a new concept of gaming packaged in destination entertainment and what changes are expected in its gaming industry as well as its economic and real estate development.

Inequality represented a major issue at the dawn of the 21st century. By many measures, inequality had increased over the previous several decades, within both developed and developing countries. Whether global inequality (measured across countries or among the people of the world) increased remained controversial. Even in those cases where experts agreed that inequality had risen, there was little consensus about the causes. Some blamed globalization for the growing gulf between rich and poor, whereas others pointed to technology, government policies, and even social norms. Experts also disagreed over whether rising inequality was even a problem, particularly in those places where the poverty rate was low or falling.

Harvard Business School's Regina M. Abrami and Texas A&M's Leonard Bierman argue that companies hurt only themselves when they block legislation that would put labor standards into trade agreements.

The furor over offshoring knowledge work is a tempest in a teapot.

Earnings have stagnated for people in the world's middle-wage countries.

Discusses the impact of the North American Free Trade Agreement (NAFTA) on the United States, Canada, and Mexico, a decade after it came into force in 1994. Keeping in mind NAFTA's effect on jobs, exports, productivity, and economic growth, policy makers had to decide whether to go ahead with the Free Trade Agreement of the Americas being negotiated by 34 countries in the Western hemisphere.

The French-owned Aguas Argentinas faces a demand from the Argentine government that it renegotiate its concession to operate the Buenos Aires water and sewage services. The company must decide whether to continue with efforts to settle on a new contract or to exercise its rights to go to international arbitration. Either way, it must decide on its strategy going forward.

Explains the emergence of international arbitration as an option for foreign investors with disputes with governments of emerging markets. Presents issues about whether arbitration will remain acceptable to countries and governments.

Supplements the (A) case.