uploads/// Global middle class

Rethink Your Emerging Market Story

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Dec. 6 2016, Updated 3:05 p.m. ET

Encompasses broader factors

In the previous articles of this series, we discussed population and economic growth as the two major drivers leading to a rise in emerging markets (EMQQ). However, the story is not limited to these two factors. It encompasses broader aspects, like:

  • the emergence of a new middle class with a unique behavior
  • technology and innovations
  • consumption themes
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Demand drivers

Over the last five decades, consumers in developed markets have been major demand drivers, boosting global growth. However, in view of the current headwinds, they will likely not continue to push global growth to a higher trajectory. On the other hand, with the substantial growth in a number of consumers, emerging markets (EEM) (VWO) are witnessing a range of conditions likely to drive global growth.

Educated workforce

The young generation in emerging markets (IEMG) (SCHE) is climbing the social ladder at a much quicker pace, creating new growth opportunities. Moreover, this generation is highly educated and techno-savvy, with an urge for innovation. It’s one of the brightest and most skillful generations of recent history. According to the UNESCO Institute for Statistics, population aged 25–34 with university degrees in South Korea rose from 36.9% of the total population in 2000 to 67.1% in 2013.

A younger, more educated workforce tends to bring in new thinking and business innovation. It’s likely better at leveraging technology, which would help boost productivity and economic growth. On the other hand, it’s also likely a great source of demand for many products. Against this background, the young generation will almost certainly play a major role in emerging markets’ growth.

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