Emerging markets are nations with social or business activity in the process of rapid growth and industrialization. The International Finance Corporation of the World Bank, who coined the term in 1981, define an emerging market as any economy where the per capita gross national product is less than $9,385 a year. However, for investors, an emerging market generally means a low-to-middle income nation which is pursuing substantial economic and political reforms and thus becoming more integrated into the global economy. According to The Economist many people find the term dated, but a new term has yet to gain much traction. [1]
An emerging market might have an underdeveloped or developing commercial and financial infrastructure, and a recent history of rescheduling or even defaulting on sovereign debt. But it should also have a recent record of economic liberalisation, functioning equity and debt markets, and significant potential for both economic growth and capital market investment by foreigners. In short, an emerging market is a poor country that might be worth investing in. Classic examples include Argentina, Brazil, Mexico, China, India and Russia.
