The financial industry loves acronyms, especially long ones. Hence, the EAGLEs, or Emerging and Growth-Leading Economies, a group of underpublicized nations that have economies predicted to grow like none other in the next few years. If you're tired of the certainty that investing in the traditional first-world economies affords, or if you fear the incipient hyperinflation and default that those economies seem to be habitually flirting with, the EAGLEs might provide a way for you to diversify and still enjoy suitable returns.

SEE: Explaining The World Through Macroeconomic Analysis

What Is an EAGLE?
he name was coined in 2010 by Banco Bilbao Vizcaya Argentaria (BBVA), the Spanish banking giant that dominates the industry in Latin America and has a minor presence throughout the United States and much of the rest of the world. Unlike other recent groupings of nations with burgeoning economies that were bundled together, discussed as a unit, and given the name of an animal for easy reference (Asian Tigers, PIIGs, even CIVETs), the EAGLEs' membership constantly changes.

BBVA defined the EAGLEs in 2010 via the following method:

1. Take the G7 countries. (That's Canada, France, Germany, U.S., the United Kingdom, Italy and Japan.)

Remove the U.S.

Determine which of the remaining non-G7 "emerging markets" economies will contribute more to the world's output over the next decade than the average of the above six, to the extent that anyone knows what the world's going to look like in 2020.

Further Explanation
Slightly confused by this? Of course you are. Here's an example:
In 2011, Russia's gross domestic product (GDP) was roughly $2.3 trillion. BBVA estimates that it'll be around $3 trillion in 2020. The $700 billion difference is what we're interested in here.

Comparable numbers for the other EAGLEs range from approximately $1.5 trillion (Turkey) up to nearly $25 trillion (China) by 2021. It's important to remember that these numbers are nothing but projections, and that they don't count for the interim years of growth, but they do give us a starting point.

By that definition, as of March 2012, the EAGLEs' lineup consists of China, India, Brazil, Indonesia, South Korea, Russia, Mexico, Turkey and Taiwan. A tenth EAGLE, Egypt, dropped off the list after the Hosni Mubarak regime was overthrown. Investors prefer a sure thing over an unknown commodity, even if that "sure thing" is a military dictator of 30 years.

No one's saying that the aforementioned countries are going to be the primary world players over the next decade, or even close. The U.S. will have (again, according to BBVA) about a $18.7 trillion economy in 2021. India, despite a population quadruple the United States', projects to have a roughly $9.1 trillion economy by 2021. To be an EAGLE, you need both an economy of fair size and the potential for lots of growth. The American economy is obviously the envy of India and will be until long into the future, but the U.S. economy can't grow as fast as India's can, and presumably, will.

What's the Point?
OK, so we know what the EAGLEs are. What's the point? BBVA says opportunities will abound among the featured countries' middle classes, notwithstanding that you could say about almost any countries' middle classes. To paraphrase page 29 of the bank's PowerPoint presentation that originally added EAGLEs to the vernacular, these growing middle classes will need financial services, durable goods, education, health and insurance. They'll buy more cars, extrapolating over what's happened since 2005. Each EAGLE will draw more tourists.

SEE: Introduction To Insurance

A couple of qualifications: Iran could be on the list, but the EAGLEs' "selection committee" discounted it for its political instability. The remaining EAGLEs have somewhat stable governments, as far as these things go.

EAGLEs are a concept of BBVA's own derivation, and it's presumably up to the rest of us to popularize it and let it find its way into everyday conversation. As for tangible acts, you can take to profit from having these particular nations placed under one umbrella, the recommendations remain exceedingly vague. The forecasts call for "boost of private consumption" and "change in consumption patterns," for instance.

The Bottom Line
Really, the EAGLE designation serves only to let you know that at least one multinational financial services firm thinks that these particular countries are worth investing in - again, with the same caveats you'd always consider when putting your money somewhere unfamiliar (or even somewhere familiar). Say you're looking for an exotic and distant locale in which to invest. The thinking goes that you should stay away from nations with small economies (Liberia, East Timor), nations with little expectation of fast growth (Suriname, Portugal), and nations that fulfill both characteristics (Nauru, São Tomé and Príncipe). By investing in the EAGLEs instead, you'd help contribute to (what are supposed to be) the agents of change over the next eight years.

Related Articles
  1. Mutual Funds & ETFs

    Top 4 Asia-Pacific ETFs

    Learn about four of the best-performing exchange-traded funds, or ETFs, that offer investors exposure to the Asia-Pacific region.
  2. Investing

    Emerging Markets Wary of Fed Interest Rate Hike

    With emerging markets suffering from the economic downturn in China and lower commodities prices, a Fed interest rate hike could be even more devastating.
  3. Economics

    These Will Be the World's Top Economies in 2020

    Discover the current economic forces that are anticipated to significantly shift the landscape of the world's most powerful economies over the next decade.
  4. Mutual Funds & ETFs

    Top 3 Japanese Bond ETFs

    Learn about the top three exchange-traded funds (ETFs) that invest in sovereign and corporate bonds issued by developed countries, including Japan.
  5. Stock Analysis

    The 5 Biggest Russian Oil Companies

    Discover the top Russian oil companies by production volume and find out more about their domestic and international business operations.
  6. Forex Fundamentals

    Buying Yuans as a Long-Term Investment: Risks and Rewards

    Examine the current state of the Chinese currency, the renminbi/yuan, and learn whether it is considered a good long-term investment.
  7. Investing Basics

    6 Investing Mistakes That the Ultra Wealthy Don't Make

    Understand what ultra-high-net-worth individuals are and how they invest. Learn about the six key investment mistakes that the ultra wealthy avoid.
  8. Stock Analysis

    Who Are Delta Airlines’ Main Competitors?

    Compare the top competitors of Delta Air Lines, Inc. Take a deeper look into the key drivers of competition in the airline industry.
  9. Mutual Funds & ETFs

    Top 5 Emerging Market ETFs

    Find out which emerging markets ETFs have enough of an asset base, trading volume and low fees to be considered top choices in the segment.
  10. Investing

    Impact Investing Funds: What are the Risks?

    Impact investing funds can carry risks unique to this asset class, including political risk, currency risk and exit risk.
  1. Is Mexico an emerging market economy?

    Mexico meets all the criteria of an emerging market economy. The country's gross domestic product, or GDP, per capita beats ... Read Full Answer >>
  2. Why should an investor include an allocation to the telecommunications sector in ...

    An investor should include an allocation to the telecommunications sector in his portfolio, because telecom offers an investor ... Read Full Answer >>
  3. What portion of the telecommunications sector will benefit most from continued growth ...

    The portion of the telecommunications sector that is projected to benefit most from the continued growth in the use of cellphones ... Read Full Answer >>
  4. What is the difference between a greenfield investment and a regular investment?

    A greenfield investment is a particular type of investment where an international company begins a new operation in a foreign ... Read Full Answer >>
  5. How strong are the barriers to entry for new companies in the telecommunications ...

    The barriers to entry for new companies in the telecommunications sector are very strong and primarily revolve around the ... Read Full Answer >>
  6. What are the benefits for a company investing in a greenfield investment?

    Advantages of greenfield investments include increased control, the ability to form marketing partnerships and the avoidance ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  2. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  3. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  4. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  5. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  6. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!