With the exception of South Africa, the BRICS are audaciously dominating the global economy.
Standard Chartered Bank recently released a report highlighting their projections about the top 10 economies in the world by 2030. As expected, China and India stole the show. In fact, China is set to surpass the United States as the world’s largest economy by 2020; based on nominal GDP and purchasing power parity exchange rates (PPP). The next decade looks promising for Asian economies. By 2030, Asian GDP will account for 35% of global GDP, in comparison to 28% in 2017; and an equivalent to the combined output of the US and the Eurozone.
According to the UK-based multinational bank, seven out of 10 current emerging markets are predicted to be among the 10 biggest economies in the world by 2030. In light of this information, it is important to question the validity of the term emerging economies.
Source: Standard Chartered (estimates in trillions of international dollars by PPP measures)
Inception and Intention
The term emerging economies was conceived by Antoine Van Agtmael in 1981 and gained popularity in the mid-1990s. Since then, it has become a permanent fixture in the media and global policy debates. The World Bank defined the term as economies with “high economic potential and international engagement”. They also characterized them as economies that are experiencing rapid growth and transforming from a traditional agro-based economy to an industrialized one. The phrase “emerging” suggests that these economies are capable of growing into highly developed markets with a distinguishing impact globally.
Fake It Till You Make it
Emerging markets are usually classified based on the country’s individual characteristic rather than what it is not in comparison to others. Yet, despite its ambiguity, the expression has been a purposeful contributor to the process it intends to explain.
In the past, the phrase was particularly important for foreign investors because they believed that these economies were experiencing an upward trend in growth, and saw them as ideal investment opportunities which could yield positive returns in the future. This, in turn, motivated these emerging markets to present their countries as profitable investment destinations to gain reputation in the global economy and attract foreign capital. Unsurprisingly, this resulted in a self-fulfilling prophecy. These economies have greatly evolved and are key players in the global economy today; especially in their engagement through trade, investment and capital allocation.
Agtmael came up with the term with the intention of inducing progress in these countries and the label has proven to be effective in achieving that goal.
The West Versus the Rest
Now, while the expression has done some good, it also comes with some baggage. Being classified as an emerging economy signals that your country’s economy and standard of living are in line with the expectations of developed countries. This view is problematic because nations differ greatly in terms of their cultural, demographic and economic structure. So, it is redundant to imply that e.g. South Africa is still emerging because it does not meet the expectations of the so-called “First world countries”.
The perception of what development ought to be has been finely shaped by ethnocentric and westernized ideas which are now being imposed on developing countries. Economic development has been “a catch-up process” where the rest are constantly trying to attain the same level of growth as the West. Because of this misconception, one must ask, “Will these countries ever truly stop emerging?”.
“The emerging market term functions as a racial signifier, maintaining the hierarchical distinction between the ‘superior’ developed West and its ‘inferior’ Others”
All Good Things Must Come To An End
The term emerging economies is more of an aspirational catchphrase rather than a factual description of the economic and social conditions of these nations.
Although these classifications have been accepted worldwide, they have become overly simplistic and divisive. These acronyms are more about trends in lieu of economic fundamentals. For instance, in 2016, Russia and Brazil were experiencing an economic recession while Mexico and India were growing rapidly; therefore, it would be illogical to cluster these distinctive countries in the same bloc.
The world has progressed so much and emerging economies has become an obsolete and counterproductive expression used to classify countries merely for convenience. Perhaps, there is a need to formulate newer acronyms that accurately capture the dynamism of growth in these countries.
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