THE EMERGING MARKET ECONOMY ADVANTAGE (By: Oluwatoyin S. Enisan)

- FOR BUSINESS START UPS -

What is an Emerging Market Economy?

In 1981 Antoine W. Van Agtmael of the International Finance Corporation of the World Bank coined the term “Emerging Market Economy”. An Emerging Market Economy (EME) is defined as an economy with low per capita income (PCI). Such economy is at the basic or elementary level of economic development but progressing. EMEs generally do not have the level of market efficiency and strict standards in measurement, accounting and securities regulations like the developed ones. However an EME will typically have a physical financial infrastructure including banks, a stock exchange, unified currency and such other basic indicators. 

Countries categorized as EMEs constitute about 80% of Global Population, such economy also represent about 20% of the world's economies.

A future-focused investor will readily look towards the EMEs because of the numerous opportunities and the prospect of high returns, EMEs often experience faster economic growth as measured by GDP. However, Investments in emerging markets comes with much greater risk due to political instability, infrastructure inadequacies, currency volatility, limited equity opportunities, Undue Government interference, Monopoly issues (many large companies may still be "state-run" or private), lack skilled labor force, Inefficiency of Government services and so no.