Whether your company is international with key relationships in several countries, a global enterprise with worldwide reach, or a local organization interested in doing business beyond your borders, there are a number of countries that deserve your attention.
When people talk about international expansion, they are quick to distinguish countries as developed, transitioning, or developing. These three words must be in your lexicon to talk intelligently when it comes to international investment.
As countries build their economies they may move from one category to another. That said, it’s easy to understand what the three categories mean. Below I spell it out and list the countries in each category at this time.
A developed country is one with a strong economy including the infrastructure needed to maintain stability. It has fully entered the free market with most of the necessary policies in place. Its government is capable of managing its infrastructure as well as entering into trustworthy relationships with other countries. It generally provides a standard of living that enables a significant portion of its population to experience a relative high quality of life.
A transitioning country is one that is moving toward a free market, though it is not there yet. In a free market commerce determines how much things cost, as opposed to a body of officers with that role. Some of these countries are still determining trade rules by fiat rather than market conditions. Trade barriers are in the process of being taken away so that the country can deal more freely with other countries, but this is often not systemic.
A developing country generally has low living standards, a spotty or non-existent industrial base, and may not even have the stability in the government required to satisfy the needs of its people or the wherewithal to engage in trade outside its borders with consistency.
Of course there are critics of these three terms as not all subscribe to this language. Nonetheless, as organizations investigate where to invest their resources, this simple system provides a beginning framework for understanding and categorizing the economic situation within countries.
According to the United Nations Conference on Trade and Development (UNCTAD)*, these are the countries in each of those three categories:
Andorra, Australia, Austria, Belgium, Bermuda, Bulgaria, Canada, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Monaco, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, San Moreno, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, United Kingdom, United States
South-east Europe (Albania, Bosnia and Herzegovina, Croatia, Montenegro, Republic of Macedonia, Serbia, The former Yugoslav) and the Commonwealth of Independent States (Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Republic of Russian Federation, Tajikistan, Turkmenistan, Ukraine, Uzbekistan)
All other countries.
UNCTAD conducts the World Investment Prospects Survey (WIPS) , which is designed to generate insights about foreign direct investment. Foreign direct investment is when money is placed overseas to either support activity that is already taking place there or expand operations into that country.
The most recent WIPS, for 2012-2014, polled 5,000 executives who worked for non-financial trans-national companies and 245 professionals who worked for investment promotion agencies.
The results of the most recent WIPS points to eleven countries as the most promising sources for investments over the next two years. Here they are in order of selection (developing in bold):
2. United States
4. United Kingdom
10. United Arab Emirates
These are the countries that have the resources to invest overseas and a best guess at ranking them by the magnitude of their predicted investment. In other words, China will likely top the list as the chief world investor, followed by the United States, and so on down to Brazil. Keep in mind these are the top eleven. So even though Brazil is at the bottom of the list, it is still a major player on the world stage when it comes to investing. Note that three, including the first on the list, are developing countries!
Now, let’s look at the most promising destinations for all this money. Below are the top twenty-one according to the WIPS. What is striking to note is the number of developing economies that made the list. Among the top five, four are developing. And among all twenty-one, twelve come from that category – more than half.
This shows confidence in overall development across the globe in the years ahead. Even though we are rolling through serious financial turmoil, there is reason for optimism. There is no greater sign of economic hope than strong financial predictions across the board that includes many of the planet’s rising countries.
So, next time you become depressed by current world events or global doomsayers, recognize that the top trans-national companies and investment promotion agencies believe that strength and development are on the rise among these star performers.
On this list some are tied, causing the ones that follow to jump in ranking to reflect the proper order. (developing countries in bold):
2. United States
6. United Kingdom
8. Russian Federation
11. Viet Nam
14. South Africa
17. Korea, Republic of
* United Nations Conference on Trade and Development, World Investment Report 2012
image credit: picstopin.com
Seth Kahan is a change specialist who has consulted with CEOs and senior managers at over 60 organizations including World Bank, Shell, Peace Corps, and 30+ associations. Seth Kahan’s forthcoming book, Getting Innovation Right: How Leaders Create Inflection Points that Drive Success in the Marketplace will be published by Jossey-Bass in early 2013.
Author’s note: If booking conferences, Seth offers over 50% of his speaker’s fee toward copies of the book for conference audience. All arrangements take place through Tom Neilssen, at BrightSightGroup.com.