What is an Emerging Market?

Emerging markets or emerging economies are states and nations that have some characteristics of a developed economy but have not fully reached that stage. 

What are the Characteristics of Emerging Markets? 

Emerging markets generally demonstrate: 

• low per-capita income, 
• rapid growth in productivity, 
• a volatile currency, and 
• opportunities for capital investment. 

Emerging markets have the potential to contribute greatly to the world economy.

Back to: ECONOMIC ANALYSIS & MONETARY POLICY

What is Low Per-Capita Income in an Emerging Market?

Emerging markets have low per capita income than established economies. Developing or emerging countries are those with either low or lower-middle per capita income of less than $4,035 (World Bank).

What is Rapid Growth in an Emerging Market?

Emerging market economies generally experience rapid growth due to high level of productivity and the low cost of wages.

What is a Volatile Currency in an Emerging Market? 

Heavy growth in productivity is often paired with rapid inflation. As such, emerging markets are more susceptible to currency swings. These economies generally lack the economic tools to absorb currency shocks.

What is Opportunity for Capital investment in an Emerging Market? 

Rapid growth in industry sectors requires capital investment. Generally, emerging economies have less-mature capital markets than the developed countries. Their stock markets are risky; but, higher risk often entails higher rewards. 

Investing in emerging market companies requires research and access the right information. Venture capital and private equity investments in emerging markets is continually on the rise.

There are many countries which can be listed in the group of emerging markets, but the main emerging markets are Brazil, Russian, India, and China, the BRIC countries. 

Other Information about Emerging Economies

Emerging markets or economies tend to have these additional characteristics:

• invest more in productive technologies
• adopt the latest techniques and methods of production to increase productivity
• continuously move away from traditional practices of exporting raw materials or solely relying on agriculture
• want to compete in the economic world and improve the quality and life standard of their people. 

Related Topics

• Rule of Law relate to Economic Growth
• Labor Productivity
• Productivity and Learning Curve
• Experience Curve
• Acceleration Principle
• Aggregate Production Function
• How to Measure Productivity
• What is the Effect of Sustained Economic Growth?
• How are compound growth rates and compound interest rates related?
• Compound Growth Rate
• Solow Growth Model
• What are the Components of Economic Growth?
• Porter's Diamond
• Physical Capital
• Human Capital
• Infrastructure
• Staple Thesis
• Resource Curse
• Capital Deepening
• What are Growth Accounting Studies?
• What is a Healthy Climate for Economic Growth?
• Economic Convergence
• Emerging Market Economy
• BRIC Countries 
• Growth Consensus
• Economic Conditions
• Leading Economic Indicators
• KOF Economic Barometer
• CEO Confidence Survey
• NAB Business Confidence Index