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The Financial Times reports that the term emerging markets was originally coined in 1981 by World Bank economist Antoine Van Agtmael. Despite its quarter-century use in the economic lexicon, there is still no universal definition.

Economists and financial data providers classify about 25 countries as developed markets because they exhibit qualities of high per capita incomes, efficient and effective financial institutions, open capital markets and unrestricted capital flows. All other countries are developing markets, which include the subsets of frontier markets and emerging markets.

Emerging markets are low-to-middle income per capita markets showing promise of becoming developed. The term was for years synonymous with the Asian Tiger economies (see Foreword Issue 23) until Goldman Sachs coined the term BRICs (Brazil, Russia, India and China), to which South Africa belatedly claimed membership as the ‘S’.

Given its dominance of global indices, Morgan Stanley Capital International (MSCI) is now the de facto arbiter of emerging market classification. The MSCI Emerging Markets index comprises 24 countries, including Asian Tigers Korea and Taiwan and all five BRICS.


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