Foreword
by Stijn Claessens and M. Ayhan Kose,
International Monetary Fund (IMF)1
While 2007 may be especially memorable, emerging
markets have already been going through some profound
structural changes over the past two decades. These
changes have transformed the nature of linkages
between industrial countries and emerging markets
and made many emerging markets more resilient to
cyclical fluctuations in industrial countries. What types
of structural changes have emerging markets been going
through during the past two decades? And what are the
implications of these changes for the recent debates
about decoupling? To address these questions, this
foreword first briefly reviews these structural changes.
It then analyses the potential effects of a US slowdown
for emerging markets in light of these changes as well as
lessons from previous slowdown episodes.
The year 2007 will probably be remembered as a landmark year
for emerging markets. As a group, these economies accounted
for more than two-thirds of global growth in 2007, and, for
the first time in modern history, China, the leading emerging
economy, contributed more to global growth than the US. The
volume of net private financial flows to these countries also
reached record-high levels. Related, 2007 witnessed an intensive
debate whether emerging markets could decouple from a
slowing US and sustain their robust growth. Such a debate was
unimaginable not long ago considering the history of frequent
financial crises in many of these countries.
foreword
FOREWORD | EUROMONEY HANDBOOKS
Stijn Claessens
M. Ayhan Kose
New engines of global growth
Mainly driven by emerging markets, the world has seen a
dramatic shift in the distribution of countries’ economic sizes
over the past two decades.2 During the period 1960–1985,
industrial economies on average constituted more than 70%
of world output while the share of emerging markets was
roughly 25%. However, during the past two decades, the
average share of emerging markets increased to