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Did the Fed sink the emerging markets?

Brazil's President Dilma Rousseff seems to have no doubt about it. According to media reports, she complained last week that "the withdrawal of the monetary stimulus in developed countries" was fueling "market volatility."

The Governor of Brazil's Central Bank Alexandre Tombini, of the "currency wars" fame, amplified that statement, saying that a lack of a "coordinated exit from exceptionally loose monetary policies" was done at the expense of emerging markets.

But he assured that Brazil had the means of resisting (i.e., defending its currency) the turmoil created by the developed countries because it had $376 billion worth of foreign reserves and currency swap agreements with other central banks.

(Read more: Emerging markets rout a reality check for Davos elite)

Well, I believe that the problem is a bit more complicated than that. Large capital outflows from some major emerging markets last Friday are just an acceleration of events that have been under way for quite some time.

Over the last twelve months, for example, the Argentine peso, Brazil's real and the Turkish lira lost 84 percent, 36 percent and 22 percent of their value against the dollar, respectively.

Sha Ying | CNBC

This is no Fed's bazooka

Similar cases are observed in a number of other developing economies. Indeed, warnings have been out for more than a year now that markets would sanction economic mismanagement and excessive trade and fiscal imbalances as the glut of global liquidity begins to recede.

So, there is nothing sudden, obscure and unexpected about this: Since the middle of last year, the Fed has led a lively debate with the markets about its intention to reduce monthly asset purchases as a prelude to rising short-term interest rates.

And that's where we are now. The Fed's balance sheet expansion in December was reduced to $33 billion from a monthly average of $95.2 billion in the previous three months. Partially available data for January indicate that the Fed's monetary base may have even shrunk this month by a considerable amount.

(Read more: It's getting ugly in emerging market currencies)

That is an unambiguous signal of the Fed's determination to withdraw the excessive monetary stimulus the economy may no longer need. But, in spite of the declining supply of high-powered money, the Fed is maintaining its pledge of keeping an easy credit stance for the foreseeable future.

The effective federal funds rate last Friday was still 0.07 percent – well below the policy target of 0.25 percent. And that leaves a long way to go to an approximately neutral policy stance of 2 percent.

It would be imprudent, however, for emerging markets or anybody else, to count on the Fed's infinite largesse.

America's clogged credit channels have been purged, banks have vigorously resumed their core business of lending to businesses and households, a broad-based pickup of aggregate demand has taken hold – and the Fed will re-calibrate its policy accordingly.

Growing competition for global savings

All that means that the U.S. is likely to keep attracting an increasing share of international capital flows.

Emerging markets should also note that the euro area will be another strong competitor for world savings. In fact, the smart money has been there for some time, but the euro area's early stages of recovery still offer great investment opportunities in bonds and equities.

At the moment, the monetary union is continuing its painful process of fiscal consolidation, and, unlike in the United States, credit channels are still not working properly because the banking system is accumulating government bonds to rebuild its capital base.

(Read more: Emerging market opportunity in long term: Blankfein)

The euro area banks are also expecting stringent asset quality reviews (i.e., "stress tests") in the coming months and are not eager to acquire risky credit claims on businesses and households.

That partly explains the slow pace of the euro area recovery. But the European Central Bank (ECB) continues to provide ample liquidity, exports are growing and, to an obvious delight of German austerity advocates, falling production costs are bringing back foreign direct investments and previously outsourced businesses to erstwhile Mediterranean deadbeats.

Spanish sporting goods company Priviet is now profitably producing at home and Spain's largest retailers have turned to their domestic suppliers for lower costs and shorter delivery times.

Structural reforms in many euro area countries are also offering flexible employment outlets to people whose welfare cuts are forcing them back into the labor market. No wonder the German Finance Minister Wolfgang Schäuble had a rare word of praise last week for the euro area's fiscal and structural adjustment.

Clearly, the developing countries will now be facing a tougher competition for global capital flows. They will have to show sound economic management and a stable political and regulatory framework to attract direct and portfolio investments.

(Read more: Could emerging markets pay the price if Abenomics fails?)

Asia, in particular, will have to step back from the brink of military confrontations and civil strife. Asia's political meddling and electioneering on the back of key issues of economic policy will also take their toll. It would, therefore, be preposterous to blame the Fed for the havoc the arms race and political unrest are playing with Asian economies.

Investment strategy implications

In fact, the Fed's drive to stabilize the U.S. economy and the strengthening euro area recovery will open up one-third of the world economy to exports from Asia and from the rest of the developing world.

China's efforts to get more growth from domestic demand will also help the world economy. We need a China that buys more, not a China that sells much more than it buys from the rest of the world. China growing on the back of its exports is a drag on the rest of the world, but China driven by the rising spending of its 300-million-strong middle class is a boon to the developing Asia and to world economy as a whole.

It is absurd to blame the emerging market rout on a one-month survey guess about China's manufacturing activity. China's growth rate of 7-7.5 percent on the basis of a non-inflationary domestic demand is much better for the rest of the world than a faster, export-driven growth with destabilizing inflation flare-ups.

Investors should not rush back into emerging markets. The current shakedown will continue for a while as markets try to absorb the full extent of global liquidity changes.

(Read more: Markets could be further whipped up ahead of the Fed)

Also note that any commitment to developing markets should focus on countries whose balance of payments will not require large and systematic external funding to close the savings-investment gap.

And a word for Brazil's central bank governor and his emerging market colleagues who might think like he does: Don't waste your country's hard-earned treasure to buy back the excess supply of your currency that you created. Don't throw cheap money at currency speculators; straighten out your economic policies instead. Your currency reserves of $376 billion are a proverbial drop in a bucket in a market whose daily turnover soars to $4-$5 trillion.

Michael Ivanovitch is president of MSI Global, a New York-based economic research company. He also served as a senior economist at the OECD in Paris, international economist at the Federal Reserve Bank of New York and taught economics at Columbia.

Follow the author on Twitter @msiglobal9

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