9th ESCB Workshop on emerging markets Joint workshop of the European Central Bank and the Deutsche Bundesbank

Emerging markets are becoming increasingly important in the global economy. In 2009, they accounted for 47% of world output in PPP terms and for almost 70% of global growth. Such important changes in the world economic order have prompted questions whether emerging markets have managed to decouple from fluctuations in advanced economies and how the linkages between advanced and emerging market economies have changed. Structural, financial and trade reform measures in emerging economies have been discussed in the past and progress in this regard may have important consequences not only for emerging market growth but also the interaction with other countries and global growth. Furthermore questions regarding competitiveness of emerging economies in a global environment have been raised.

The aftermath of the crisis has stimulated further the interest in the development of emerging economies, on account of their much stronger growth performance than that of advanced economies. It has to some extent also changed the focus of the debate as low interest rates in advanced economies and problems in their financial systems can have important consequences for the real and financial development in emerging countries. Structural and cyclical pull and push factors have resulted into a strong wave of private capital flows towards emerging market economies. While capital inflows may be beneficial for the host countries, it may also complicate the domestic macroeconomic policy setting and increase financial stability risks.