What Makes an Economy an “Emerging Market”?

By Iris Penhaligon · Published Sep 8, 2026 · 6 min read

In this guide

Common characteristics
Opportunities
Risks
Not one group
How classifications change

“Emerging market” is a broad label for economies that are industrialising and integrating into global markets, but are not yet classed as advanced.

There is no single official definition, and classifications differ between index providers and organisations.

Common characteristics

Faster economic growth than advanced economies
Rising middle classes and urbanisation
Developing financial markets and institutions
Greater exposure to commodity prices and capital flows

Opportunities

Growing consumer markets and young populations attract businesses and investors looking for growth.

Risks

Currency swings, political uncertainty, and sudden shifts in investment flows can create volatility. Changes in global interest rates often affect emerging markets strongly.

Not one group

Emerging markets vary enormously in size, structure, and stability. Treating them as a single group can be misleading.

How classifications change

Economies can be upgraded to developed status as incomes rise and markets become more accessible, which is why lists differ and change over time.

This is general educational information about economics, not financial, investment, or tax advice. Consult a qualified, licensed professional before making financial decisions.

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