Having evaded definition since the term was coined in the 1980s*, there is now a loose consensus that emerging markets are in many ways a diverse group of countries with enough political, cultural, and institutional attributes in common to let us speak of them in the same breath.
In recent decades Brazil, China, India, Indonesia, Mexico, Russia, South Africa, Turkey and about fifteen (mainly smaller) countries in Africa, Asia, Europe and the Americas have:
- Achieved relatively strong and sustained economic growth and expect (and are generally expected) to perform well in the future.
- Made significant progress in reducing poverty, fertility, infant mortality, communicable diseases and illiteracy.
- Developed politically differentiated but relatively stable polities with relatively effective governance, judicial, financial, transport, education and healthcare systems that, among other things, encourage direct and indirect domestic and foreign investment.
- Developed sufficiently large populations, economies and markets and sufficient external influence to become significant or dominant players in regional and/or global geopolitics.
- Been challenged by problems and opportunities associated with the speed and scale of demographic, economic, social, cultural, technological and urban changes that have been both the causes and consequences of economic success.
Emerging markets are differentiated from higher income countries with relatively more reliable political, economic, financial and judicial systems and better established institutions and from lower income countries with relatively weaker and less reliable systems and less established institutions. There have been numerous transitions. A few emerging markets (e.g. Argentina) were once among the world’s most prosperous countries. Some high income countries (e.g. Singapore, South Korea, Taiwan) have graduated from the ranks of emerging markets. Other high income countries (e.g. Saudi Arabia, UAE) have some but not all of the attributes of emerging markets notably the fact that they are small states although their geo-political power allows them to punch above their weight. Other small states are (e.g. Costa Rica, Uruguay) are not usually regarded as emerging markets although they meet many of the criteria because they have small economies. And some countries that have been widely regarded as emerging markets (e.g. Egypt, Syria) could be at least temporarily excluded in light of the impact of political instability on economic performance. At the end of the day any list of emerging markets is based partly on objective criteria and partly on judgment.
No two lists of emerging markets are the same but the eight countries listed above are in all of them. Most lists include four in the Western Hemisphere (Argentina, Chile, Colombia, Peru); a few in Africa (Egypt, Morocco, Tunisia and in some cases Nigeria); some in the Middle East (Jordan and in some cases the UAE and/or Saudi Arabia) several in Asia (Malaysia, Pakistan, Philippines, Sri Lanka, Thailand) and some in Europe (Poland and in some cases the Czech Republic and/or Hungary). If all those countries are included there are 28 emerging markets. Most lists include 20 – 25 countries. The Emerging Markets Symposium uses a set of 20**.
*The term ’emerging market’ was first used by the IFC economist Antoine van Agtmael in 1981. Goldman Saks economist Jim O’Neill first used the term BRIC to describe Brazil, Russia, India and China in 2001.
**The EMS focusses on 20 emerging markets: Argentina, Brazil, Chile, China, Colombia, Egypt, India, Indonesia, Jordan, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Russian Federation, South Africa, Thailand, Tunisia, Turkey.
