Question

Difference between developing, emerging and developed economies

Answer 1

Defining emerging markets and frontier markets gets a little trickier. An emerging market is, in short, a country in the process of rapid growth and development with lower per capita incomes and less mature capital markets than developed countries. It includes the famed BRICs, Brazil, Russia, India, and China; and even the PIIGS (Portugal, Ireland, Italy, Greece, Spain - also known by the more politically correct moniker GIPSI).

A frontier market is a subset of the emerging market category. In other words, frontier markets are emerging markets, but not all emerging markets are frontier markets. Specifically, a frontier market is one with little market liquidity , marginally developed capital markets, and lower per capita incomes vis à vis the more developed emerging markets like Brazil and China. However, because frontier markets have yet to undergo much meaningful economic development, the potential for rapid growth and outsized returns make these markets interesting to high-risk investors.