Emerging economies

Topics: BRIC, Economics, Developing country Pages: 2 (446 words) Published: November 16, 2013
1. DESCRIBE THE EMERGING ECONOMIES

The term "emerging economies" (also: emerging market, although these terms are sometimes defined differently) refers to the states in the process of rapid and dynamic growth and industrialisation. The seven largest of them are: China, Brazil, Russia, India, Mexico, Indonesia, Turkey.

The "emerging market" term refers more to a business phenomenon and not necessarily describes an economically strong state; however, these states are usually between "developing" and "developed" phases. The "emerging market" term includes the state's political situation, e.g.: "a country where politics matters at least as much as economics", "is a society transitioning from a dictatorship to a free-market-oriented economy". Also, it emphasises country's social situation: expanding middle class, improving standards of living, social stability and tolerance.

The "emerging economy" term, however, should/can be defined mostly by financial criteria: income (e.g. 10-75% of EU's average), catching-up growth (a brisk economic growth in the last decade), institutional transformation and economic opening (integrating into the world economy).

According to International Monetary Fund (IMF), among emerging economies are for example (not mentioning already listed): Hungary, Poland, Romania, Ukraine, Latvia, Lithuania, Estonia and others. Investments in emerging markets come with much greater risk due to political instability, domestic infrastructure problems, currency volatility and limited equity opportunities (many large companies may still be "state-run" or private). Also, local stock exchanges may not offer liquid markets for outside investors. 

According to the PricewaterhouseCoopers (PwC), the emerging economies are set to grow much faster than the G7 (France, Germany, Italy, Japan, UK, USA, Canada) over the next four decades. Figures for average growth in GDP in purchasing power parity (PPP) terms (which adjusts for price level...
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