Background
Emerging market and developing economies (EMDEs) refer to the group of countries that are classified by the International Monetary Fund (IMF) as neither advanced economies nor low-income developing countries. These countries are often experiencing rapid growth and industrialization and are becoming increasingly integrated with the global economy.
Historical Context
The concept of EMDEs emerged in the late 20th century as global economic assessments started differentiating the varying levels of economic development of countries. The 2015 classification by the IMF included 152 countries categorized under this group, collectively contributing substantially to global GDP and holding a significant portion of the world’s population.
Definitions and Concepts
Emerging Market and Developing Economies: All countries in the International Monetary Fund classification that are not classified as advanced economies. As of 2015, 152 countries within this group generated 57.6 percent of world GDP while comprising 85.4 percent of the world population.
Major Analytical Frameworks
Classical Economics
Classical economics posits that market forces of supply and demand naturally align in a competitive market to ensure efficient resource utilization. Comparing emerging markets within this framework often focuses on how these economies handle comparative advantages and specialization.
Neoclassical Economics
Neoclassical economics extends classical views, emphasizing market equilibrium, consumer preferences, and production costs. Analysts may assess the efficiency of resource allocation in EMDEs and the development of financial markets from a neoclassical perspective.
Keynesian Economics
Keynesianism encourages actively managing economic cycles through government intervention. For EMDEs, the focus can be preferences towards fiscal and monetary policies to stabilize growth, control inflation, and reduce unemployment.
Marxian Economics
A Marxian approach studies emerging and developing economies in the context of class struggles, power dynamics, and the impact of global capitalism on domestic economies. It often critiques the exploitation and socio-economic inequalities within these states.
Institutional Economics
This framework assesses the role of institutions—such as legal frameworks, political stability, and governance—on economic performance. It examines how regulatory environments, property rights, and institutional reforms drive development in EMDEs.
Behavioral Economics
Behavioral economics in EMDEs looks at how cognitive biases, cultural differences, and limited financial literacy impact economic decisions and market outcomes.
Post-Keynesian Economics
Post-Keynesian advocates focus on the nuances of market imperfections and structural issues unique to EMDEs. Structuralist viewpoints emphasize the history, dynamics, and persistent inequalities in these economies.
Austrian Economics
Austrian economics highlights the critical roles of entrepreneurship, individual choice, and market coordination. For EMDEs, this perspective examines how liberal economic policies could stimulate innovation and economic progress.
Development Economics
Development economics specifically addresses the challenges and strategies related to economic development in EMDEs. This covers infrastructure development, education, healthcare, and efforts to uplift living standards.
Monetarism
Monetarists emphasize the importance of stable monetary policy for economic growth. They analyze how controlling money supply and inflation can support stable economic environments in EMDEs.
Comparative Analysis
Comparative analysis between EMDEs and advanced economies often explores varying levels of income disparity, investment patterns, political stability, and developmental policies contributing to economic growth differences.
Case Studies
- China’s Economic Reform: Examination of China’s transition from a centrally planned economy to a market-oriented one.
- India’s Liberalization: Study of the 1991 economic reforms and their impacts.
- Brazil’s Industrialization: Evaluation of policy initiatives stimulating industrial growth.
Suggested Books for Further Studies
- “The Bottom Billion” by Paul Collier
- “Development as Freedom” by Amartya Sen
- “The End of Poverty” by Jeffrey Sachs
Related Terms with Definitions
- Advanced Economies: Economies classified as highly developed with high per capita income, comprehensive industrial sectors, and advanced technology.
- Gross Domestic Product (GDP): A measure of the market value of all finished goods and services produced within a country during a specified period.
- Industrialization: The process by which an economy transforms from primarily agricultural to one based on the manufacturing of goods and services.
This dictionary entry offers a structured and comprehensive overview of the term “Emerging Market and Developing Economies,” capturing its essential definitions, contexts, and relevant analytical viewpoints.
