What is a defining characteristic of emerging markets?

A defining characteristic of emerging markets is their engagement in a catch-up process. This process refers to the economic trajectory where emerging markets seek to close the development gap with more advanced economies. They often have lower income levels, less developed infrastructure, and nascent financial markets, presenting opportunities for growth and investment as they undergo significant economic transformation.

Emerging markets typically experience rapid growth rates as they implement reforms, attract foreign investment, and industrialize. This catch-up is driven by factors such as demographic trends, urbanization, and adopting new technologies, all of which facilitate faster economic expansion compared to developed markets.

The other options do not accurately capture the essence of emerging markets. For instance, while some emerging markets might have acceptable levels of domestic savings, it is not a universal characteristic as many still face challenges in this area. Stability in political situations is often not a hallmark of emerging markets, as they might experience volatility and uncertainty. Advanced industrial capabilities are also not characteristic since emerging markets are usually in the process of developing and expanding their industrial sectors.