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Medium Term: Where Are Emerging Markets Headed?

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Emerging Markets in a World of Chaos
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Abstract

The world in the next 25 years is unpredictable, of course, but a few trends may be identifiable and relevant. The world economy until 2050 and beyond will face a series of structural shifts that will affect both advanced and developing economies. Six tailwinds and six headwinds are identified. The tailwinds are: good macroeconomic fundamentals; improving health and education coupled with young demography; rise of capital market and fintech with growing private sector; growing state capacity; regional trade and skills upgrading; and the rise of renewables. Headwinds are: macro uncertainties, including low global growth, inflation and high debt; growing inequality and gender discrimination; end of an era of cheap money; authoritarian populism, institutional weakening, and corruption; selective deglobalization and productivity shortfalls; and accelerating climate change that represents an existential threat to the planet.

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Notes

  1. 1.

    According to the PricewaterhouseCoopers model, these trend growth estimates, which are abstracted from shorter-term cyclical trends, are driven by the following key factors: (a) growth in the working-age population and the potential workforce (based on the latest United Nations population projections); (b) increases in human capital, which is proxied by average educational attainment across the adult population; (c) growth in the physical capital stock, which is driven by capital investment and net of depreciation; and (d) TFP growth, which is driven by technological progress and the catch-up by lower-income countries using new technologies and processes. See PwC (2017).

  2. 2.

    Stamm and Vorisek (2023).

  3. 3.

    Tewari and Hoskins (2023).

  4. 4.

    UNCTAD (2022).

  5. 5.

    Kuijs (2022).

  6. 6.

    Economist (2022).

  7. 7.

    Bhandari (2022).

  8. 8.

    Subramanian and Felman (2022).

  9. 9.

    IMF (2022).

  10. 10.

    Fastmarkets (2023).

  11. 11.

    EIU (2022).

  12. 12.

    Amaglobeli and Thevenot (2022).

  13. 13.

    Lazard (2023).

  14. 14.

    Fleischman (2021).

  15. 15.

    Gaulier et al. (2019).

  16. 16.

    BNEF (2022).

  17. 17.

    WEO (World Economic Outlook Databases) (dashboard), International Monetary Fund, Washington, DC, https://www.imf.org/en/Publications/SPROLLS/world-economic-outlook-databases#sort=%40imfdate%20descending.

  18. 18.

    Piketty (2014, 2015).

  19. 19.

    Chancel et al. (2021).

  20. 20.

    World Bank (2022).

  21. 21.

    Stanovaya (2023).

  22. 22.

    Liu (2022).

  23. 23.

    Financial Times (2022).

  24. 24.

    Subramanian and Felman (2020).

  25. 25.

    Reid (2023).

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Correspondence to Ali Zafar .

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Zafar, A. (2023). Medium Term: Where Are Emerging Markets Headed?. In: Emerging Markets in a World of Chaos. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-29949-0_5

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  • DOI: https://doi.org/10.1007/978-3-031-29949-0_5

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  • Publisher Name: Palgrave Macmillan, Cham

  • Print ISBN: 978-3-031-29948-3

  • Online ISBN: 978-3-031-29949-0

  • eBook Packages: Economics and FinanceEconomics and Finance (R0)

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