What Is an Emerging Markets Overview?


Quick Answer

An emerging market overview is a general description of countries that are undergoing rapid economic expansion and industrialization as they shift from being centrally planned and isolated economies to free and open markets that welcome foreign investments. Emerging markets share some characteristics with highly developed economies but fall short on other criteria. As of 2015, the most important emerging markets are China, India, Russia and Brazil, otherwise known as the BRIC countries.

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The BRIC countries are important emerging markets because their populations account for one-third of the world total but produce the majority of world GDP growth, opening up economic opportunities for global investors. Goldman Sachs forecasts that the BRIC countries will become the world's four largest economies by 2050, pushing the U.S. economy to fifth place.

Because investors perceive investing in the emerging markets as relatively high risk, investment firms lower the risk by packaging securities from emerging markets as exchange-traded funds, or ETFs, that represent a basket of companies in a particular sector or country, such as the Dow Jones Emerging Markets Oil & Gas Titans 30 Index and the Dow Jones BRIC 50 China Subindex.

There are more than 40 emerging markets, such as the ASEAN free trade area, which is composed of 10 countries in Southeast Asia, as well as South Korea, Mexico, Indonesia and Turkey. Also considered emerging markets are most countries in Eastern Europe, many Latin American countries, such as Argentina and Colombia, and many African economies, such as Nigeria's and South Africa's.

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