Emerging Markets, Industrialisation and Economic Development

An outstanding feature of the world financial economy during the last decade or so has been the establishment and the very fast expansion of stock markets in developing countries. Between 1982 and 1992 the total combined capitalisation of companies quoted on the emerging markets included in The Economist’s list rose from less than a hundred billion to nearly a trillion US dollars.2 The corresponding growth in the combined capitalisation of industrial countries’ markets was a little more than threefold — from three trillion to ten trillion US dollars. A number of leading individual emerging markets (for example, Mexico, Korea and Thailand) recorded over this period a more than twenty-fold increase in total market capitalisation of companies quoted on the stock exchanges. By the early 1990s the latter figure for many emerging markets, whether considered in absolute terms or as a proportion of GDP, was greater than that for the average medium-sized advanced country markets in Europe (for example Sweden, Denmark and Finland).