Rising oil and food prices are putting pressure on the developing countries to increase gasoline and food prices. This is putting an upward pressure on the inflation in these countries. Higher inflation alomst always bring higher interest rates. In a high interest environment, investors are likely to move their money to fixed income securities and cause an emerging market crash. We have already seen China raising interest rates for the last 12 months to cope with inflation. During that rise, Chinese stock market fell 50% from its peak. Also, other developing economies such as Brazil and Turkey recently started increasing the interest rates. Is it wise to invest in emerging market economies in the face of higher interest rates?