8: The Myth of “Emerging Markets”

The term "emerging markets" sounds optimistic. It implies momentum, growth, and eventual arrival. It suggests that a group of countries are in transition, not yet recognised as mature economies but moving steadily toward that classification. The optimism is part of its power. But embedded within the label is a hierarchy that deserves direct examination: emerging relative to what, toward whose standard, and on whose timeline?

The classification originated in financial circles in the early 1980s, when Antoine van Agtmael at the International Finance Corporation coined the term as a deliberate replacement for "Third World," which had become too politically loaded to use comfortably in investment prospectuses. The rebranding was intentional and effective. It reframed economies that had previously been associated with poverty and instability as investment opportunities in transition, signals of risk alongside growth potential. For investors, the category was useful. It created a distinct asset class with its own risk-return profile, its own capital allocation logic, and its own set of analytical frameworks. But over time the label became something more than an investment category. It became narrative positioning, and narrative positioning has consequences that extend far beyond portfolio construction.

When a country is persistently described as "emerging," it is positioned as not yet established, defined by transition rather than by present capability. Nigeria has the largest economy in Africa by nominal GDP and one of the largest film industries in the world by volume of output. It has a technology sector that has produced billion-dollar companies and a diaspora that remits more capital annually than the country receives in foreign direct investment. It has been classified as an emerging market for four decades. The classification has not updated to reflect four decades of economic complexity, technological development, and institutional evolution, because the classification was never designed to update. It was designed to position, and the position it encodes is one of perpetual arrival rather than achieved capability. Even after sustained growth, innovation, and institutional reform, the term continues to frame a country as approaching a destination it is never quite permitted to reach.

The category stabilises asymmetry in global capital markets in ways that are directly measurable. Risk premiums for emerging market sovereign bonds are systematically higher than for equivalent debt issued by developed economies, not only because of current fiscal conditions but because the category itself encodes a risk assumption that is applied before any country-specific analysis begins. Volatility assumptions are baked into portfolio allocations. Investment flows fluctuate rapidly in response to shocks in developed economies, with capital exiting emerging markets first during periods of global financial stress, reinforcing exactly the currency instability and fiscal pressure that the classification cites as evidence of risk. The label produces the conditions it describes, and then cites those conditions as justification for the label. This is not conspiracy. It is how embedded narrative categories function when they become structural features of financial architecture rather than provisional analytical tools.

Credit rating agencies, asset managers, and international financial institutions use the category to segment analysis in ways that compress enormous structural diversity into a single perception field. South Korea and Mozambique have both carried emerging market classifications at various points in their economic histories. The compression of that diversity into a shared analytical category obscures more than it reveals, but it serves the function of simplifying complex allocation decisions, and simplification that serves institutional convenience tends to persist regardless of its analytical accuracy.

Beyond finance, the term shapes diplomacy and development discourse in subtler but equally consequential ways. Trade negotiations, climate discussions, and multilateral engagements frequently treat emerging markets as a bloc collectively progressing toward models defined elsewhere. This framing positions the timeline of development as externally anchored, as though there is a known destination that some economies have reached and others are approaching, rather than an open question about what different societies are choosing to become. The G20's treatment of emerging market economies as a distinct category within multilateral governance structures, positioned structurally between developed economies and least developed countries, institutionalises this hierarchy in ways that affect everything from voting weight to agenda-setting authority in the negotiations that determine global economic rules.

The deeper issue is not whether growth is occurring. Many African economies have experienced sustained expansion, technological innovation, and remarkable demographic dynamism across the period during which they have carried the emerging market classification. The issue is whether the narrative of emergence ever permits arrival, or whether the category functions as a permanent holding room, a place from which economies are always approaching but never reaching parity in narrative terms. If a country is always emerging, it is perpetually evaluated against a benchmark it did not design, on a timeline it did not set, toward a destination whose definition remains in the hands of the economies that have already declared themselves arrived.

The term also shapes domestic imagination in ways that are harder to measure but no less consequential. Entrepreneurs pitch ventures as serving emerging market needs rather than as building world-class infrastructure for sophisticated consumers. Policymakers describe reforms as steps toward emerging market status rather than as expressions of a distinctly articulated vision of what their economy is building toward. Media celebrate economic progress in language that reinforces transition rather than authorship. The story becomes internal, absorbed into how societies narrate their own development to themselves, and once it is internal it is far more difficult to examine and replace than when it was visibly external.

This is not an argument for abandoning the category reflexively. It retains analytical utility in specific financial contexts where the risk-return characteristics of a particular asset class need to be communicated efficiently. The argument is more precise than that. Narrative engineering requires asking whether language that was designed for one purpose, efficient capital allocation, has been allowed to do work for which it was never designed and for which it is actively unsuitable: defining the economic identity and developmental trajectory of societies whose complexity it cannot hold.

When classification becomes identity, it constrains possibility. If a continent continues to be positioned as perpetually emerging, its economic story remains tethered to catching up rather than to defining what it means to have arrived on its own terms. Its innovation is framed as convergence toward an existing model rather than as the construction of a new one. Its volatility is foregrounded more consistently than its structural resilience, its demographic advantage, or its resource position. The narrative foregrounds what the category predicts rather than what the economy is actually doing.

Narrative sovereignty demands more than growth statistics that exceed the benchmarks set by the classification. It requires the interrogation of the labels through which growth is understood and the willingness to replace those labels when they have outlived their analytical usefulness and begun to function as constraints on imagination rather than descriptions of reality.

The question is not whether markets are developing. The question is whether they will continue to be narrated as perpetually emerging, or whether they will begin to author new classifications that reflect their own economic architecture, their own definitions of sophistication, and their own timelines of arrival. Emergence is a phase. It should not become a permanent identity. And the decision about whether it does is, at its core, a narrative decision, which means it is exactly the kind of decision this room exists to examine.