Developing Vs Established Markets - Deepstash

Developing Vs Established Markets

Developing countries and emerging markets are often more susceptible to be affected by a contagion, whereas large, established markets can weather them to a greater degree.

Periodic, global financial crises has been a staple of the economy for every decade since 1825, in one form or another.

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Contagion In Economics

Contagion, in financial terms, refers to the diffusion of economic booms, and can occur both domestically and globally. It is basically a spread of an economic crisis from one region to another, and spreads on an international level due to the global market interdependence.

The term contagion was coined during the 1997 Asian financial crisis, but it was occurring namelessly even during the Great Depression in the 1930s.

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A financial crisis

A financial crisis is often associated with a panic or a bank run where investors sell off assets or withdraw money from savings accounts.

  • Asset prices drop in value.
  • Consumers are unable to pay their debts.
  • Financial institutions experience liquidity shortages.

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Black Friday has two relevant meanings
  • In history, Black Friday was a stock market disaster that happened on September 24, 1869, when, after a period of uncontrolled speculation, the price of gold crashed, and the markets crashed.
  • The contemporary meaning refers to the day after the U.S. Thanksgiving holiday, which has been a holiday itself for many employees. It is known as a day full of shopping deals and heavy discounts and is considered the beginning of the holiday shopping season.

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Microeconomics: Comparative Advantage

The law of comparative advantage was first mentioned in 1817 by English economist David Ricardo.

A company has a comparative advantage when it is able to provide a good or service at a lower opportunity cost than others, helping it sell the same product at a lower cost, resulting in better margins.

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