Encouraging trends in emerging markets belie their volatility since the taper tantrum of 2013, when the Federal Reserve signaled it was pulling back on quantitative easing. Between 2010 and 2018, low exchange-rate volatility and high interest-rate differentials caused non-bank financial institutions in emerging markets to double their U.S. dollar-denominated debt to $3.7 trillion. Three-quarters of the world’s smartphones, mostly made in emerging markets, use Google’s Android mobile operating system. Higher-income developing countries face technology transfer restrictions that affect improvements in productivity.Meanwhile, automation decreases the advantages of low-skilled, cheap labor and offshoring. Rising nationalism and protectionism are likely outcomes, and will only deepen the wedge between advanced and emerging economies.

Source: Economic Times January 26, 2020 05:48 UTC