An IFC investment officer, Antoine van Agtmael, coined the term “emerging markets” in the late 1970s as a way of encouraging equity investors to think more seriously about the developing nations. New York Times word maven and author William Safire recounted the history in his book No Uncertain Terms:
First, they were undeveloped nations. That was a put-down, so they became LDNs—less developed nations. Still patronizing. Finally emerged emerging nations. Now they’re still undeveloped and nobody has emerged, but everybody’s happy … [In 1981], a Dutch banker named Antoine van Agtmael [then working for IFC] went to New York to launch what he wanted to call a third world investment fund. Back in bipolar 1952, the sociologist Alfred Sauvy coined tiers monde, “third world,” to describe nonaligned nations that wanted to position themselves between the Soviet and Western blocs. (Tiers was chosen rather than troiseme on the analogy of the French tiers etat, “third estate,” referring to the commoners.) In time, third world gained a connotation as much economic as political and was made up mostly of have-not nations.
“No one wants to put money into the third world investment fund,” the banker recounts he was told. “I knew we needed something positive, uplifting, not negative.” And by the time he came to work on Monday morning, he had the answer: emerging markets. In 1984, he wrote a book and titled it Emerging Markets Securities, which didn’t sell too well because it did not have an exhaustive subtitle, but did establish his claim to the coinage (which will stand until I get an earlier written citation).
Postscript: Agtmael eventually left IFC and went on to launch his own asset fund called, not surprisingly, Emerging Markets Management. Later this year, he will be publishing a book entitled, The Emerging Markets Century. (In IFC folklore, the original name for Antoine’s initiative is reputed to have been the “Third World Investment Trust,” and its acronym was TWIT [!]. In fact, it was the Third World Equity Fund, and a copy of his original presentation is available through Corporate Relations).
