Emerging markets refer to countries, which have opened up their doors to international trade in the interest of developing their own economies. To understand this better, one has to understand the difference between a developed and an undeveloped economy. A developed economy is one, which is able to support itself in entirety, with the possibility of continuous growth due to the development of its own technology. An undeveloped one, of course, is its opposite. Thus, an emerging market economy is one, which is in transition from being an undeveloped/developing economy to a developed one.
For this purpose, emerging markets accept the inflow of foreign influence to enhance their business methods and their technology. This influence comes in the form of business relations and agreements between investors and the emerging market. By allowing foreign investors to establish businesses within the country, these markets gain part of its income, adding to its gross capital income, and in effect allow it allocate more resources. A well-established local business, in the same way, may also opt for expansion in other nations. This chain of trade practices improves the overall capacity of a country to do business, with its goal being able to become at par with already developed countries. This is what also determines the value of a country’s currency is in the world market.
An emerging market is characterized by the increase in both local and foreign investment. Increase in the local perspective signifies that business practices have improved. Foreign investments prove that the global community believes that a country has promise. Neither of these, however, is possible without effective economic reforms. These reforms differ from one country to the other, and these depend mostly on culture and resources. When the culture of a nation is highly conservative (like that of Japan in its early years), the inflow of foreign technology is resisted so change is highly improbable. Japan, in itself however, was a pioneer in many technological feats so it never got left behind. The resources of a country also limit its ability to do business. In history, Russia led the global community in trade before 19th century due to its large population and its vast resources. With the tide of the century, however, there came World War I, and Russia was it’s biggest casualty. To this day, however, Russia is still one of biggest emerging markets there is. The same applies to other emerging markets in the world today, including China, India, Indonesia, Brazil, Mexico, Argentina, South Africa, Poland, Turkey, and South Korea.
Each of these countries plays an important role as an individual market. Eventually studies have been made to develop these markets by coordinating their efforts, and so evolved terms such as BRIC, BRICS, BRICET and BRIMC. BRIC stands for the countries of Brazil, Russia, India, and China. The other terms were derived form BRIC, with the addition of South Africa (S), Eastern Europe (E), Turkey (T), and Mexico (M). The original BRIC thesis proposed that these four countries would eventually become the most dominant countries by the year 2050. This is because of the business network that exists between these countries even in the present day. China and India specialize in manufactured goods and services, while Brazil and Russia are vital suppliers of raw materials. An example of this working relationship is the production and distribution of IBM products.
Frank Collins is an traveler and an editor for Exploring Abroad.com