Michigan State University’s Center for International Business Education and Research (MSU-CIBER) in the Eli Broad College of Business has just released its annual emerging markets potential index (EMPI), available at http://globaledge.msu.edu/ibrd/marketpot.asp.

Emerging markets are some of the fastest growing economies in the world and represent countries that are experiencing a substantial economic transformation. Such economies are home to approximately 80 percent of the world’s population, according to study leader S. Tamer Cavusgil, The John W. Byington Endowed Chair in Global Marketing at the Broad School. “Their tremendous economic expansion has fueled much of the recent wave of globalization. They remain the primary destinations for not only exports but popular markets for direct investment and offshoring activity,” he says.

The 2007 update of the EMPI features China, Hong Kong and Singapore, respectively, in the top three spots. After finishing third last year, China displaced Hong Kong, which had been the most attractive emerging market for the previous three years. Singapore fell from second to third, and Taiwan, previously excluded from the study for lack of data, entered as the fourth most attractive market in its first year on the list.

While the East Asian economies occupy the top of the list, China has continued to register robust economic growth. “Its middle-class is growing rapidly, adding millions of consumers each year with spending capacity and a desire for an expanding portfolio of goods and services,” he says.

 “Also notable is the performance of Eastern European economies. The cluster of Hungary, Poland and Czech Republic received an extra boost from their recent accession to the European Union. These countries are also recipients of substantial foreign direct investment,” says Cavusgil.

Latin American countries in the EMPI all dropped in the rankings, with the exception of Argentina. “Contributing to their relative decline have been the lack of political stability and lackluster economic growth,” says Cavusgil. Mexico continues to be economically integrated with its NAFTA partners, and remains a major trading partner for both Canada and the United States, according to Cavusgil. However, other Latin American countries on the list are trading more with each other (and less with the United States), especially within the framework of the MERCOSUR free trade area. (MERCOSUR is a regional trade agreement between Brazil, Argentina, Uruguay, Venezuela, and Paraguay.)

This year’s list of emerging markets grew from 24 to 27 with the additions of Pakistan and Saudi Arabia, along with Taiwan. The index, which has been published annually by MSU-CIBER since 1995, uses a number of market growth indicators to determine the attractiveness of emerging markets. The factors include market size, market growth rate, market intensity, market consumption, commercial infrastructure, economic freedom, market receptivity, and country risk.

The on-line, interactive rankings allow users to rank emerging markets on any of those eight dimensions, allowing easy comparison of the data among the countries listed. Organizations interested in customizing the EMPI can contact Tomas Hult, Director of the MSU-CIBER at 517-353-4336 or hult@msu.edu.