The Fed's decision to start reducing interest rates in line with the recovery of the US economy has an effect not only on US markets but also on global markets . When U.S. interest rates were low, investors sought higher yields that they found in emerging markets. As the Fed began to cut spending, investors began to withdraw their money from these emerging markets and reinvest it in US markets, causing emerging market currencies to fall. (De Groote) Contagion is “the likelihood that significant economic changes in one country will spread to others.” (Contagion) Currently, emerging markets are in difficulty. According to Luis Alberto Moreno, president of the Inter-American Development Bank, “emerging markets, particularly in Latin America, are much better at managing economic crises than at managing prosperity.” (Naím) Since emerging markets did not manage their prosperity well when the United States was in recession and the Fed was using quantitative easing and low interest rates to help stimulate the economy, they are now suffering from the withdrawal of investors while the American economy is in difficulty. to recover. The United States is not the only country impacting emerging markets. When “the Chinese government attempted to calm a dangerously overcharged economy,” slowing growth led to fewer export revenues for emerging markets and lower demand for the raw materials consumed by the giant country. (Naím)According to Naím, “Stock markets in the United States, Europe and Japan have just recorded their worst results since January 2010 – a telling sign that the crisis in emerging markets has already hurt developed countries. » For now, experts say it is unlikely that the crisis in emerging markets will escalate into a full-blown paper crisis...... TURKEY." International Reserves and Foreign Currency Liquidity - TURKEY . Np , nd Web. February 16, 2014. 6. “An explanation of the Fed taper and its impact on the markets.” worry? 2014.9. “Turkey's current account”. Np, nd Web. February 17, 2014.12. Zumbrun, Joshua. "Plosser says taper delay undermined Fed's credibility." Bloomberg.com. Bloomberg, October 8, 2013. Web. February 17.. 2014.