Most of us are familiar with the so called BRICS countries (Brazil, Russia, India, China, and South Africa), but as these countries continue to integrate into the global economy there are other non-traditional markets that continue to emerge for global investors.
Such countries include Mexico, the Philippines, those in the East African Union such as Kenya, Turkey and even, potentially, Iran. In the past these countries have been held back by poor educational systems, inadequate infrastructure, and political instability. While many of the same problems continue to plague these areas, they are making slow but steady progress.
Modern technology has been a driving force behind this progress, as has the growth of trade agreements both regionally and globally. Mexico's involvement in the North American Free Trade Agreement has provided it with many opportunities for growth. The Mexican's have had to fight for equal footing alongside two global economic powerhouses in the form of the U.S. and Canada, but have also reaped the benefits of open access to these two very rich markets.
Their relatively inexpensive but well educated labour pool, continues to spark economic growth. While corruption and the war on drugs continue to be a problem, there are signs that Mexico is starting to make progress in these areas. It's also worth noting their political system is relatively stable and democratic when compared to other emerging markets.
The Philippines has seen its share of struggles in recent years. It's in an area of the Pacific that is under constant threat of weather related disaster in the form of typhoons and flooding. The most recent disaster coming in the form of Typhoon Haiyan. More than 5,000 people were lost in this disaster.
Yet despite these problems, The Philippines continues to emerge as one of the new global hotspots for business. They boast a relatively educated workforce, with an inexpensive labour pool. However, despite being one of Asia's oldest democracies, it has not enjoyed a great deal of political stability. An ingrained family caste system has held back the country's economic development. This volatility has continued to affect its progress, as has the ever present threat of Muslim insurgency in the south.
Despite its problems the Philippines has enjoyed steady economic growth in the last few years, and it continues to be ruled by a democratic government. If the country continues to maintain its current level of growth, it will be one of the most attractive emerging markets in the coming years.
Sub-Saharan Africa has traditionally been viewed as an economic basket case. Few countries in the region can boast an average annual income above $5000, but there are signs that this is starting to change. In particular, the East African Union is emerging as a potential hotspot of economic growth. These countries are increasingly becoming true economic partners.
Until recently, cross border cooperation had generally been non-existent, but this area of Africa is now starting to implement new trade agreements that have the potential to open it up their markets. Improvements to infrastructure have also helped improve the perceptions of Africa's investment potential. If these trends continue their momentum, business interests will increasingly look to Africa as an emerging hotspot for investment.
Turkey has faced many of the problems that other emerging economies have fell victim to over the years. Political instability and religious tension are ever present for Turkey. Despite this, it remains one of the Muslim world's most promising regions for economic growth. Turkey, for all its faults is a democracy, and democracies generally allow for some level of political stability. It continues to strive for greater integration into the European Union, which makes it an attractive option for investors.
Iran is a bit of a different case. There are many more unknowns when it comes to Iran. It does not have a strong democratic tradition, and at the moment it's economy has been crippled by continued sanctions placed on it as a result of its nuclear program. However, the potential for growth in this market is exponential.
Iran has shown signs of greater cooperation with the west and a willingness to negotiate a solution to the nuclear problem. If this new openness proves to be genuine, the market has much to offer investors. It boasts a large, relatively educated population that's hungry for access to the consumer goods common in the rest of the world. It also has vast oil reserves to offer world markets. While it remains unclear how successful Iran's transition to a more open economy will be, it is an opportunity investors will want to keep a close eye on.
The key thing for investors to keep in mind in all of these emerging markets is that potential for growth is encouraging, but there are still many risks. Most investors would prefer to bet on a sure thing, but there are no sure things in these markets. Risk will continue to be present, but the rapid growth of infrastructure and technological advancement in these areas is offering the hope of new and untapped markets for investors.
As western economies mature, market opportunities in these regions will be less common. The BRICS economies will also begin to mature, and investors will increasingly look to these emerging hotspots for investment opportunities. Caution should not be thrown out the door, but companies that want to maintain strong growth must look to these emerging hotspots with increased regularity.