So far this year, emerging economies have performed quite well compared to developed economies that are trying to get out of their holes, writes Gary Gordon for ETF Expert.
Emerging economies are still very much tied to those of developed countries and the stabilizing effect of the financial systems will have developed countries looking to consume.
The success of businesses in emerging markets is tied to inexpensive labor, easy access to capital, good cash flow, potential for growth and sustainability in rougher times. More notable emerging markets, like China and Brazil, have domestic revenue surpluses, trade surpluses and they provide cheap labor.
As long as developed countries still use emerging market commodities and labor, emerging markets may continue growing at its impressive rates.
Disclosure I am long EEM,VWO and ADRE.
Emerging markets are doing the things that developed countries were doing thirty years ago.
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