The biggest winner of the rapid EMs growth is the developed world

The slowdown of the emerging markets has led to the question of if the developing countries are able to catch up with the developed world. The past dramatic and rapid economic growth of the EMs was mainly driven by the manufacturing boom due to their cheap labour forces. When the emerging markets are growing, the people's incomes in the EMs also increase. However, the biggest winner is the developed world. Firstly, the multinational firms benefit from the cheap labour costs and generate greater profits. Secondly, the people in the developed world, especially the middle and upper classes, work in the higher value adding positions, which means their jobs have much higher incomes than the jobs in the EMs. Thirdly, goods are produced at lower costs, priced lower. The prices of goods in the developed world decrease sharply; however, as these products are produced in the EMs, the prices are generally flat in the EMs. This causes the purchasing power of the people in the developed world increase much faster than the purchasing power of the people in the EMs. Therefore, maybe the rapid growth in the EMs benefit the people in the developing world, it has actually widened the wealth gap between the developing world and the developed world.