Once, the financial world looked simple. Rich countries had developed markets. Developing countries with reasonably sophisticated stock markets were christened 'emerging markets'. Those further behind became 'frontier markets'. This 3-rung ladder was never entirely satisfactory. Today, it is positively misleading.
The term 'emerging markets' was popularised by the International Finance Corporation in the 1980s. It proved a marketing triumph. Fund managers created emerging-market funds and indices like MSCI. Investment banks created emerging-market departments. Investors began treating dozens of radically different countries as one asset class.
