An emerging market (or an emerging country or an emerging economy) is a market that has some characteristics of a
developed market
In investing, a developed market is a country that is most developed in terms of its economy and capital markets. The country must be high income, but this also includes openness to foreign ownership, ease of capital movement, and efficiency of m ...
, but does not fully meet its standards. This includes markets that may become developed markets in the future or were in the past. The term "
frontier market
A frontier market is a term for a type of developing country's market economy which is more developed than a least developing countries , least developed country's, but too small, risky, or illiquid to be generally classified as an emerging marke ...
" is used for
developing countries
A developing country is a sovereign state with a less-developed Secondary sector of the economy, industrial base and a lower Human Development Index (HDI) relative to developed countries. However, this definition is not universally agreed upon. ...
with smaller, riskier, or more illiquid capital markets than "emerging". As of 2006, the economies of
China
China, officially the People's Republic of China (PRC), is a country in East Asia. With population of China, a population exceeding 1.4 billion, it is the list of countries by population (United Nations), second-most populous country after ...
and
India
India, officially the Republic of India, is a country in South Asia. It is the List of countries and dependencies by area, seventh-largest country by area; the List of countries by population (United Nations), most populous country since ...
are considered to be the largest emerging markets. According to ''
The Economist
''The Economist'' is a British newspaper published weekly in printed magazine format and daily on Electronic publishing, digital platforms. It publishes stories on topics that include economics, business, geopolitics, technology and culture. M ...
'', many people find the term outdated, but no new term has gained traction. Emerging market hedge fund capital reached a record new level in the first quarter of 2011 of $121 billion. Emerging market economies’ share of global PPP-adjusted GDP has risen from 27 percent in 1960 to around 53 percent by 2013.
The ten largest emerging economies by
nominal GDP are 4 of the 9
BRICS
BRICS is an intergovernmental organization comprising ten countriesBrazil, Russia, India, China, South Africa, Egypt, Ethiopia, Indonesia, Iran and the United Arab Emirates. The idea of a BRICS-like group can be traced back to Russian foreign ...
countries (
Brazil
Brazil, officially the Federative Republic of Brazil, is the largest country in South America. It is the world's List of countries and dependencies by area, fifth-largest country by area and the List of countries and dependencies by population ...
,
Russia
Russia, or the Russian Federation, is a country spanning Eastern Europe and North Asia. It is the list of countries and dependencies by area, largest country in the world, and extends across Time in Russia, eleven time zones, sharing Borders ...
,
India
India, officially the Republic of India, is a country in South Asia. It is the List of countries and dependencies by area, seventh-largest country by area; the List of countries by population (United Nations), most populous country since ...
, and
China
China, officially the People's Republic of China (PRC), is a country in East Asia. With population of China, a population exceeding 1.4 billion, it is the list of countries by population (United Nations), second-most populous country after ...
) along with
Mexico
Mexico, officially the United Mexican States, is a country in North America. It is the northernmost country in Latin America, and borders the United States to the north, and Guatemala and Belize to the southeast; while having maritime boundar ...
,
South Korea
South Korea, officially the Republic of Korea (ROK), is a country in East Asia. It constitutes the southern half of the Korea, Korean Peninsula and borders North Korea along the Korean Demilitarized Zone, with the Yellow Sea to the west and t ...
,
Indonesia
Indonesia, officially the Republic of Indonesia, is a country in Southeast Asia and Oceania, between the Indian Ocean, Indian and Pacific Ocean, Pacific oceans. Comprising over List of islands of Indonesia, 17,000 islands, including Sumatra, ...
,
Turkey
Turkey, officially the Republic of Türkiye, is a country mainly located in Anatolia in West Asia, with a relatively small part called East Thrace in Southeast Europe. It borders the Black Sea to the north; Georgia (country), Georgia, Armen ...
,
Saudi Arabia
Saudi Arabia, officially the Kingdom of Saudi Arabia (KSA), is a country in West Asia. Located in the centre of the Middle East, it covers the bulk of the Arabian Peninsula and has a land area of about , making it the List of Asian countries ...
, and
Poland
Poland, officially the Republic of Poland, is a country in Central Europe. It extends from the Baltic Sea in the north to the Sudetes and Carpathian Mountains in the south, bordered by Lithuania and Russia to the northeast, Belarus and Ukrai ...
. The inclusion of South Korea, Poland, and sometimes Taiwan are questionable given they are no longer considered emerging markets by the IMF and World Bank (for Korea and Taiwan.) If we ignore those three, the top ten would include
Argentina
Argentina, officially the Argentine Republic, is a country in the southern half of South America. It covers an area of , making it the List of South American countries by area, second-largest country in South America after Brazil, the fourt ...
and
Thailand
Thailand, officially the Kingdom of Thailand and historically known as Siam (the official name until 1939), is a country in Southeast Asia on the Mainland Southeast Asia, Indochinese Peninsula. With a population of almost 66 million, it spa ...
.
When countries "graduate" from their emerging status, they are referred to as emerged markets, emerged economies or emerged countries, where countries have developed from emerging economy status, but have yet to reach the technological and economic development of developed countries.
Terminology
In the 1970s, "less developed countries" (LDCs) was the common term for markets that were less "developed" (by objective or subjective measures) than the developed countries such as the United States, Japan, and those in
Western Europe
Western Europe is the western region of Europe. The region's extent varies depending on context.
The concept of "the West" appeared in Europe in juxtaposition to "the East" and originally applied to the Western half of the ancient Mediterranean ...
. These markets were supposed to provide greater potential for profit but also more risk from various factors like
patent infringement
A patent is a type of intellectual property that gives its owner the legal right to exclude others from making, using, or selling an invention for a limited period of time in exchange for publishing an enabling disclosure of the invention."A ...
. This term was replaced by ''emerging market''. The term is misleading in that there is no guarantee that a country will move from "less developed" to "more developed"; although that is the general trend in the world, countries can also move from "more developed" to "less developed".
Originally coined in 1981 by then
World Bank
The World Bank is an international financial institution that provides loans and Grant (money), grants to the governments of Least developed countries, low- and Developing country, middle-income countries for the purposes of economic development ...
economist Antoine Van Agtmael,
the term is sometimes loosely used as a replacement for ''emerging economies'', but really signifies a business phenomenon that is not fully described or constrained by such; these countries are considered to be in a transitional phase between
developing and
developed status. Examples of emerging markets include many countries in Africa, most countries in Eastern Europe, some countries of Latin America, some countries in the Middle East, Russia and some countries in Southeast Asia. Emphasizing the fluid nature of the category, political scientist
Ian Bremmer defines an emerging market as "a country where politics matters at least as much as economics to the markets".
The research on emerging markets is diffused within
management
Management (or managing) is the administration of organizations, whether businesses, nonprofit organizations, or a Government agency, government bodies through business administration, Nonprofit studies, nonprofit management, or the political s ...
literature. While researchers such as
George Haley,
Vladimir Kvint
Vladimir L'vovich Kvint ( Russian: Владимир Львович Квинт) is a Russian-American economist and the Chair of the Department of Economic and Financial Strategy at the Moscow School of Economics of the Lomonosov Moscow State Un ...
,
Hernando de Soto
Hernando de Soto (; ; 1497 – 21 May 1542) was a Spanish explorer and conquistador who was involved in expeditions in Nicaragua and the Yucatan Peninsula. He played an important role in Francisco Pizarro's conquest of the Inca Empire in Peru, ...
,
Usha Haley
Usha C. V. Haley is an American author and academic, currently W. Frank Barton Distinguished Chair of International Business and Professor of Management at the W. Frank Barton School of Business at Wichita State University in the U.S. state of Kans ...
, and several professors from
Harvard Business School
Harvard Business School (HBS) is the graduate school, graduate business school of Harvard University, a Private university, private Ivy League research university. Located in Allston, Massachusetts, HBS owns Harvard Business Publishing, which p ...
and
Yale School of Management
The Yale School of Management (also known as Yale SOM) is the graduate school, graduate business school of Yale University, a Private university, private research university in New Haven, Connecticut. The school awards the Master of Business Admi ...
have described activity in countries such as India and China, how a market emerges is now well understood and can easily be modeled.
In 2009, Dr. Kvint published this definition: "an emerging market country is a society transitioning from a dictatorship to a free-market-oriented-economy, with increasing economic freedom, gradual integration with the Global Marketplace and with other members of the GEM (Global Emerging Market), an expanding middle class, improving standards of living, social stability and tolerance, as well as an increase in cooperation with multilateral institutions"
In 2008 Emerging Economy Report, the Center for Knowledge Societies defines ''emerging economies'' as those "regions of the world that are experiencing rapid informationalization under conditions of limited or partial
industrialization
Industrialisation (British English, UK) American and British English spelling differences, or industrialization (American English, US) is the period of social and economic change that transforms a human group from an agrarian society into an i ...
". It appears that emerging markets lie at the intersection of non-traditional user behavior, the rise of new user groups and community adoption of products and services, and innovations in product technologies and platforms.
More critical scholars have also studied key emerging markets like Mexico and Turkey. Thomas Marois (2012, 2) argues that financial imperatives have become much more significant and has developed the idea of 'emerging finance capitalism' – an era wherein the collective interests of financial capital principally shape the logical options and choices of government and state elites over and above those of labor and popular classes.
Julien Vercueil recently proposed an pragmatic definition of the "emerging economies", as distinguished from "emerging markets" coined by an approach heavily influenced by financial criteria. According to his definition, an emerging economy displays the following characteristics:
[Vercueil, Julien: "Les pays émergents. Brésil – Russie – Inde – Chine... Mutations économiques et nouveaux défis " (Emerging Countries. Brazil – Russia – India – China.. Economic change and new challenges", in French). Paris: Bréal, 3rd Edition, 2012, 232 p.]
# Intermediate income: its PPP per capita income is comprised between 10% and 75% of the average EU per capita income.
# Catching-up growth: during at least the last decade, it has experienced a brisk economic growth that has narrowed the income gap with advanced economies.
# Institutional transformations and economic opening: during the same period, it has undertaken profound institutional transformations which contributed to integrate it more deeply into the world economy. Hence, emerging economies appears to be a by-product of the current globalization.
At the beginning of the 2010s, more than 50 countries, representing 60% of the world's population and 45% of its GDP, matched these criteria.
Among them, the BRICs.

The term "rapidly developing economies" is being used to denote emerging markets such as The United Arab Emirates, Chile and Malaysia that are undergoing rapid growth.
In recent years, new terms have emerged to describe the largest developing countries such as
BRIC (Brazil, Russia, India, and China), along with ''BRICET'' (BRIC + Eastern Europe and Turkey), ''BRICS'' (BRIC + South Africa), ''BRICM'' (BRIC + Mexico),
MINT (Mexico, Indonesia, Nigeria and Turkey),
Next Eleven (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, South Korea, Turkey, and Vietnam) and
CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa). These countries do not share any common agenda, but some experts believe that they are enjoying an increasing role in the world economy and on political platforms.
Lists of emerging (or developed) markets vary; guides may be found in such investment information sources as ''EMIS'' (a Euromoney Institutional Investor Company), ''
The Economist
''The Economist'' is a British newspaper published weekly in printed magazine format and daily on Electronic publishing, digital platforms. It publishes stories on topics that include economics, business, geopolitics, technology and culture. M ...
'', or market index makers (such as
MSCI).
In an Opalesque.TV video,
hedge fund
A hedge fund is a Pooling (resource management), pooled investment fund that holds Market liquidity, liquid assets and that makes use of complex trader (finance), trading and risk management techniques to aim to improve investment performance and ...
manager Jonathan Binder discusses the current and future relevance of the term "emerging markets" in the financial world. Binder says that in the future investors will not necessarily think of the traditional classifications of "
G10" (or
G7) versus "emerging markets". Instead, people should look at the world as countries that are fiscally responsible and countries that are not. Whether that country is in Europe or in South America should make no difference, making the traditional "
blocs" of categorization irrelevant. Guégan ''et al.'' (2014) also discuss the relevance of the terminology "emerging country" comparing the credit worthiness of so-called emerging countries to so-called developed countries. According to their analysis, depending on the criteria used, the term may not always be appropriate.
The 10 ''Big Emerging Markets'' (BEM) economies are (alphabetically ordered): Argentina, Brazil, China, India, Indonesia, Mexico, Poland, South Africa, South Korea and Turkey. Egypt, Iran, Nigeria, Pakistan, Russia, Saudi Arabia, Taiwan, and Thailand are
other major emerging markets.
Newly industrialized countries are emerging markets whose economies have not yet reached developed status but have, in a macroeconomic sense, outpaced their developing counterparts.
Individual investors can invest in emerging markets by buying into emerging markets or global funds. If they want to pick single stocks or make their own bets they can do it either through ADRs (American depositor Receipts – stocks of foreign companies that trade on US stock exchanges) or through exchange traded funds (exchange traded funds or ETFs hold basket of stocks). The exchange traded funds can be focused on a particular country (e.g., China, India) or region (e.g., Asia-Pacific, Latin America).
FTSE International Emerging Markets Index
The
FTSE International Emerging Markets Index calculates how emerging a
company
A company, abbreviated as co., is a Legal personality, legal entity representing an association of legal people, whether Natural person, natural, Juridical person, juridical or a mixture of both, with a specific objective. Company members ...
is, and have helped many companies that are on low status emerge. They have been reported by many countries, including
China
China, officially the People's Republic of China (PRC), is a country in East Asia. With population of China, a population exceeding 1.4 billion, it is the list of countries by population (United Nations), second-most populous country after ...
,
India
India, officially the Republic of India, is a country in South Asia. It is the List of countries and dependencies by area, seventh-largest country by area; the List of countries by population (United Nations), most populous country since ...
, and
Brazil
Brazil, officially the Federative Republic of Brazil, is the largest country in South America. It is the world's List of countries and dependencies by area, fifth-largest country by area and the List of countries and dependencies by population ...
.
Emerged market
Also referred to as "emerged economy" or "emerged country".
Emerging markets share the economic characteristics such as low income, high growth economies that use market liberalization as their main means of growth. Of course, emerging economies can develop out of such emerging status, entering the post-emerging stage. When emerging markets are promoted from their economic status, they are referred to as emerged markets.
Countries like
Israel
Israel, officially the State of Israel, is a country in West Asia. It Borders of Israel, shares borders with Lebanon to the north, Syria to the north-east, Jordan to the east, Egypt to the south-west, and the Mediterranean Sea to the west. Isr ...
,
Poland
Poland, officially the Republic of Poland, is a country in Central Europe. It extends from the Baltic Sea in the north to the Sudetes and Carpathian Mountains in the south, bordered by Lithuania and Russia to the northeast, Belarus and Ukrai ...
,
South Korea
South Korea, officially the Republic of Korea (ROK), is a country in East Asia. It constitutes the southern half of the Korea, Korean Peninsula and borders North Korea along the Korean Demilitarized Zone, with the Yellow Sea to the west and t ...
,
Taiwan
Taiwan, officially the Republic of China (ROC), is a country in East Asia. The main geography of Taiwan, island of Taiwan, also known as ''Formosa'', lies between the East China Sea, East and South China Seas in the northwestern Pacific Ocea ...
, the
Czech Republic
The Czech Republic, also known as Czechia, and historically known as Bohemia, is a landlocked country in Central Europe. The country is bordered by Austria to the south, Germany to the west, Poland to the northeast, and Slovakia to the south ...
, and city-states such as
Singapore
Singapore, officially the Republic of Singapore, is an island country and city-state in Southeast Asia. The country's territory comprises one main island, 63 satellite islands and islets, and one outlying islet. It is about one degree ...
have transitioned from emerging to "emerged".
These emerged markets tend to be characterized by higher incomes and relatively stable political schemes, compared to those categorized as emerging markets.
Commonly listed
Various sources list countries as "emerging economies" as indicated by the table below.
A few countries appear in every list (BRICS, Mexico, Turkey, South Africa). Indonesia and Turkey are categorized with Mexico and Nigeria as part of the
MINT economies. While there are no commonly agreed upon parameters on which the countries can be classified as "Emerging Economies", several firms have developed detailed methodologies to identify the top performing emerging economies every year. While often treated as one group, emerging market economies are diverse in their factor endowments as well as real, financial, and external linkages.
BBVA Research
In November 2010,
BBVA
Banco Bilbao Vizcaya Argentaria, S.A. (), better known by its initialism BBVA, is a Spanish multinational financial services company based in Bilbao, with operative offices in Madrid. It is one of the largest financial institutions in the world, ...
Research introduced a new economic concept, to identify key emerging markets.
This classification is divided into two sets of developing economies.
As of 2014, the groupings are as follows:
EAGLEs (emerging and growth-leading economies): Expected Incremental GDP in the next 10 years to be larger than the average of the G7 economies, excluding the US.
*
*
*
*
*
*
*
*
NEST: Expected Incremental GDP in the next decade to be lower than the average of the G6 economies (G7 excluding the US) but higher than Italy's.
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
Other emerging markets
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
Emerging Market Bond Index Global
The
Emerging Market Bond Index Global (EMBI Global) by
J.P. Morgan was the first comprehensive EM sovereign index in the market, after the EMBI+. It provides full coverage of the EM asset class with representative countries, investable
instruments (sovereign and quasi-sovereign), and transparent rules.
The EMBI Global includes only USD-denominated emerging markets sovereign bonds and uses a traditional,
market capitalization
Market capitalization, sometimes referred to as market cap, is the total value of a publicly traded company's outstanding common shares owned by stockholders.
Market capitalization is equal to the market price per common share multiplied by ...
weighted method for country allocation.
As of March end 2016, the EMBI Global's market capitalization was $692.3bn.
For country inclusion, a country's
GNI per capita must be below the Index Income Ceiling (IIC) for three consecutive years to be eligible for inclusion to the EMBI Global. J.P. Morgan defines the Index Income Ceiling (IIC) as the GNI per capita level that is adjusted every year by the growth rate of the World GNI per capita,
Atlas method The World Bank has used the Atlas method since 1993 to estimate the economic size of countries based on their gross national income (GNI) in U.S. dollars.
To convert a country's GNI from its local currency to U.S. dollars, the Atlas method uses a c ...
(current US$), provided by the World Bank annually. An existing country may be considered for removal from the index if its GNI per capita is above the Index Income Ceiling (IIC) for three consecutive years as well as the country's long term foreign currency sovereign credit rating (the available ratings from all three agencies: S&P, Moody's & Fitch) is A-/A3/A- (inclusive) or above for three consecutive years.
J.P. Morgan has introduced what is called an "Index Income Ceiling" (IIC), defined as the income level that is adjusted every year by the growth rate of the World GNI per capita, provided by the World Bank as "GNI per capita, Atlas method (current US$) annually". Once a country has GNI per capita below or above the IIC level for three consecutive years, the country eligibility will be determined.
* J.P. Morgan has established the base IIC level in 1987 to match the World Bank High Income threshold at US$6,000 GNI per capita.
* Every year, growth in the World GNI per capita figure is applied to the IIC, establishing a new IIC that is dynamic over time.
* This approach ensures that J.P. Morgan's cutoff for index removal is adjusted by the World income growth rate, and not by the inflation rate of a smaller sample of Developed economies.
* This metric essentially incorporates real global growth, global inflation, and currency exchange rate (current USD-denominated) changes.
* Essentially, the introduction of the IIC establishes a higher, more appropriate threshold for country eligibility in the EMBI Global/Diversified.
Emerging Markets Index
The Emerging Markets Index by
MasterCard is a list of the top 65 cities in emerging markets. The following countries had cities featured on the list:
Emerging Market Multinationals Report
Launched in 2016 by
Lourdes Casanova, Anne Miroux, at Emerging Markets Institute, at the
Samuel Curtis Johnson Graduate School of Management,
Cornell University
Cornell University is a Private university, private Ivy League research university based in Ithaca, New York, United States. The university was co-founded by American philanthropist Ezra Cornell and historian and educator Andrew Dickson W ...
, the Emerging Market Multinationals Report analyzes the economic performance of the emerging economies and emerging market multinationals (EMNCs), exploring among others the foreign investment, revenues, valuation and other business data of these firms with the help of the EMI research team. The second part of the report includes chapters by EmNet at the
OECD Development Centre,
International Finance Corporation at the
World Bank Group
The World Bank Group (WBG) is a family of five international organizations that make leveraged loans to developing countries. It is the largest and best-known development bank in the world and an observer at the United Nations Development Group ...
, the business school at the
University of the Andes (Colombia), and other universities of the Emerging Multinationals Research Network and beyond.
The report launched the emerging economies "E20+1" grouping, that includes the top 20 emerging economies plus China. These economies are selected based on nominal gross domestic product (GDP) per capita, share in global trade and poverty levels.
In the 2020 report, EMI published the different milestones of the E20 countries. In 2021, launched the EMI Ranking of the 500 largest companies by revenue (EMNC 500R), the 500 largest by market capitalization (500MC), and the 200 best ESG performer companies (200ESG). In 2022, the report released D-ESG ranking of the E20+1. The D-ESG ranking assesses countries based on their economic growth (D) and ESG performances.
Global Growth Generators
"Global Growth Generators", or
3G (countries), is an alternative classification determined by
Citigroup
Citigroup Inc. or Citi (Style (visual arts), stylized as citi) is an American multinational investment banking, investment bank and financial services company based in New York City. The company was formed in 1998 by the merger of Citicorp, t ...
analysts as being countries with the most promising growth prospects for 2010–2050. These consist of Indonesia, Egypt, seven other emerging countries, and two countries not previously listed before, specifically
Iraq
Iraq, officially the Republic of Iraq, is a country in West Asia. It is bordered by Saudi Arabia to Iraq–Saudi Arabia border, the south, Turkey to Iraq–Turkey border, the north, Iran to Iran–Iraq border, the east, the Persian Gulf and ...
and
Mongolia
Mongolia is a landlocked country in East Asia, bordered by Russia to the north and China to the south and southeast. It covers an area of , with a population of 3.5 million, making it the world's List of countries and dependencies by po ...
. There has been disagreement about the reclassification of these countries, among others, for the purpose of acronym creation as was seen with the BRICS.
Estimating Demand in Emerging Markets
Estimating the demand for products or services in emerging markets and developing economies can be complex and challenging for managers. These countries have unique commercial environments and may be limited in terms of reliable data, market research firms, and trained interviewers. Consumers in some of these countries may consider surveys an invasion of privacy. Survey respondents may try to please researchers by telling them what they want to hear rather than providing honest answers to their questions. However some companies have dedicated their entire business units for understanding the dynamics of emerging markets owing to their peculiarity.
Economy
The following table lists the GDP (PPP) projections of the 30 largest emerging economies for the year of 2025 (unless otherwise stated).
Members of the
G-20 major economies are in bold.
See also
*
Developed market
In investing, a developed market is a country that is most developed in terms of its economy and capital markets. The country must be high income, but this also includes openness to foreign ownership, ease of capital movement, and efficiency of m ...
*
Frontier market
A frontier market is a term for a type of developing country's market economy which is more developed than a least developing countries , least developed country's, but too small, risky, or illiquid to be generally classified as an emerging marke ...
*
Global North and Global South
Global North and Global South are terms that denote a method of grouping countries based on their defining characteristics with regard to socioeconomics and Global politics, politics. According to UN Trade and Development (UNCTAD), the Global S ...
*
Tehran Stock Exchange
*
Free trade area
A free trade area is the region encompassing a trade bloc whose member countries have signed a free trade agreement (FTA). Such agreements involve cooperation between at least two countries to reduce trade barriers, import quotas and tariffs, and ...
References
External links
{{Authority control
Business terms
Economic country classifications
International development
Economic geography
Investment
Lists of countries by economic indicator