One of the troubling surprises for many investors during last year’s economic crisis was the “recoupling” of the developed world and emerging markets. Rather than offering a safe haven, emerging markets ended up being hit as hard, if not harder, than the U.S. and Europe.

In the Financial Times, PIMCO Chief Executive Officer Mohamed El-Erian recently offered his thoughts on whether the future will hold decoupling or recoupling for the developed and emerging markets, an issue that could be key for investors.

“While decoupling is a reality, the international dimensions are much more nuanced than suggested by traditional analyses,” El-Erian wrote. “As a result, investment and policy implications are skewed.”

El-Erian says decoupling theories were “firmly in control” up until the economic crisis hit last year. At that point, “the consensus characterisation of EM flipped — from global locomotive to caboose — as these economies outpaced industrial countries in experiencing sharp contractions in activity and asset prices.”

Now, however, decoupling proponents are back on top, El-Erian says, “buoyed by the developing pick-up in economic activities and the fact that equity valuations are now back above the pre-Lehman levels.”

What does it all mean? “To me, it is an important reminder of the need to be much more specific in the analysis — an approach that confirms that decoupling is real but qualifies its spillover effects,” El-Erian says. “The international dimensions of the decoupling process are much more nuanced than suggested by consensus analysis. Specifically, the beneficial spillover impact of a unit of growth in emerging economies varies a great deal from country to country.”

Emerging economies are continuing to grow in relation to the rest of the world, but “are not yet in a position to act as a powerful locomotive for industrial countries,” El-Erian contends. “The base effects are still low; and part of the growth is based on transient factors, including a huge stimulus in China. Moreover, like their industrial country counterparts, governments will come under more pressure to better ‘internalise’ the impact of their stimulus spending.”

For investors looking to play on decoupling, El-Erian says to wait for “signals of sustainable consumption growth in emerging economies and, more generally, an accelerated shift in policy emphasis from the producer to the consumer. Milestones include more aggressive measures to strengthen social safety nets and greater exchange rate flexibility.” If those signs aren’t present, he says to “adopt a highly differentiated approach,” focusing on “deeply integrated regional transmission mechanisms and, in the case of China, also commodity-based linkages.” And, he adds, don’t expect emerging market growth to materially improve the challenging outlook for industrial countries activity.