As of 2009, the International Monetary Fund (IMF) had 192 member countries or territories. In each of these, as well as in several other countries or territories that are not members of the IMF, policy makers face the continuous need to make decisions about macroeconomic policies – decisions about fiscal policy, monetary policy, and exchange rate policy as well as about many other policies that affect the aggregate economy. The vast majority of the countries in which these decisions are made are developing countries – countries with incomes per person that are much lower than those in the advanced economies of North America, Western Europe, and East Asia. What this means is that most macroeconomic policy decisions around the world are actually made in the context of developing economies.

Though people may be the same everywhere, the economies in which they live are not. Among other things, economies differ with respect to their macroeconomic institutions, their production structures, and their economic links with the rest of the world. These factors, as well as many others that distinguish developing economies from advanced industrial economies, affect the way that economies work at the macroeconomic level. Moreover, developing countries themselves are far from homogeneous. Most important, a relatively small subgroup of such countries, typically at middle-income levels, has achieved emerging-market status – a term that is used to denote economies that have become closely linked financially with international capital markets.