The title may seem pessimistically inclined especially to the sanguine world. Well, in my opinion saying it any other way would just make it an eye-wash.
Rather than considering it an aberration from current belief, it has to be construed as a narration pertaining to constant variability of economic phenomenon.
When World Bank economist Antoine van Agtmael coined the word “Emerging market” in 1980s, it exuded enthusiasm, as next gen transition markets to compliment developed markets. Since 30 years of its inception, there have been multiple iterations to that tag with countries being added and subsequently written off.
So did some countries emerge, develop and vainly transcended the list, while others went the other way to reset their development cycle?
Obviously I wouldn’t jump right to the crux of this discussion pre-maturely, rather will take the prolix path of a retrospective outlook. Developed countries represented by US, Western Europe and Japan set the benchmark and economically compelled the promising ones to be labelled as “Less Economically Developed countries (LDC)”.
The rest of world was insecure with handful of developed countries and rightfully so, as dependence is more abhorred than dominance.
So the Great Migration thereon witnessed the economies relentlessly striving towards the coveted status and irrespective of their pecking order of “being developed”, was conveniently referred to as “Emerging”.
The ‘Convenience’ of Developed countries keeping their positions unthreatened or ‘Inconvenience’ of the Emerging markets to comply with sacrosanct “developed” gradation (Living standards, Human Development Index and Industrial base), is a perspective debate!
According to IMF, currently there are 150+ developing countries. Ironically, that includes BRIC countries which are vehemently considered more developed than their developing peers.
Moreover, BRIC (Brazil, Russia, India and China) countries were one of the few emerging countries which cushioned a recession hit world marred with contracting developed countries and heavily- indebted PIIGS (Portugal, Ireland, Italy, Greece and Spain). While they were not immune to the global slowdown, strong domestic consumption aided their impressive growth.
They still may not comply totally with the “developed parameters” but, with developed countries tumbling, the goal post has definitely shifted. So arguably, some of these countries have already emerged. Of course, there are cases like Singapore which was in the developing list in the 1990’s but have since been taken out and accepted as advance economies.
Singapore is a case representative of clean-hit-comply to the “developed” pre-requisites and with proven sustenance mechanisms, is an exemplary case of transition to the coveted status. Volte-face to my last discussion is inevitable, in order to elucidate the next aspect of “Emerging” phenomenon. While some of the “emerged” economies did cushion the gloom and doom, the subsequent rehabilitation story has been slow.
Overconfidence of toppling developed countries from the pedestal is turning into vulnerability propelled by political instability, scum-scams and erosion of low cost advantage to name some drastic few ailments in today’s economy.
A classic submerging story? Not exactly! It’s a failed case of an inflated expectation management. BRIC together holds $18 trillion GDP which is 30% of the world GDP. With an average GDP of more than $2 trillion for BRIC countries, even a growth rate from 5% to 9% is above-average, though its labelled “softening or cooling” from comparative expectations per se.
Number crunchers scurry for a binary replacement of weakened developed economies and to top it all, expect the transition to be spike-less. Mood swings of the market add to the misery and in this economic chaos, a major silver lining is ignored.
A more resilient world economy!
While Western economy are reeling, desperate shift to Asia have indeed managed to flatten the world to larger extent. Even when BRIC countries get comparatively slower, 3G countries (Global Growth Generators) like Indonesia, Turkey, Vietnam are rising up to the occasion, thus adding to wider base of emerging economies.
So debilitated but recuperating Developed, Emerged and wider Emerging economies strike a constructive balance for a better world. A world which can recover, sustain and foster sustained growth.