Wednesday, 4 June 2014

The impacts of rising emerging markets on the global economy

The most commonly known emerging markets are the BRIC countries: Brazil, Russia, India, and China; however they are currently experiencing a slowdown in economic growth, so the EAGLE countries are predicted to be the next emerging giants. 

The EAGLE countries are recognised as: China, India, Brazil, Indonesia, South Korea, Russia, Turkey, Mexico and Taiwan; which are predicted to contribute to a colossal 58% of world economic growth between 2011 and 2021 (Valdez & Molyneux, 2013, pg 455-456). 

Emerging markets have a vast amount of power in the global market because they are the "main source of optimism for global markets" according to Guriev (18/3/2013). Guriev further states that when there's no growth in emerging economies, asset prices then fall all over the world, which can in turn lead to a recession. 

One major problem in emerging markets is corruption. Luo (2002) states that many emerging markets rank highly in a Corruption Perceptions Index (CPI). Among the most corrupt were: Romania, Bangladesh, Dominica, Indonesia, Pakistan, Vietnam, India, Argentina, Turkey, Egypt, Phillipines, Thailand, Mexico, Bulgaria, Brazil, Russia and China. Of these 13, they are either BRIC and/or EAGLE countries. 

The MINT countries have to be discussed: Mexico, Indonesia, Nigeria, and Turkey. The reason these countries are expected to become so successful in the near future is due to their large populations, made up of a young workforce - which will help to sustain their economies if there's a smaller and ageing population in the future. In addition, they are located in convenient and central locations, making it easier for other countries to trade with them. 

I believe that all the BRIC countries' growth will eventually reach a standstill. With this deceleration of the BRIC countries' growth, it leaves a pathway for other emerging markets such as South Korea, Mexico and Indonesia to become the forefront of emerging economies within the world market.

A factor that does need to be considered is that if another financial crisis were to occur again, then how would emerging economies fare? Emerging economies were greatly affected by the 1995 financial crisis but helped towards the recovery of the 2008 recession.  

In order to be able to stay competitive, all emerging economies will need to ensure that they foresee future trends in local and global markets, adapt strategies in line with the business climate at that time and improve their global relations with both developed and developing economies. These factors are imperative if emerging economies wish to expand and grow to become major players in the global markets. 


Guriev, S (18/3/2013) Russia's Effect would be Trivial. The New York Times. Available from:  

Luo, Y (2002) Multinational Enterprises in Emerging Markets. Denmark: Copenhagen Business School Press 

Valdez, S and Molyneux, P (2013) An Introduction to Global Financial Markets, 7th edition. Hampshire: Palgrave Macmillan

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