Emerging Markets and Their Role in a Global Economy

Abstract

Since the 1980s, the share of emerging markets in a global economy has been systematically increasing. This results from faster economic growth of this group as compared to advanced economies. China and India and a few other Asian countries have been the main contributors to this faster growth. In the 1980s and 1990s, emerging markets suffered from several rounds of macroeconomic and financial crises, a result of unsustainable policies. In the first two decades of the twenty-first century their macroeconomic performance markedly improved. However, macroeconomic instability did not disappear completely: emerging markets suffered from both the spillover effects of the global financial crisis of 2008–2009 and commodity price decline in 2014–2015. The crises in Argentina and Turkey in 2018–2019 also suggest that unsustainable policies are still the problem. Looking ahead, emerging markets can suffer from the recent wave of trade and investment protectionism, slower growth in advanced economies, and normalization of their monetary policies.