Emerging Markets

Abstract While many definitions of emerging markets exist, all tend to have three characteristics in common: (i) rapid economic growth; (ii) proactive adoption of market‐based frameworks; and (iii) being in a transition phase between developing‐ and developed‐country status. The so‐called BRIC countries (Brazil, Russia, India, and China) have been highlighted as exemplars of emerging markets. It is projected that by 2050 the BRIC economies have the potential to overtake the current richest countries in terms of economic wealth. Markets within the emerging category have been further classified on the basis of national income and progress on market infrastructure development. For example, the FTSE index divides emerging markets into advanced emerging, emerging markets, and frontier markets. The key challenges facing emerging markets include governance, political risk, rapid urbanization, a shortage of highly skilled labor, poor infrastructure, and more recently, the global economic slowdown that began in 2008.