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What are Frontier Markets?

April 15, 2014

What are Frontier Markets?

At this point, virtually everyone has heard of the BRIC economies; Brazil, Russia, India, and China. Over the last 20 years or so, these economies have been the drivers of world economic growth. With China superseding all other BRIC members, the BRIC nations have elevated themselves from regional economic powers to global powerhouses. Growing populations, rising incomes, and burgeoning consumer classes have driven consumption internally and have grown markets for products from America, Europe, Japan, and many others. Improving education and infrastructure have sped up this development.

Recently, however, there have been cracks appearing in the facade of BRIC growth. Brazil is going through economic troubles, Russia is on the international stage for all the wrong reasons, India is in the midst of an enormously complicated election and economic overhaul, and China is dealing with issues related to slowing growth and increasing pollution. On top of these issues, labor costs in these former rock-bottom-cost locations has led to margin squeezes for firms operating there. Against this backdrop, investors are seeking increased yields, higher earnings, and greater opportunities for growth.

Enter frontier markets.

Often attributed with many of the same growth attributes once assigned to BRIC economies, these investment opportunities include the following:

Nigeria
Kuwait
Zimbabwe

Happy Reading!

http://www.investopedia.com/terms/f/frontier-market.asp
http://online.wsj.com/news/articles/SB10001424052702304680904579365283289255854
http://etfdb.com/type/region/frontier-markets/

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