Emerging markets

Topics: Emerging markets, Economic development, BRIC Pages: 5 (1417 words) Published: January 19, 2014
ANALYSE THE IMPACT(S) OF THE RISE OF EMERGING MARKETS ON THE WORLD ECONOMY.

In the 70s and 80s the terms such as ‘Third World, Lesser Developed Countries (LDC) or under-developed countries’ was used to what has now become the Emerging Markets which are the boosters in the world economy recovery (http://www.pearsoned.co.uk/bookshop/article.asp?item=361). In 1981 the World Bank redefined countries like such as the emerging markets. These economies would have a low to middle per capita and by 2001 Jim O’Neill of Golden Sach coined these countries as BRIC which included Brazil, Russia, India and China. However the growth of these countries has slowed for various reasons, so Jim O’Neill added another four countries to the emerging market. MINT which includes Mexico, Indonesia, Nigeria and Turkey are now the emerging economic giants. In 2005 Golden Sach added further eleven countries to the emerging economies. These eleven would become the next level of the emerging markets. The following would analyse the impact that the rise of the emerging market has on the world economy.

With what the press describe as the ‘fiscal cliff’ for the world’s biggest economy, America, will that have an impact on the performance of the whole world economy?

The recent figures from IMF projected the growth of 2.9% for 2013 for the world economy this was a 0.3% decrease from 2012 recorded growth of 3.2%. So the world economy overall is growing but is it mainly due to the emerging markets? Over the years it has proven that the emerging markets are impacting the world economy as the World Economic Outlook even states that the drivers of growth have shifted. Rumours are that the biggest emerging economy BRIC has gone into maturation. With all its four countries seen a big growth for the past 20 years it has now slowed down. However in the past 20 years the changes in these countries have impacted the global economy, India and Chine only accounted for less than 5% of the world output whereas now it accounts for 20% of the world GDP. This increase has taken place due to highly massively changes in the global economy. Investment and innovation has changed the economics of the countries in the BRIC economies. As of 2013 the BRIC economies account for quarter of the global output and it is predicted that China will become world’s largest economy. (http://www.economist.com/blogs/freeexchange/2013/05/global-economy). China did caim that ut us very likely to oivertake the world top trading nation US, who held the title for decades. The total trade of Chine grew at an annual rate of 7.6% to £2.5t last year. The US is yet to release its figures however the first 11 months of 2013 showed a total of £2.1t (http://www.bbc.co.uk/news/business-25678415). This refers back to the argument of The World Economic Outlook which argued that there has been a shift in the market. This is the shift of top economies who have been the main boosters in the economy dropping down and allowing the emerging market economy to be the boosters.

The global financial stability report by International Monetary Fund shows the emerging markets have seen a long term increase in the since 2002. This reflects the growth in there respected economies. So arguments has been made that the emerging markets have growth dramatically and this has impacted to the global economy.

Positive impact
The rise of the BRIC countries and its impact on the Dutch economy CPB Background Document  | 21112011
In the last three decades, the share of the BRIC countries (Brazil, Russia, India and China) in global GDP has grown rapidly to 24% to date (measured in Purchasing Power Parities). They contributed substantially to global economic growth already before the financial crisis and even more so since 2008. http://www.cpb.nl/en/publication/rise-bric-countries-and-its-impact-dutch-economy

Foreign portfolio investment in emerging market
bonds has been on an increasing long-term path...
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