Emerging market

The term emerging markets is commonly used to describe business and market activity in industrializing or emerging regions of the world. It is sometimes loosely used as a replacement for emerging economies, but really signifies a business phenomenon that is not fully described by or constrained to geography or economic strength; such countries are considered to be in a transitional phase between developing and developed status. Examples of emerging markets include China, India, countries in Eastern Europe, and parts of Africa and Latin America.

The research on emerging markets is diffused within management literature. While researchers including C. K. Prahalad, Hernando De Soto, and several professors from Harvard Business School and Yale School of Management have described activity in countries such as India and China, how a market emerges is little understood.

It appears that emerging markets lie at the intersection of non-traditional user behavior, the rise of new user groups and community adoption of products and services, and innovations in product technologies and platforms.

The term "rapidly developing economies" is now being used to denote emerging markets such as The United Arab Emirates, Chile and Malaysia that are undergoing rapid growth.

In recent years, a new term has emerged to described the largest developing countries called BRIC (for Brazil, Russia, India and China). These countries do not share any common agenda, but some experts believe that they are enjoying an increasing role in the world economy and on political platforms.

List of countries

File:Developing markets.png

Map of countries with emerging market status, as of 2005

It is difficult to make an exact list of emerging (or developed) markets; the best guides tend to be investment information sources (like The Economist) or market index makers (such as Morgan Stanley Capital International). These sources are neutral and well-informed, but the nature of investment information sources leads to two potential problems. One is an element of historicity; markets may be maintained in an index for continuity, even if the countries have since developed past the emerging market phase. Possible examples of this are South Korea, Taiwan, Israel and Czech Republic. A second is the simplification inherent in making an index; small countries, or countries with limited market liquidity are often not considered, with their larger neighbours considered an appropriate stand-in. Some potential smaller emerging markets not listed below include Slovakia, Slovenia and the Baltic countries in Europe, Costa Rica, Uruguay and Venezuela in the Americas, and Kazakhstan, Nigeria and Vietnam in Asia or Africa. As of July 2006, the Morgan Stanley Emerging Markets Index included:

Argentina Brazil Chile China Colombia

Czech Republic Egypt Hungary India Indonesia

Israel Jordan Malaysia Mexico Morocco

Pakistan Peru Philippines Poland Russia

South Africa South Korea Taiwan Thailand Turkey

The list tracked by The Economist is the same, except with Hong Kong and Singapore included (MSCI classifies them as Developed Markets) and Jordan and Pakistan omitted.

References

• Michael Pettis, The Volatility Machine: Emerging Economies and the Threat of Financial Collapse (2001) ISBN 0-19-514330-2

External links

• What Is An Emerging Market Economy?
• What Are Emerging Markets? University of Iowa Center for International Finance and Development