After several months of market volatility, emerging markets were given a respite when the U.S. Federal Reserve decided to delay tapering its asset purchases, but some may be squandering the chance to address economic reform.
"An improvement in government finances would leave countries less vulnerable to future bouts of market turmoil. It would also give them more scope to counter future economic downturns," said Krystal Tan and Daniel Martin, economists at Capital Economics, in a note.
"Some of the governments that most need to rein in their deficits to help their economies withstand future bouts of market volatility are showing the least willingness to do so," they said, citing India and Thailand.
(Read more: Emerging market reprieve is only temporary: Pimco)
After the Fed first broached the possibility it would begin tapering its $85 billion-a-month asset-purchase program in May, emerging market stocks and currencies convulsed amid fund outflows. Countries with perceived imbalances, such as current account and fiscal deficits, including India, Indonesia and Thailand, were among the hardest hit.
Markets stabilized and many recovered solidly in September after the Fed decided to keep its asset purchases steady and economists pushed back their tapering expectations to 2014.
For example, Indonesian shares fell around 27 percent from their May peaks to their late August lows; in September, they climbed around 25 percent from those lows, but have since given back much of the recovery. The rupiah has lost around 24 percent of its value against the U.S. dollar this year.
(Read more: Will Fed crush emerging markets? The big debate)