As an industry that’s very much interested in emerging markets, perhaps some in the insurance business might be interested in a recently published piece I read on the Knowledge@Wharton site today.
The piece, When Are Emerging Markets No Longer “Emerging”?, examines whether the phrase “emerging markets” has lost some of its meaning as the term is applied to more and more countries. It notes that the term was initially applied to fast growing Asian economies, then to Eastern European countries after the fall of the Berlin Wall. Soon, countries in Latin America and elsewhere were also being tagged “emerging markets.”
The result is that the term has lost some of its meaning, according to Mauro Guillen, a management professor at the University of Pennsylvania’s Wharton School. “While South Korea, Singapore and Taiwan share characteristics, once you put them in a bucket with India, Mexico, Argentina, Indonesia and Poland, it’s no longer meaningful,” he says in the Knowledge@Wharton article. “The term `emerging markets’ has become a victim of its own success.”
According to Wharton faculty, the piece notes, the most important element in defining an economy poised to “emerge” is the strength of its economic and political institutions like rule of law, regulatory controls and contract enforcement.
I found another reason in the Knowledge@Wharton posting to be judicious about using the term “emerging markets,” or at least to begin thinking about a more appropriate term for some “emerging markets’ countries down the road.
It’s in some of the thoughts the article includes from Antoine W. van Agtmael–credited with being the first to use the term “emerging markets” in 1981 while deputy director of the capital markets department at the World Bank’s International Finance Corp. Mr. van Agtmael notes that in the next 10 years there will be one billion more consumers in emerging markets, and that in 25 years the economies of those countries will surpass the combined economies of the developed countries.
I’ll point out here that we’ve had an annual Cover Focus report on emerging markets in Industry Focus the past couple of years, something we’ll be repeating this year with a look at Emerging Markets & Globalization in our June issue.