According to Walter Hamilton of The Los Angeles Times, “A frontier market typically is rich in resources with a consumer class that is just now emerging and a core of promising companies whose efficiency is being sharpened by a fierce global marketplace.”
However, the risks are many, and sometimes the added risk may not be justified. Just take a look at the performance of the MSCI Frontier Markets Index compared to that of the MSCI Emerging Markets Index: 39% to 88% since February 2009.
But emerging market economies were once frontier market economies, so the allure remains.
For more stories on emerging markets, visit our emerging markets category.
Sumin Kim contributed to this article.