Emerging Markets

Location Type
Parent Location

Emerging markets, also known as emerging countries or emerging economies, are developing nations that have become more engaged with global markets as they grow. These countries typically feature a unified currency, stock market, and backing system, in the process of industrializing. Emerging markets are transitioning from low income, less developed, often pre-industrial economies toward modern, industrial economies with higher standards of living. While emerging markets often have a higher rate of growth compared to developed countries, they are often plagued by higher sociopolitical instability and volatility. These economies are characterized by lower-than-average per capita income, brisk economic growth, high volatility, currency swings, and potential for growth. Brazil, Russia, India, China, and South Africa are the biggest emerging markets in the world.

Differences Between Developed & Emerging Markets:
  • Developed markets have very stable institutions (companies and governments).
    • This gives investors the confidence to invest in those countries even during bad times
    • Emerging markets tend to have more fluid institutions that makes it risker to invest for the long-term

Concerns About Investing in Emerging Markets (Circa 2018)
  • government corruption
  • poorly education population
  • over-crowded urban slums
  • pollution¬†
  • economy is dependent on commodities and natural resources

How Are Living Standards Raises?
  • Countries with low but accelerating rates of urbanization can make good investments
  • Countries with young education populations set a good base for economic gains