Newly industrialized countries take a step up

The term emerging markets or emerging economies was coined by a World Bank economist and came into common use in the 1980s.

While there is no exact definition that would lead to a consensus of which countries are emerging, the term generally refers to countries that are not yet developed, but are in the process of doing so, with healthy economic growth and increasing per capita income.

Countries were first divided into categories when the World Bank and the International Monetary Fund were created after the Second World War and needed a way to refer to groups of countries along economic lines, said James Brander, Asia- Pacific professor of international business and public policy at the University of B. C.’ s Sauder School of Business.

The first attempt separated countries into developed economies and undeveloped or less developed economies.

Those terms were “sort of parallel to the terms First World and Third World,” with First World being wealthy western economies, and Third World being poor or less developed economies, he said.

The Second World referred to the Soviet Bloc — developed, but different in character.

“By the early ’ 70s, it became clear that that categorization wasn’t sufficient because within the less developed world you had two categories,” Brander said. “You had countries that were very poor and doing terribly, like [ in] Africa, and you had countries that had been poor that were really growing very rapidly: South Korea, Hong Kong, Singapore and others.”

So the term NIC was coined for newly industrialized countries.

In essence, NICs were countries that were moving from the Third World into the First.

But by the 1980s, even the term NIC was no longer accurate, partly because the newly industrialized countries were no longer so new, Brander said.

That’s when the term emerging economies came to refer to countries that were growing rapidly, but were still not as well off as the so- called developed economies.

The countries included in that categorization vary by organization.

“But when we talk about the emerging economies, we certainly mean China, which is by far the most important,” Brander said. “We certainly mean India, which is a very important economy, we certainly mean Indonesia, which is a fairly important economy, we certainly mean Brazil, which is a large and important economy.

“And we probably mean Russia and we probably mean Turkey and we probably mean some other smaller economies that have also been growing pretty fast.”

When will these countries move from emerging to developed? While there is no rule, the countries would likely have to meet the World Bank’s threshold for a highincome economy with a percapita income of $ 12,476 US or more.

China has the second largest economy in the world but its per capita income, at $ 8,430, is only in the mid- range, Brander said.

“So it will be a while yet before China moves out of the World Bank categorization [ of middle income].”