Waves of change: Why reform is the ultimate weapon in EMs

Emerging markets are on the cusp of a fourth wave of reform, and this will matter more than any monetary or fiscal policy changes ever would, explains RBC's Richard Farrell.

  Transitions As economies transition from undeveloped to developed, the structural changes in the economy unleashes economic growth which, combined with higher levels of governance, should translate into attractive investment returns. Developed economies are characterised as having transparent and flexible markets for goods, services and labour, where prices are determined by supply and demand and where the rule of law means that contracts are enforceable at a reasonable cost. As EMs move closer to this economic model, overall per capita productivity will improve as capital and...