Editor's Note: This article was originally published at 1:30 p.m. EDT on Real Money on Aug. 16. To see Gene Balas' latest commentary as it's published, sign up for a free trial of Real Money.

NEW YORK ( Real Money) -- Sluggish global growth is evident in emerging markets. As demand from developed economies reduces exports from developing economies while consumer demand in those emerging markets is still not yet fully matured, some emerging economies are feeling the pinch. Even though global inflation remains contained, certain emerging markets are running into capacity constraints, with resultant inflation above desired levels.

The Dallas Fed did a good job summarizing the difficulties these economies face. Some origins of those issues can be traced to the developed world. Europe has only recently emerged from recession, and demand from that region has been sluggish. Meanwhile, Japan and the U.S. are not growing by leaps and bounds, either. Other problems are endogenous to some countries -- witness the turmoil in Egypt, for example, not to mention protests in Turkey and Brazil.

Consider examples of slowing emerging-market economies. After posting an average of 8.6% from 2003 to 2007, India's first-quarter growth printed at 2.8%. Indonesia's exports have been sliding for 15 months, with a June decline of 4.4%. Retail sales, industrial production and Purchasing Managers Indices (PMIs) came on the soft side for Brazil and Mexico. South Africa saw June exports declining 7%, though July PMI reaching a five-month high of 52.2. Turkey's manufacturing PMI dipped below the 50 threshold in July to 49.8. A good part of this weakness is due to sluggish demand from the developed world.

Then there are issues with external imbalances. Since mid-2011, capital inflows into emerging economies have moderated, largely as a result of declining cross-border bank flows (mainly from European banks after the eurozone crisis dip in 2011-2012). With fewer investment funds flowing into these economies, currencies in some nations have been under pressure, particularly those with large current account deficits. The currencies of South Africa, India, Indonesia, Turkey and Brazil depreciated the most. Of course, moderate external debt burdens in a number of emerging markets and the cushion of accumulated international reserves can alleviate some of the issues with any short-term capital outflows in such countries.

Even so, when a currency falls in value, buying imported goods is more expensive, especially commodities that are often priced in dollars. This can push inflation up. To combat inflation and increase the value of their currencies, some emerging markets have been tightening monetary policy, which can slow their economic growth. Slower growth might even be desirable in some countries if it will lessen inflation pressures. Recently, production capabilities and labor force constraints might not support the same pace of rapid growth as had been seen in the years before the recession. If an economy grows faster than its constraints of labor and capital can support, inflation often results.

A related factor is that productivity gains can allow for living standards to increase and production to grow without straining resources, allowing faster growth with less inflation. Ultimately, this would provide rising consumer incomes, developing a consumer-oriented society with internally generated demand that is less subject to external forces. However, a large portion of technology gains from the reallocation of resources from farming into factories has already been achieved. Human capital then becomes key, with a greater emphasis on training and education to support adoption of more advanced technologies, which often require a more highly trained workforce.

So, for some emerging economies to grow faster, develop consumer societies and control inflation, it is necessary to adopt advanced technologies to allow greater productivity gains. These gains are required to increase living standards -- but they also require a labor force that is well-educated, and trained to adopt these new production methods and information systems. Otherwise, it will be difficult to grow employment and living standards while containing inflation. Thus, there's a social challenge to the economic issue, as recent protests demonstrate.

Gene Balas has 20 years experience in investment management and is a Chartered Financial Analyst. He most recently was director of investments at Genworth Financial Asset Management. In this role, he performed forecasts on macroeconomic conditions and determined the influences of thematic drivers to develop the appropriate investment strategy. Prior to GFAM, Balas was director of investment management and guidance at Merrill Lynch, where he advised pension funds, endowments and foundations as to appropriate investment strategy. Balas received a bachelor's degree in business administration in finance from the University of Houston and a Master of Business Administration degree from Columbia Business School.

To contact Gene, please email gene.balas@thestreet.com.