1. DIFFERENTIATING
EMERGING MARKETS
FROM FRONTIER
MARKETS
Brian Lippey

2. Introduction
 A seasoned executive, Brian Lippey has over two decades’
experience in global capital markets. Currently the founder
and chief executive of Caledonia Partners, Brian Lippey has
previously served as president of The Rohatyn Group, an
asset management firm focused on emerging markets.
Profitable investments in global markets can be made in both
the emerging and frontier markets. But before investment
options are evaluated, it is particularly prudent to differentiate
the two markets.
Emerging markets refer to markets in countries that are less
developed than the North American and Western European
markets. In the 1970s, these were the countries referred to as
“less economically developed countries” (LEDCs).

3. Emerging Markets
 Today these emerging markets include China, Brazil, India, and
South Africa. Thanks to the economic development boom of the 80s
and 90s, these markets have grown substantially.
Frontier markets on the other hand, have no universally acclaimed
definition. They consist of countries that are far less developed as
compared to emerging markets. Frontier markets comprise of
markets in countries at the early stages of economic development,
and many do not have established stock exchanges. These markets
have the least number of investors, are less regulated, and carry
heavy political and currency risks. These countries include
Pakistan, Myanmar, Tunisia, and Kenya.
As the emerging markets catch up economically to the developed
world, frontier markets are slowly gaining acknowledgement as the
next frontier for an economic development boom. However,
because they are riskier than emerging markets, entry through an
established mutual fund and a strategic diversification approach are
good investment practices in these markets.