Stretched budgets and sluggish growth are putting emerging market governments on a collision course with rising pressures from recently empowered middle classes for more spending and better services.
From Jakarta to Brasilia, policymakers face the end to an era of abundant global liquidity that helped fuel the fastest expansion in three decades.
In the eight weeks to Wednesday last week, investors pulled US$40.3 billion from emerging market bond and equity funds amid signs the United States Federal Reserve may begin reducing stimulus later this year.
Last year, US$111 billion poured into these asset classes, according to EPFR Global, which tracks money flows. The Fed's plans did not trigger the slump - after a decade of prosperity, the economies of Brazil, Russia, India and China (BRIC) have been slowing since 2010.
Developing countries were punished more during downturns than their European counterparts, because they depended on growth to mitigate social tensions, said Angel Gurria, the secretary-general of the Organisation for Economic Co-operation and Development.
"The needs are much more elementary and brutal," Gurria, a former Mexican finance secretary, said last week.
Families lived with "vermin because they don't have cement on the floor, and when there's a big wind it blows off the roof. This isn't the problem the middle class in the Netherlands face."
Nomura International, citing the "surprise" outbreak recently of protests in Brazil and Turkey, said 11 other countries - including China, India and Russia, as well as commodity exporters Argentina and Venezuela - faced the risk of market-moving civil unrest in the short to medium term.
Frustration with corruption by a middle class that swelled during the past decade is partly fuelling the angst, according to its June 27 report.
"If you lift your people out of extreme poverty, it's not like they're going to say, 'Great, now we're all set, we don't want anything else,'" Jim Yong Kim, the president of the World Bank, said in June. "This is not going to go away. This is the most natural thing in the world."
Investors could ride out the volatility by betting on governments that resisted populist pressures for more spending and instead shore up long-term financial stability, said Ruchir Sharma, a fund manager at Morgan Stanley Investment Management.
Sharma said his group was underweight China, Brazil and Russia and overweight Mexico and the Philippines.
Mexico is benefiting from a stronger US economy, and first-year president Enrique Pena Nieto is trying to open up the state-run oil industry. The Philippines is forecast to grow 6.2 per cent this year, according to a survey of economists.
"The sell-off has been indiscriminate, but once the dust settles, the attention will turn back," Sharma said.
Officials still have the ability to defuse social tensions, having strengthened their finances since the last spate of emerging market crises toppled governments from Indonesia to Argentina starting in the late 1990s, said Alastair Newton, the London-based Nomura political analyst who wrote the bank's report.
Only now, they will need to balance the mood in the streets with the discipline demanded by markets in the context of slowing expansions and tighter budgets.
Finance Minister Lou Jiwei has signalled China's economy may expand less than the government's target of 7.5 per cent.