Page 38 - RMAI Bulletin July - September 2021

RMAI BULLETIN JULY TO SEPTEMBER 2021

Comparison of emerging economies • poor health (AIDS in some countries) or
poverty;
over other economies
• concept of the extended family (provides
Change is more likely to occur in emerging economies safety net);
and the changes that occur happen more quickly and
are more unpredictable. • education levels low.

3. Political- In only a few emerging economies has
Risk is greater in two ways. democracy been the norm for more than 10–15
Y Firstly, emerging economies are different from years
developed economies and this gives rise to new • stable but despotic/one party rule or regular
risks; change in government;
Y Secondly, risks which have a low probability of • democratic but not free elections;
occurring in developed countries, have a higher • multiparty governments with changing
likelihood of occurring in emerging economies.
factions;
• historical legacy – colonial past or former
The nature of emerging economies communist state;
Covers various physical, social, political and economic • potential for violent overthrow;
aspects that underlie the weaknesses and instabilities
that characterize their economies. • corruption;
• control of the press though this is being
1. Physical- Emerging economies exhibit a wide undermined by the Internet and satellite
range of physical attributes that in one way or television;
another tend to place some limitations on the • strong influence of the military;
growth opportunities of a country or make it • lack of legal framework or laws in place but
vulnerable to external influences. Some of these not enforced;
factors are: • contracts not always honoured;
• geography – large or small size, inaccessible
regions or barriers to travel, distance from • internal conflict/repression;
developed economies; • war or threat of war;
• dependency on weather patterns –rains, El • many regulations, together with a propensity
Nino to bring out new ones without consultation or
• vulnerability to natural disaster – floods, thinking them through.
earthquakes;
4. Economic- Sound economic performance requires
• poor infrastructure – transport, utilities, etc;
the country to have some competitive advantage
• reliance on a few agricultures and/or primary to start with, which is then effectively exploited.
commodities. • skewed income distribution;

• managed economy – subsidized prices;
2. Social- The social fabric of a country will support
or hinder its development. Some of the factors • dependence on primary exports and/or
• language – often there are many local tourism and/or aid flows for foreign exchange;
languages but a foreign language is needed to • net oil importers (few notable exceptions);
conduct international trade (English, Chinese, • protected home markets;
Spanish or French being the most common); • IMF/World Bank support required;
• tribal divisions; • large black economy;
• religion; • high unemployment or underemployment
• population growth; (but no or limited state support);
• skewed population distribution – large • poor quality/quantity of data – lack of
percentage less than 15 years of age; transparency;

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