Investing in Winners

Enhancing opportunities for investment in economically sound emerging markets

Tim Cullen Associates assists soundly performing countries to differentiate themselves from their neighbours and attract the foreign direct investment that they deserve

In a rapidly integrating global economy, emerging markets accounted for two thirds of the rise in global foreign direct investment (FDI) during the past decade. While FDI enables companies in industrialised countries to profit by expanding their activities, this form of non-debt-creating capital is also appealing to other countries. It enables them to improve their links with foreign markets and distribution networks, to acquire technology, and improve the management of their domestic companies through exposure to international firms.

Unfortunately, the pace of integration and the capacity to attract foreign investment has been uneven among developing countries. The countries that have been most successful have implemented far-reaching economic reforms that include a dramatic lowering of tariffs and other trade barriers, bringing government expenditure and inflation under control, and building a regulatory environment that is friendly to business and investment. There are, however, a number of countries that have pursued the right policies, but that have not attracted the FDI that they deserve. Such countries will be unable to sustain economic growth unless they can increase investment levels. As they cannot afford to reduce domestic consumption, most of the new investment must come from foreign sources.

In many cases good performers have suffered from the “bad neighbourhood effect”. Entire sub-regions that contain individual countries pursuing good policies have been ignored because of investors’ failure to differentiate among such groups of countries.

TCA, with its access to the best available economic analysis and with Associates in Asia, Latin America, North America and Europe, is able to help strongly performing countries to differentiate themselves from their neighbours in the eyes of the investment community. Through direct contact with potential investors throughout the industrialised world, the capacity to organize investment conferences, media campaigns, advertising and other promotional activities, and the ability to link potential investors to sources of political risk insurance, TCA can facilitate investment in countries that are pursuing good policies, have a sound regulatory and legal framework, and are discouraging corruption.