Are Emerging Markets Gaining Momentum?

Emerging markets are markets with gradually improving market economies, relatively high economic growth rates, and significant market potential. A 1994 research report by the U.S. Department of Commerce listed the China Economic Zone, India, ASEAN countries, South Korea, Turkey, Mexico, Brazil, Argentina, Poland, and South Africa as major emerging markets. By 2025, emerging market central banks had cumulatively cut interest rates 51 times, totaling 3085 basis points, marking the largest easing measure since at least 2021; the scale of the rate cuts far exceeded the 2160 basis points cut in 2024. Inflation levels were effectively controlled. Analysts predict that there is room for further easing policies, with countries like Brazil and Hungary potentially initiating rate cuts. Emerging markets refer to stock or energy markets in developing countries. According to the authoritative definition of the International Finance Corporation, a country or region is considered an emerging market if its per capita Gross National Product (GNP) has not reached the level defined by the World Bank as a high-income country. Some countries, despite having reached high-income status in terms of economic development and per capita GNP, are still considered emerging markets due to their lagging stock market development and immature market mechanisms. Compared to traditional industries, the internet is a truly emerging market.

Overview of Emerging Market Countries

1. Definition and Scope

Emerging market countries generally refer to those countries in a phase of rapid economic development, with relatively low income levels but huge growth potential and considerable market size. Driven by globalization, these countries are actively integrating into the global economic system, gradually transforming from traditional to modern economies, and becoming indispensable components of global industrial and supply chains. They are widely distributed in Asia, Latin America, Africa, and other regions, encompassing different levels of economic development, resource endowments, and socio-cultural backgrounds.

2. Typical Characteristics

• High Social and Economic Dynamics:

Emerging market countries are often in a period of rapid socio-economic transformation, with frequent adjustments to domestic industrial structures and constantly evolving social class structures. This dynamic nature brings both development opportunities and numerous unstable factors. For example, rapid changes in employment structures may lead to periodic employment pressures, and the alternation between traditional and emerging industries during industrial upgrading may trigger localized economic fluctuations.

• Relatively High Innovation Vitality:

While emerging market countries may lag behind developed countries in total R&D investment and infrastructure, they demonstrate high innovation vitality in several areas. On the one hand, to catch up with developed countries, emerging market countries actively introduce and absorb advanced foreign technologies, and then adapt and innovate accordingly. On the other hand, their vast domestic markets and diverse demands provide broad application scenarios for local innovation, giving rise to many innovative business models and technological applications, particularly in the internet and mobile communications sectors.

• Relatively Low Production Costs:

In terms of labor costs, emerging market countries typically possess abundant labor resources, resulting in a relatively plentiful labor supply and a significant advantage in labor costs compared to developed countries. This advantage has attracted a large number of labor-intensive industries to emerging market countries, promoting the development of their manufacturing sectors. Simultaneously, some emerging market countries also possess abundant natural resources, such as oil and minerals, and the lower cost of resource acquisition provides strong support for the development of related industries.

3. Classification Methods

• Resource-Based Emerging Market Countries:

These countries primarily rely on their abundant natural resources for economic growth. For example, Brazil is one of the world's largest coffee producers, possessing significant advantages in agricultural resources, while its oil production also plays a crucial role in its economy. Saudi Arabia, on the other hand, is the world's largest oil exporter, with the oil industry being the pillar of its economy. Through oil extraction and export, Saudi Arabia has accumulated substantial wealth, driving domestic infrastructure development, industrial growth, and the improvement of its social welfare system.

• Manufacturing-Based Emerging Market Countries:

These countries rely heavily on manufacturing as the main driver of economic growth. They fully utilize their labor cost advantages and government industrial support policies to vigorously develop manufacturing and actively promote product exports. Typical examples include East Asian countries like China and South Korea. China, through reform and opening up, established special economic zones, attracted foreign investment and technology, and gradually developed into a global manufacturing center, with products covering a wide range from low-end labor-intensive products to high-end technology-intensive products. South Korea, under the guidance of government industrial planning, has achieved rapid growth in manufacturing sectors such as electronics and automobiles, creating a number of internationally competitive corporate brands.

• Service-Oriented Emerging Market Countries:

These countries focus their economic development on the service sector, driving economic growth through improved service quality, innovative service models, and expanded service markets. Some South and Southeast Asian countries, such as India, have a significant advantage in IT service outsourcing. Leveraging their large pool of highly qualified English-speaking personnel and relatively low labor costs, they have attracted substantial IT service outsourcing business from developed countries in Europe and America, becoming a major global destination for IT service outsourcing. Indonesia, on the other hand, is continuously developing its tourism services, utilizing its abundant natural and cultural tourism resources to attract a large number of international tourists and promote local economic development.

The Role of Emerging Market Countries

Their role in promoting economic development. They facilitate horizontal capital flows and economic linkages, improving the overall efficiency of resource allocation. They broaden investment options, catering to diverse investor motives, transaction motivations, and profit needs, generally providing investors with the possibility of higher returns.

The Development Essence of Emerging Market Countries

Comparison of Development Speeds in Emerging Markets

The rapid development of emerging market countries is merely a phenomenon; its essence, in short, is industrialization and modernization. The shift from an agricultural economy to an industrial economy is a natural process driven by advancements in productivity. Agricultural economies are stagnant or develop very slowly; only through industrialization and a shift to an industrial economy can rapid growth occur.

Developed countries have all experienced leaps in development throughout history. This was their period of industrialization. At that time, a large number of laborers moved from rural areas to cities and from agriculture to industry, leading to rapid growth in industrial production. Developing countries, at the beginning of their independence, were also backward agricultural nations, facing the historical task of industrialization. The "Four Asian Tigers," including South Korea, took this step first. Many more emerging market countries are also on this path.

However, the content of industrialization and the standards for achieving industrialization have varied in different historical periods, changing with the times. When Britain industrialized, it primarily focused on developing light industry and textiles. In the past, some believed that a country was industrialized when its industrial output exceeded that of agriculture, or when its industrial workforce exceeded that of agriculture.