Cover; Title Page; Copyright Page; Contents; Foreword; Acknowledgements; Introduction; I.1 Upside down: perception vs reality; I.2 The structure of the book; 1 Globalisation and the Current Global Economy; 1.1 What is globalisation?; 1.2 Economic history and globalisation; 1.2.1 The desire to control and its impact on trade; 1.2.2 The influence of money; 1.2.3 Trade and commodification; 1.2.4 Nationalism; 1.3 Recent globalisation; 1.3.1 Bretton Woods; 1.3.2 Ideological shifts; 1.3.3 Participating in globalisation: living with volatility; 2 Defining Emerging Markets.
2.1 The great global rebalancing2.1.1 Financing sovereigns; 2.1.2 Catching up; 2.1.3 The poorest can also emerge: aid and debt; 2.1.4 From debt to transparency and legitimacy; 2.2 Investing in emerging markets; 2.3 Emerging market debt in the 20th century; 2.3.1 Types of external sovereign debt; 2.3.2 From Mexican crisis to Brady bonds; 2.3.3 Market discipline; 2.3.4 Eastern Europe; 2.3.5 Mexico in crisis again; 2.3.6 The Asian and Russian crises; 2.3.7 Emerging markets grow up; (a) The first change: country and contagion risks fall; (b) The second change: the investor base.
2.3.8 Testing robustness: Argentina defaults2.3.9 The end of the self-fulfilling prophecy; 2.4 The growth of local currency debt; 2.5 Why invest in emerging markets?; 3 The 2008 Credit Crunch and Aftermath; 3.1 Bank regulation failure; 3.1.1 Sub-prime; 3.2 The 2008 crisis; 3.3 Depression risk; 3.3.1 Reducing the debt; 3.3.2 Deleveraging is not an emerging market problem; 3.4 Global central bank imbalances; 4 Limitations of Economics and Finance Theory; 4.1 Theoretical thought and limitations; 4.2 Economics, a vehicle for the ruling ideology; 4.3 Macroeconomics.
4.4 Microeconomic foundations of macroeconomics4.4.1 Efficient market hypothesis; 4.4.2 Modern portfolio theory; 4.4.3 Investment under uncertainty; 4.5 Bounded decisions and behavioural finance; 5 What is Risk?; 5.1 Specific and systematic risk; 5.2 Looking backwards; 5.3 Uncertainty; 5.4 Risk and volatility; 5.5 Risk in emerging markets; 5.6 Rating agencies; 5.7 Capacity, willingness, trust; 5.7.1 Rich countries default by other means; 5.7.2 Two sets of risk in emerging markets; 5.8 Sovereign risk: a three-layer approach; 5.9 Prejudice, risk and markets.
5.9.1 When you have a hammer, everything looks like a nail6 Core/​Periphery Disease; 6.1 The core/​periphery paradigm; 6.1.1 Core breach?; 6.1.2 Another core/​periphery concept: decoupling; 6.1.3 And another: spreads; 6.2 Beyond core/​periphery; 6.2.1 Towards a relative theory of risk; 6.2.2 GDP weighting; 7 The Structure of Investment; 7.1 Misaligned incentives; 7.2 Confused incentives; 7.3 Evolutionary dynamics, institutional forms; 7.3.1 History matters; 7.4 Network theory; 7.5 Game theory; 7.6 Investor structure and liquidity; 7.7 Market segmentation; 7.7.1 Warning signals.
7.8 Investor base structure matters.

The world is upside down. The emerging market countries are more important than many investors realise. They have been catching up with the West over the past few decades. Greater market freedom has spread since the end of the Cold War, and with it institutional changes which have further assisted emerging economies in becoming more productive, flexible, and resilient. The Western financial crisis from 2008 has quickened the pace of the relative rise of emerging markets - their relative economic power, and with it political power, but also their financial power as savers, investors and creditors. Emerging Markets in an Upside Down World - Challenging Perceptions in Asset Allocation and Investment argues that finance theory has misunderstood risk and that this has led to poor investment decisions; and that emerging markets constitute a good example of why traditional finance theory is faulty. The book accurately describes the complex and changing global environment currently facing the investor and asset allocator. It raises many questions often bypassed because of the use of simplifying assumptions and models. The narrative builds towards a checklist of issues and questions for the asset allocator and investor and then to a discussion of a variety of regulatory and policy issues. Aimed at institutional and retail investors as well as economics, finance, business and international relations students, Emerging Markets in an Upside Down World covers many complex ideas, but is written to be accessible to the non-expert.