According to the article, a major reason for the growth of developing countries is the the rise of China as an economic super power and the Federal Reserve stimulating the economy. However with China's economy faltering a little bit and and the Fed has caused a widespread ripple effect resulting in investors fleeing even far off places like Buenos Aires and Istanbul with the most affected being the countries that predominantly depended on China for raw materials and are experiencing political instability.
The Fed's decision about not supporting the bond buying stimulus programs that were keeping interest rates low. So the countries that were depending on these low interest rates might possibly see an increase in the price of borrowing and cause further damage to their economies.
http://dealbook.nytimes.com/2014/01/24/a-worldwide-market-slump-gains-traction/?_php=true&_type=blogs&ref=economy&_r=0
1 comment:
This is an interesting article. I believe that these economic shifts in China are just proof that they could not maintain such impressive expansions and these expansions would soon falter. It interesting to me how this shocks people. Did the world really believe that China's economy would continue to grow forever?
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