The Emerging Market Economy

The Emerging Market Economy or the EME was a word coined by Antoine W. Van Agtmael in 1981. He worked for the World Bank’s International Finance Corporation. He defined the EME as a country’s economy that was low up to an average per capita income. Nations which have this kind of per capita income comprises at least eighty percent of the entire world population which is twenty percent of the economies worldwide.

Another definition is applicable for the countries whose economic growth falls into that category. These range from the smallest to the biggest which are considered as EMEs due to the reforms in their political situations and developments in their economies.

Even China which is considered to be a country with a great and booming economy is still categorized as one of the countries with small economies the same with Tunisia. Tunisia and China both belong in this category since these countries have started reforms and developments for their economy. These countries also started to make their markets open and they have turned it to become more globally competitive. The Emerging Market Economies are thought to be the countries with the most rapid growth in economies.

Countries with Emerging Market Economies have also the characteristic of being transitional which means that are in the continuous process of changing from the close market to the open kind. By doing this the countries are also developing a particular system for accountability.

This includes the former eastern bloc nations and Soviet Union nations. In becoming an EME with the emerging market, the nation is starting more reforms for their economies which can help make a stronger economy. This also helps in making the people become more responsible by being transparent and efficient in the programs of the market. The EMEs are also expected to make reforms for their own exchange rate system since a good currency can establish much confidence for their economy especially for more foreign investments.

The reforms for the currency are also makes the investors in the country to reduce the money they send abroad. This is the concept behind capital flight. The EMEs are also blessed to receive more guidance and aids from the countries with larger economies and from the global organizations like International Monetary Fund and the World Bank.

A distinct trait of the EMEs is increased foreign and local investments this implies more for their portfolio and direct investments. Economic growth often tells the other countries that this EME has established confidence for their own economy. The foreign investments tell the whole world that they have taken notice of the EME. More international currencies in the EME’s currency market can definitely add volume to the stocks as wells as develop a longer term type of investment for their infrastructures.