Emerging economies are generally known as the largest, wealthiest, and fastest-growing of the developing countries. Emerging economies are typically economies in transition, moving from a closed to an open economy, undergoing far-reaching economic reforms as they seek to integrate into the world economy. This transition, however, can be tenuous as political or economic turmoil threatens to impede movement toward open markets. These economies may grow rapidly, but they can make for risky economic investments because of political instability, inequality, social unrest, and the potential for financial crises. Often, these countries present sharp contrasts of cutting-edge technology and relative prosperity coexisting beside stark poverty and poor infrastructure.
Their growth is due primarily to the use of new energy, telecommunications, and information technologies as well as rapid industrialization. China, for example, is already moving away from low-skilled manufacturing as it ships those jobs offshore to Vietnam, Bangladesh, and the Philippines. It is expected that by 2020, the five biggest emerging markets’ share of world output will be 16 percent, up from 7.8 percent in 1992. They will also become more significant consumers than industrialized countries due to their fast-growing populations and rise in the countries’ middle-class. While industrialized countries will add about 100 million more middle-income consumers by 2020, the developing world will add over 900 million, and China alone will add 500 million.
In the past five years, China, India, and Russia, together with other fast-growing economies mostly in Asia and Latin America, have averaged almost 7 percent growth compared with the industrialized countries’ 2.3 percent. It is expected that by the middle of the new century, Russia, India, China, and Brazil together could be larger than the combined economies of the United States, Japan, the United Kingdom, Germany, France, and Italy. China alone could be the world’s second-largest economy by the end of the second decade of 2000 and could surpass the United States by 2050, with India predicted to follow.
In the 1980s, the emerging economies were mainly the “Asian Tigers” and some Latin American countries. In recent years, the largest developing countries of Brazil, Russia, India, Mexico, and China, known as BRIC or BRIMC, are viewed as the primary emerging economies. Other countries considered emerging economies include Mexico, Argentina, South Africa, Poland, Turkey, Indonesia, Chile, and South Korea. Due to their rapid growth, the United Arab Emirates, Chile, Malaysia, Vietnam, Bangladesh, and the Philippines form the next wave of emerging markets.
Emerging economies are expected to change the face of global economics and politics, as they gain increased stature in the world political arena and as the world increasingly relies on them to drive future growth. Their growth has resulted in calls for the largest of them to conform to greenhouse gas emissions limits, something they were exempt from doing in the first phase of the Kyoto Protocol (2008–12) in order to give them a chance to catch up with the economic development of the industrialized world.
Competition from the emerging economies will force developed countries to find areas of comparative advantage to ensure their own economic growth, whether it be specialized technologies of high value or commodities, requiring the retraining of their workforce to meet these specializations, something the developed countries do well. Whether the potential of emerging economies can be realized depends in large part on their ability to invest in their growing populations, government stability, and commitment to open markets, none of which are certain.
- John Hawksworth, The World in 2050: How Big Will the Major Emerging Market Economies Get and How Can the OECD Compete? (PricewaterhouseCoopers LLP, 2006);
- Chuan Li, “What Are Emerging Markets?” The University of Iowa Center for Finance and International Development, uiowa.edu/ifdebook (cited March 2009);
- L. Wince-Smith, “Emerging Economies Coming on Strong,” Issues in Science & Technology (v.23/3, 2007).
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