What is an Emerging Market? The Role of the BRIC Countries
- The purpose of this paper is twofold: first, to identify what constitutes an emerging market, and second, to determine whether Brazil, Russia, India, and China, commonly called the BRICs, can be rightfully classified as emerging markets. In this respect, major multilateral institutions’ country classification systems are analysed to ascertain what indicators are used to categorise countries according to their development stage and economic maturity. The paper finds that these systems lack comprehensive criteria necessary to make accurate decisions, thereby leading to somewhat arbitrary country classifications. Hence, an alternative approach which incorporates economic, political, social, and infrastructural indicators considered relevant in measuring the diverse characteristics of emerging markets is developed. This approach is applied to comparatively analyse the BRICs and qualitatively assess their degree of conformance to the criteria of emerging markets. The results reveal that Brazil, China, and India largely comply with the established criteria; Russia, however, hardly fits into the emerging market category. Moreover, the level of development varies significantly across the BRICs: whereas Brazil and Russia certainly represent the more mature BRICs, China and particularly India still have to substantially improve in order to catch up with the advanced economies. Such results have important implications for multilateral institutions and relief agencies as they provide financial and technical support to countries in need. Eventually, a comprehensive classification system that accurately categorises countries based on their distinct development stages is indispensable in order to allocate the limited resources of such organisations in the most effective way.