ABSTRACT
Th e advent of the 2007 subprime crisis in the United States that currently leads to a global economic recession may, however, set up a new deal for emerging markets and international investments. Indeed, when the U.S. housing markets started to ignite hedge funds failures and to damage the U.S. fi nancial and banking sectors, many specialists demonstrated that emerging markets will be scarcely aff ected for several reasons. First, almost emerging markets have a high growth rate and a strong trade and fi scal balances. Th ey accumulate, since the year of 2002, considerable current account surplus compared to the structural defi cit for the United States. A prime example is China with a surplus representing more than 9.4% of the GDP in 2006. Second, in line with the current account surplus, the actual foreign reserves of emerging markets have exceeded 3 trillion compared to only 1 trillion in 2000 and represent bout 72% of the world reserves. Th is position of strength should naturally allow emerging markets to reduce their fi nancial dependences on developed countries (i.e., one of the profound causes of the 1997 Asian fi nancial crisis), to improve the liquidity levels and to stabilize fi nancial markets. Finally, from a purely economic point of view, emerging market economies are being more independent of cyclical movements in the U.S. economy due to their eff orts in stimulating internal demands of manufactured products. As a result, they will not suff er from the U.S. recession, or at least not much. But recently, more economists and fi nanciers share the view that the economic slowdown in the United States would generate heavy infl uences on emerging countries as their expected economic growth declines sharply, and their stock markets experienced free falls in response to the fi nancial crisis shocks, albeit smaller than those of developed countries.
