SHARETIPSINFO >> Articles Directory >>What is an emerging market economy and why to invest in emerging markets

 

The term emerging economy is used to describe the countries that are gaining economic momentum with major reforms and rapid industrialization. The emerging markets are already making their mark or will soon have a great impact on the global economic scene. Though India and China is considered to be the stronger among all other emerging economies there are some other countries like Brazil, Mexico, South Africa, South Korea and Argentina that are also considered as emerging economies. Market oriented economic reforms, creation of huge opportunities in the business and trade, technological advancement and foreign direct investments – these are the typical signs of an emerging economy.

There are a few striking features that are somehow similar to all the emerging economies in the world and they are: -

• These countries have large population, rich resource base in terms of human resource and natural resources, and all these countries are large markets. The economic growth of these countries influences the growth of the neighboring countries as well.

• All the major emerging economies in the world are going through a transition as far as their social and political values are concerned. The change is evident from the open market policies, market friendly economy and other political strategies that focus on rapid industrial development.

• The emerging markets are the fastest growing economies of the world. In fact according to studies the cumulative share in the global production output of the five biggest emerging economies will double by the year 2020 from what it was in 1992.

 

The transition from the developing countries to emerging economies was possible mainly because of the change in the trade and economic policies. The market friendly and open door policies that were adopted by these countries after the state led economic development efforts failed miserably in most of these countries initiated the change. Moreover large scale foreign investments in these countries also helped the rapid industrialization that is the base on any emerging economy. This was possible only when foreign investments replaced foreign aids or foreign economic assistance. There has been a great change in the way these countries do trade and business with the developed countries.

Though there is great conflict in these countries with the new economic policies with the conventional and tradition economic trends, these emerging economies are all set to rule the global economy in the future. In the near future these countries that are considered emerging economy these days will become key players in global economy and politics as well.

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