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The author is chairman of Rockefeller International. His new book is called “What went wrong with capitalism‘

In the 2000s, when a broad economic boom in emerging markets poured billions of dollars into their financial markets, author Fareed Zakaria described the historic moment as “the rise of the rest.” Now, a similarly encouraging development is unfolding in emerging markets, but few observers have taken notice, and even fewer foreign investors have responded to this momentous shift.

A major comeback is underway. After a sharp slowdown over the last decade, emerging markets are once again increasing their growth lead over the developed world, including the strongest country, the US, to a level not seen for 15 years. The share of emerging markets where GDP per capita is likely to grow faster than in the US is expected to rise from 48 percent over the past five years to 88 percent over the next five years. This share would correspond to the peak of the emerging market boom in the 2000s.

This burgeoning boom is different from the last in key ways. In the 2000s, emerging markets benefited from the rapid rise of China, a massive increase in commodity prices and the loose monetary policies of Western central banks. Many commentators assumed that “the rest” could continue its massive boom on the back of China’s rise, but were sorely disappointed. In 2012, I warned of an impending “doom of the rest” in the face of overhyped hype. Indeed, the next decade was a grim one for emerging markets – and a great one for the US.

But today, many emerging markets are in much better financial shape than the United States. As an overstimulated superpower that is basing its growth on record deficits, America is on an unsustainable path. Emerging markets have far smaller fiscal and current account deficits, giving them more opportunities to invest and fuel future growth. Even countries known for their financial profligacy in the past – from Turkey to Argentina – have returned to economic orthodoxy.

The fate of emerging markets no longer depends so much on the largest of them. The current recovery is being driven by countries other than China, whose difficulties (from a shrinking population to high debt) dwarf the strengths of its emerging global rivals. Beijing’s nationalist turn and its increasingly strained relationship with the West have scared off international investors, who are leaving China and setting up factories elsewhere.

Over the next decade, exports of green technologies and the raw materials they require, such as copper and lithium, are likely to be particularly strong, coming mainly from emerging markets. The AI ​​boom is already boosting exports from suppliers of AI chips (Korea and Taiwan) and electronics (Malaysia and the Philippines). Investment is increasing in many emerging markets, attracted by a number of strengths – India’s large domestic market, Malaysia’s fertile data center environment and Mexico’s proximity to the US.

When economic growth picks up, corporate profits tend to rise as well. Leaving China aside, profits in emerging markets are currently growing at an annual rate of 19 percent, while in the US they are only 10 percent. In the second quarter of this year, companies in emerging markets (excluding China) exceeded profit forecasts by a larger margin than their US competitors for the first time since 2009. Profit margins in emerging markets have been rising for 18 months, while in the US they have stagnated.

Global stock market investors, fascinated by America’s mega-tech companies, have yet to react. Activity has dried up almost entirely in most emerging markets, and trading volumes in many countries are near 20-year lows. The few emerging markets posting competitive gains include those such as India and Saudi Arabia, which have a strong and fast-growing base of domestic investors.

Yet there are signs of a turnaround coming. America’s growing reputation as the world’s most irresponsible financial empire – one that takes its reserve currency status for granted – threatens to undermine the dollar. In recent weeks, the U.S. currency has finally begun to break lower, which has historically led to stronger capital flows to emerging markets.

After a long stay in the shadow of the US, emerging markets are an increasingly attractive business. Although they are again experiencing faster earnings growth, they are trading at record lows compared to the US. For 15 years, the US delivered above-average earnings growth, driven primarily by the large technology companies, but here too the situation is changing. Earnings growth of the “magnificent seven” US technology companies is expected to fall by more than half in the coming year.

Of course, it never made sense to lump the emerging markets together in a faceless heap. The rise of the rest will mean a good decade for the emerging markets on average, but led by a select group of stars, each in their own way drawing strength from favorable trends in global trade, the dollar, economic reforms and new political leadership.

Remember that until recently, many commentators warned that emerging markets were vulnerable to a series of crises following the shock of the pandemic. Expectations remain so low and fears so high that emerging markets have disappeared from the radar of most global investors. But that is the nature of comebacks. They emerge from the darkness, and the deeper the shadows from which they emerge, the more dramatic the comeback – once it is recognized.