What Are the Main Characteristics of ‘Emerging Markets’?

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What are the main characteristics of ‘emerging markets’?

During the changing of world economy, it is increasingly common to hear the term ‘emerging markets’ and from news and report. In the mid-1980s, the term ‘emerging markets’ was created by the World Bank, and has significant influence on the global business world nowadays (Gwynne, Klak and Shaw 2003). To raise investor’s attention to those developing countries, there are numerous characteristics springing up which are given by researches and economists. However, some of those characteristics are contradictory and it is difficult to give a real definition. This essay discusses the main characteristics of ‘emerging markets’ as defined by the World Bank and economists. Further, another key characteristic needs to be taken into consider when defining ‘emerging markets’.

The definition by the World Bank
The term ‘emerging markets’ is an extension of the terms ‘Second World’ and ‘Third World’ and was coined by the World Bank economist Antoine van Agtmael in the mid-1980s (Gwynne, Klak and Shaw 2003, The Economist 2011). The term was based on two concepts and had replaced ‘the Third World’ and ‘developing countries’ (Gwynne, Klak and Shaw 2003). ‘First, it coined the term to refer to those countries outside the core that are most attractive to international investors. Second, the World Bank initiated a new real material opportunity for foreign investors to profit from investment in these countries’ (Gwynne, Klak and Shaw 2003: 23). Basically the World Bank classifies those economies based on their gross national income (GNI) per capita and those data computed using the Atlas method. Only the classifications and data of low-income and middle-income economies are reported and do not necessarily reflect development status, even though the economies with low or middle income are sometimes referred to as developing economies (the World Bank, no date).

The Characteristics of Emerging Markets Is ‘In...