Emerging Markets

By: EconomyWatch   Date: 29 June 2010

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The Emerging Markets was a term coined by World Bank economist Antoine W. van Agtmael in 1981 in reference to nations undergoing rapid economic growth and industrialization. The term is often used interchangeably with 'emerging and developing economies'. The IMF classifies 150 countries as Emerging Markets based on the composition of countries' export earnings and other income from abroad; a distinction between net creditor and net debtor countries; and, for the net debtor countries, financial criteria based on external financing sources and experience with external debt servicing.

Emerging and developing economies are often transitional economies, shifting from closed economies to open market economies. Often, the transition involves structural or policy reforms such as currency or capital market changes. The level of foreign investment is also critical for an emerging economy. In most cases, increased foreign investment is a sign the economy has potential. The injection of foreign currency into the local economy aids long-term investment to its infrastructure.

For foreign investors on the other hand, an emerging economy is an ideal investment opportunity as it often promises massive returns on investment. However, the risks involved in investing in an emerging economy are often larger than those in a developed economy. EconomyWatch adopts IMF’s classification of emerging and developing economies. There are however multiple lists created by various organisations based on their interpretation of the term.

IMF’s List of Emerging Economies (150 countries)

The list compiled by the IMF is by far the most extensive list among all the lists created. It encompasses countries such as China, India and Russia, who could potentially become the three largest economies in the world, poorer nations such as Haiti, and war-torn countries such as Afghanistan and Iraq.

Click on the individual countries to view country economic profiles on EconomyWatch

Afghanistan, Albania, Algeria, Angola, Antigua and Barbuda, Argentina, Armenia, Azerbaijan, The Bahamas, Bahrain, Bangladesh, Belarus, Belize, Benin, Bhutan, Bolivia, Botswana, Bosnia and Herzegovina, Brazil, Bulgaria, Burkina Faso, Burundi, Cameroon, Cape Verde, Central African Republic, Chad, Chile, China, Colombia, Comoros, Democratic Republic of the Congo, Republic of the Congo, Costa Rica, Côte d'Ivoire, Croatia, Djibouti, Dominica, Dominican Republic, Ecuador, Egypt, El Salvador, Equatorial Guinea, Eritrea, Estonia, Ethiopia, Fiji, Gabon, The Gambia, Georgia, Ghana, Grenada, Guatemala, Guinea, Guinea-Bissau, Guyana, Haiti, Honduras, Hungary, Indonesia, India, Iran, Iraq, Jamaica, Jordan, Kazakhstan, Kenya, Kiribati, Kuwait, Kyrgyzstan, Laos, Latvia, Lebanon, Lesotho, Liberia, Libya, Lithuania, Macedonia, Madagascar, Malawi, Malaysia, Maldives, Mali, Marshall Islands, Mauritania, Mauritius, Mexico, Federated States of Micronesia, Moldova, Mongolia, Montenegro, Morocco, Mozambique, Myanmar, Namibia, Nauru, Nepal, Nicaragua, Niger, Nigeria, Oman, Pakistan, Palau, Panama, Papua New Guinea, Paraguay, Peru, Philippines, Poland, Qatar, Romania, Russia, Rwanda, Saudi Arabia, Samoa, São Tomé and Príncipe, Senegal, Serbia, Seychelles, Sierra Leone, Solomon Islands, South Africa, Somalia, Sri Lanka, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Sudan, Suriname, Swaziland, Syria, Tajikistan, Tanzania, Thailand, Timor-Leste, Togo, Tonga, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Tuvalu, Uganda, Ukraine, United Arab Emirates, Uruguay, Uzbekistan, Vanuatu, Venezuela, Vietnam, Yemen, Zambia, Zimbabwe

FTSE’s List (6+16 countries)

The FTSE group classifies emerging markets into two separate groups based on the country’s national income as well as the development of its market infrastructure.

Advanced Emerging Markets:

Brazil, Hungary, Mexico, Poland, South Africa, Taiwan

Secondary Emerging Markets:

Chile, China, Colombia, Czech Republic, Egypt, India, Indonesia, Malaysia, Morocco, Pakistan, Peru, Philippines, Russia, Thailand, Turkey, United Arab Emirates

MSCI Barra’s List (21 countries)

Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, South Korea, Taiwan

The Economist’s List (24 countries)

Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hong Kong, Hungary, India, Indonesia, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Taiwan

Standard & Poor’s List (19 countries)

Brazil, Chile, China, Czech Republic, Egypt, Hungary, India, Indonesia, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, Turkey

Dow Jones’ List (35 countries)

Argentina, Bahrain, Brazil, Bulgaria, Chile, China, Colombia, Czech Republic, Egypt, Estonia, Hungary, India, Indonesia, Jordan, Kuwait, Latvia, Lithuania, Malaysia, Mauritius, Mexico, Morocco, Oman, Pakistan, Peru, Philippines, Poland, Qatar, Romania, Russia, Slovakia, South Africa, Sri Lanka, Thailand, Turkey, United Arab Emirates 

Other Important Classifications

Apart from these lists, other commonly used classification of emerging and developing economies include the BRICS (Brazil, Russia, India, China, and South Africa), the Next Eleven (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey and Vietnam), and the Global Growth Generator Countries (Bangladesh, China, Egypt, India, Indonesia, Iraq, Mongolia, Nigeria, Philippines, Sri Lanka and Vietnam).

Emerging and Developing Economies Export, Import & Trade

Emerging and developing economies were responsible for driving global trade growth by more than 8 percent annually in 2011 and 2012 according to the Organisation for Economic Co-operation and Development (OECD). As the five largest emerging economies in the world, BRICS account for 18 percent of global trade and about 45 percent of current growth.

Brazil, Russia and South Africa focus primarily on raw material exports, while India and China’s key exports lie in manufacturing and services. In April 2011, economic and trade ministers from the BRICS nations came together in a summit and vowed to “oppose trade protectionism in all its forms” by creating a task force designed to come up with suggestions to improve and expand economic cooperation between BRICS and other developing economies.

Find out more about Emerging and Developing Economies' Export, Import & Trade

Emerging and Developing Economies Industry Sectors

Emerging economies also tend to experience a shift from agriculture to the industrial and services industries. The agriculture sector is often seen as a vital component of an emerging economy’s GDP, however most emerging and developing economies will seek to diversify into more high-value industries.

A classic example is China. In 2001, agriculture was responsible for 17.7 percent of China’s GDP while the industrial and services industries took up 49.3 percent and 33 percent respectively.

However in less than ten years, the importance of China’s agriculture indsutry shrunk to 9.6 percent of GDP while the services industry experienced massive growth of 43.6 percent of China’s GDP in 2010. The industrial industry, which has long been China’s main driver for economic growth, has also decreased to 46.8 percent of China’s GDP in 2010.

Find out more about Emerging and Developing Economies' Industry Sectors

Emerging and Developing Economies Economic Structure

China, like larger emerging economies has a massive population that makes up a large market and sizeable labour force. Eight out of the top ten most populous nations in the world are emerging economies. China, India, Indonesia, Brazil, Pakistan, Nigeria, Bangladesh and Russia account for 52.173 percent of the world’s total population.

A large population can be often seen to be an economic asset as there is higher potential demand within the country. Most advanced economies face an aging population, while emerging economies such as India now possess the world’s largest working-age population.

Larger emerging economies also have a relative abundance of natural resources, particularly oil and natural gas. Iran, Iraq, Russia, Nigeria, China, Brazil, Mexico, India, Egypt and Indonesia are among the top 30 countries with the largest proven oil reserves in the world. In addition, apart from Iraq (57th) and Brazil (40th), these countries are also in the top 30 countries with the largest proven natural gas reserves in the world.

Find out more about Emerging and Developing Economies' Economic Structure

Emerging and Developing Economies Economic Forecast

Emerging and developing economies now have a 47.139 percent share of the world’s total GDP (PPP).

By 2013, the total GDP (PPP) for emerging and developing economies is expected to account for more than half of the world’s total share, eventually reaching 52.137 percent of the world’s total GDP (PPP) by 2015. The total GDP (PPP) for emerging and developing economies in 2015 is expected to be US$52.174 trillion.

The total current account balance for emerging and developing economies is also expected to grow over the next five years. While the total current account balance took a massive hit between 2008 to 2010 due to the global financial crisis, 2011 to 2015 promises a return to pre-financial crisis levels. By 2015, the total current account balance for emerging and developing economies is forecasted to be US$763.781 billion.

Finally, EconomyWatch compared the unemployment rates of 70 emerging and developing economies in 2010 to the forecasted rate in 2015. In 2010, the mean unemployment rate was 9.733 percent and the median unemployment rate was 8.159 percent. Both numbers are expected to drop to 8.196 percent and 7.349 percent respectively by 2015. 

Find out more about Emerging and Developing Economies' Economic Forecast.

Read more on about Emerging and Developing Economies, including forecasts and trade statistics on EconomyWatch below.

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