Emerging and developing economies are often transitional economies, shifting from closed economies to open market economies. Often, the transition involves structural or policy reforms such as currency or capital market changes. The level of foreign investment is also critical for an emerging economy. In most cases, increased foreign investment is a sign the economy has potential. The injection of foreign currency into the local economy aids long-term investment to its infrastructure.
For foreign investors on the other hand, an emerging economy is an ideal investment opportunity as it often promises massive returns on investment. However, the risks involved in investing in an emerging economy are often larger than those in a developed economy. EconomyWatch adopts IMF’s classification of emerging and developing economies. There are however multiple lists created by various organisations based on their interpretation of the term.
Read more about Emerging Markets Economy on EconomyWatch
Emerging and Developing Economies Export, Import & Trade
Emerging and developing economies were responsible for driving global trade growth by more than 8 per cent annually in 2011 and 2012 according to the organisation for Economic Co-operation and Development (OECD). As the five largest emerging economies in the world, BRICS account for 18 per cent of global trade and about 45 per cent of current growth.
Brazil, Russia and South Africa focus primarily on raw material exports, while India and China’s key exports lie in manufacturing and services. In April 2011, economic and trade ministers from the BRICS nations came together in a summit and vowed to “oppose trade protectionism in all its forms” by creating a task force designed to come up with suggestions to improve and expand economic cooperation between BRICS and other developing economies.
Emerging and Developing Economies Industry Sectors
Emerging economies also tend to experience a shift from agriculture to the industrial and services industries. The agriculture sector is often seen as a vital component of an emerging economy’s GDP, however most emerging and developing economies will seek to diversify into more high-value industries.
A classic example is China. In 2001, agriculture was responsible for 17.7 per cent of China’s GDP while the industrial and services industries took up 49.3 per cent and 33 per cent respectively.
However in less than 10 years, the importance of China’s agriculture industry shrunk to 9.6 per cent of GDP while the services industry experienced massive growth of 43.6 per cent of China’s GDP in 2010. The industrial industry, which has long been China’s main driver for economic growth, has also decreased to 46.8 per cent of China’s GDP in 2010.
Full Article: Emerging and Developing Economies’ Industry Sectors
Emerging and Developing Economies Economic Structure
China, like larger emerging economies has a massive population that makes up a large market and sizeable Labour force. Eight out of the top 10 most populous nations in the world are emerging economies. China, India, Indonesia, Brazil, Pakistan, Nigeria, Bangladesh and Russia account for 52.173 per cent of the world’s total population.
A large population can be often seen to be an economic asset as there is higher potential demand within the country. Most advanced economies face an ageing population, while emerging economies such as India now possess the world’s largest working-age population.
Full Article: Emerging and Developing Economies Economic Structure
Emerging and Developing Economies Economic Forecast
Emerging and developing economies now have a 47.139 per cent share of the world’s total GDP (PPP).
By 2013, the total GDP (PPP) for emerging and developing economies is expected to account for more than half of the world’s total share, eventually reaching 52.137 per cent of the world’s total GDP (PPP) by 2015. The total GDP (PPP) for emerging and developing economies in 2015 is expected to be US$52.174 trillion.
Full Article: Emerging and Developing Economies Economic Forecast
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