Emerging economies are becoming increasingly integrated with the global financial system. China, India, Russia, Indonesia, Malaysia and Turkey as countries of the world economy in the weight gradually increasing presence of emerging countries, revealed the need for more involvement of the global asset allocation. Capital flows to these regions continue to be significant even if they are less than before the crisis. A large part of it seems to be concentrated in Asia.
Emerging markets have a significant contribution to global production in terms of the purchasing power parity. The most important factor behind their strong growth is that they benefit from the advantage of global trade. Again, the low-interest rates in the developed markets helped emerging economies to find funds at low cost. Trade and financial liberalization efforts of emerging economies have encouraged capital flows and hence investments. Besides, most rising economies have realized structural reforms and strengthened their political structures. Emerging economies have made efforts to increase their international reserves. The transition to the flexible exchange rate regime provides the transfer of the capital, fastly. The liberalization of trade brought with it the increased trade among the emerging economies. Terms of trade are in favour of emerging economies, contributing to growth rates.
All of this has led to emerging economies as economies contributing to the global system instead of troubled economies in the system. The problems that began in the global financial markets in 2007 have changed the position of emerging economies in the international arena. As developed countries were adversely affected by the global financial crisis, emerging markets could survive despite the economic turmoil. Moreover, some have played an important role in ensuring the stability of the global financial system.
However, the performance of emerging economies has begun to decline in recent years. Financial and external imbalances cause weaker growth rates in these countries. Nevertheless, emerging markets will continue to be the main player in the global economy, offering the best investment opportunities despite the slowdown in growth. Having better resources compared to many developed countries, young and dynamic workforce structure, stronger balance of payments provide advantage. However, it should not be overlooked that emerging economies have their own differences in per capita income, population, macroeconomic indicators. Some may have relatively lower rates. Strengthening the financial system and the rules of law will be the key to the development of these economies.