Friday, March 07, 2008

What is an 'emerging market'?

Not many question commonly used terms in our lexicon. When one does, it does present some useful perspectives. Knowledge@Wharton examines the use of the term 'emerging markets' in When Are Emerging Markets No Longer 'Emerging'?

Antoine W. van Agtmael was deputy director of the capital markets department of the World Bank's International Finance Corp. (IFC) when he coined the phrase "emerging markets" during an investor conference in Thailand in 1981.

Initially, the phrase applied to fast-growing economies in Asia and was used in Eastern Europe after the fall of the Berlin Wall. As global interest in market-driven economies grew, investors began to look toward Latin America for emerging markets and eventually at countries such as Indonesia, Thailand, China, India and Russia

Emerging economies, he adds, are in places that are changing from a system based on informal relationships to a more formal system with rules that are transparent and apply equally to all participants in the market.

At the same time, some countries seem to have gotten solidly stuck in the emerging markets category. Guillen points to South Korea...

As Shakespeare wrote, "What's in a name?..."
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