Liberalization of capital markets in emerging markets in the last two decades has made these countries' equity markets increasingly responsive to world factors. One of the implications of globalization for international asset allocation. is that global portfolio managers can no longer add significant value by pursuing indexing strategies in emerging markets. Empirical analysis shows there are no significant gains from an aggregate investment in emerging market equities, although portfolio managers can achieve enhanced performance by specialized investment in some markets, instead of indexing across all emerging markets. Aggregate diversification across all emerging markets is no longer enough to create value. Country selection strategies are imperative if a global portfolio manager wants to outperform benchmarks.