Emerging Markets

The current global market environment has influenced the markets and the economies.  Last two decades have experienced major changes in the marketing trends. From economical crisis to restructuring of the markets, the world has passed through many transformations. The financial crisis of 2003 – 2009 has shown many significant changes in both destroying and structuring new markets. If we see the present global economic conditions, there are many countries with potential emerging markets. These countries in the coming future can lead the global economy. From political strengths to overseas trades, the emerging economies can play a key role in controlling the overall global market.

Emerging Markets

Developing countries are referred as emerging markets. Investors see emerging markets as a potential investment achievement. Yet there is a risk on higher returns as well.  The term caught wide attention during 1990s. Emerging markets show a significant development. Emerging markets are those countries which are less developed or not considered to be developed. The emerging markets are regarded to be underdeveloped. But they prove high growth potential with high risks and significant market volatility. The countries which are known as developed countries, they have a well established market. Emerging markets are progressing to become more advanced. Rapid growth and industrialization is the backbone of any country’s development. The huge investment in the technological advancement is also a key factor in the development of any country.

The world sees the emerging markets as a potential profitable market in coming future. Emerging markets may show a lower per capita income. Emerging markets often have an average sociopolitical instability. There can be higher unemployment. The emerging markets show low levels of industrial and business growth. If we look at the map of the world, countries of Asia, Eastern Europe and Latin America are considered to be emerging markets. But still, these emerging markets have the potential to lay down the foundation of global manufacturing operations. Emerging markets show a higher level of economic performance than the least developed countries. This is a stage between the developed and underdeveloped countries. The term was coined by Antoine W. Van Agtmael (International Finance Corporation, World Bank) in 1981. The countries are considered to be emerging as their developments and reform activities are in a process to attain the economical advancement like the developed economies (UK, USA, and Japan).
In near future, the emerging markets will be the central of attraction in the global markets. This is why many developed countries have shown their interest to invest in emerging markets. Emerging markets carry higher investment risks. But due to the rapid growth and development potential, these markets also ensure a high potential return on the investment. While the developed countries can have a stable annual growth in their economy, emerging markets can show significant higher and faster growth.  The International Monetary Fund has stated that emerging markets are expected to grow two to three times faster than the developed economies like USA.  China and India are considered to be the rapidly growing emerging markets.

For the first time in 1988, MSCI released its index of emerging markets. At that time there were only 10 countries indexed as emerging markets.  The financial crisis was very risky. But it resulted into a new economic era. It led to development of many emerging economies. The countries with stable economic conditions and the countries with less stable economic framework, both suffered a huge loss due to the crisis. But this is a fact that economic crisis has given space for new economies to dominate the global economy. Before it, these countries were dependent on their traditional economies. The revenue used to be generated from agriculture or by export of raw materials. The crisis led to economic diversification. Now the emerging markets are proving to be the growth driver of the global economies.

Emerging markets have a lower than average per capita income. With lower than average per capita income, the emerging countries have a rapid growth. In 2011, the developed countries such as US, Germany, UK and Japan showed an economic growth between 1 to 2%. If we see the growth of emerging economies, it was between 3 – 4% shown by Turkey, Russia, Mexico, S. Africa etc. Brazil showed a rapid growth of 4.5%. India and China remained at the top with 8% growth.

IMF list of Emerging Markets:

International Monetary Fund listed following countries as of July 16, 2012:

  1. Argentina Colombia           9. Indonesia          13. Pakistan           17. Romania          21. Ukraine
  2. Brazil Estonia               10. Latvia               14. Peru                 18. Russia              22. Venezuela
  3. Chile Hungary             11. Malaysia          15. Philippines      19. South Africa
  4. China                    India                   12. Mexico            16. Poland             20. Turkey

Emerging Marketing Index has listed following counties as of 2008.

  1. Argentina                 Ecuador             13. Lebanon          19. Philippines      25. Thailand
  2. Brazil                 Egypt                  14. Malaysia          20. Poland             26. Tunisia
  3. Bulgaria                 Hungary             15. Mexico            21. Romania          27. Turkey
  4. Chile                 India                 16. Morocco         22. Russia              28. Ukraine
  5. China                 Indonesia        17. Pakistan           23. Senegal           29. Uruguay
  6. Dominican Republic Kenya              18. Peru                 24. South Africa   30. Venezuela

The coming market age of the emerging counties. With high, strong investment policies and rapid growth, the emerging countries has the potential to drive the overall global market.

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