Analysis of Investment Opportunities in Third World Nations
With an estimated five and a half billion people living in the countries that have been termed the third world this area is ripe for investment. Third world countries or as they are termed the developing world are mostly concentrated in Africa and Asia. These countries have the highest population growth rates. The economies of some of these are growing at a steady rate whilst others have stagnated in place due to unfavourable conditions especially at the public polity level. Investment in these countries is best restricted to basic areas of investment. These areas do not require specialized policy or diversified economic environments.
Key considerations include; socio-political environment in the third world countries. By virtue of their nascent state these countries pose challenges in the general stability of their socio-political environments. They are susceptible to upheavals and these can pose a challenge to long term investment opportunities. Some countries within this category have sought to create economic climates that favour long term investment. Secondly, it is best to direct investment into areas of need rather than luxuries. Low disposable income renders the best investment opportunities to lean towards essentials and basics, service industries other than tourism are limited in current return potential. Lastly, corruption has been a major hindrance in third world investment. Corruption creates bottlenecks that prevent quick and easy investment and can be frustrating to the outside investor.
Areas that provide good investment potential include; infrastructure services. Infrastructure for third world countries is still underdeveloped; this is further compounded by underdeveloped technological foundations. Engineering expertise being in a formative nature provides a good investment opportunity. Infrastructure provides three key areas for investment; communication, transportation, and ICT services. The huge population in the third world provides the perfect basis for uptake of new communication and ICT services; for example Africa with a billion plus people is ripe ground for uptake of mobile telephony and related services.
Secondly, there is a lot of investment potential in creation of labour intensive industries. The standards of living and labour rates are low currently; this makes them prefect ground for creation of labour intensive industries due to the availability of cheap labour. As a matter of fact big businesses are setting up in the third world in order to achieve better profit margins. This area of investment could even be designed as labour provision; here you provide the factory and labour, this is then outsourced to interested companies at cost.
Thirdly, by virtue of low industrialization third world countries provide tourism potential. This is because environmental degradation and change is still at a primordial stage and the wildlife and vistas of these countries are relatively well preserved. Furthermore, high tourism earnings in such countries have led to policy that aims at the preservation of attractions. This industry provides investment opportunities in terms of service industry.
When analysing investment opportunities in the third world it is crucial that the investor actively takes into consideration reports of world financial institutions as these provide invaluable information.