CHAPTER 4

Coping With Emerging and Advanced Market Risks

Overview

For the past six years or so, advanced economies have been exposing international investors to a lot of risk, from the U.S. economy trembling over its fiscal cliff and the EU struggling to control the eurozone crisis, to Japan seemingly sunk into permanent stagnation. Hence, it would be easy to conclude that the biggest global risks, as of now, would come from these advanced economies.

Yet, that’s not what Eurasia, a political risk consultancy group, argues. In its predictions for 2013,1 the group puts emerging markets at the top of their risk rankings. That’s because, they argued, the advanced economies have proved in recent years that they can manage crises. Conversely, there ...

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