From raw minerals and agricultural commodities to manufacturing and finance, regions like Latin America and Sub-Saharan Africa are becoming increasingly attractive as entrepreneurs and investors worldwide look for new countries in which to conduct business. When doing business in emerging regions, the main factors that come into play are the ease of starting a new corporation or company, access to credit, enforcing contracts, access to international markets, and dealing with construction permits, amongst others. In this regard, consultants, entrepreneurs, and investors should also take into consideration elements such as the strength and transparency of government institutions, standing trade agreements, national infrastructure, and the development of the financial sector, amongst others.
Business Opportunities in Developing Regions
Latin America is one of the safest and most developed emerging markets in the world. With a substantially advanced transportation and financial infrastructure as well as stable governmental institutions and growing economies, Latin America is a leading destination for Foreign Direct Investment (FDI). However, within the region, each country and jurisdiction has different characteristics, strengths and weaknesses. For instance, when it comes to starting a new business, Jamaica, Panama, and Puerto Rico rank top three as it relates to legal procedures to set up a company. Meanwhile, Colombia, Puerto Rico, and Mexico have easier procedures when it comes to access to credit for businesses. Another important element to consider is the trade agreements that the country has, particularly as they relate to the company’s target market. In the case of Colombia, there are more than a dozen free trade agreements with both regional and international projection, including agreements with the United States, the European Union, Mercosur, Chile, Mexico, and the other Andean nations. Equally important is the contract enforcement reputation that countries maintain. In this regard, the Caribbean jurisdiction of Antigua and Barbuda as well as Mexico and Brazil rank highest.
Like everywhere else in the world, current events affect the investment environment of countries in emerging regions. Over the last few years, this phenomenon has been particularly evident in Venezuela, whose political and economic situation has warded off both foreign and domestic private sector investment. On the other hand, the recent government transition in Argentina has led to a friendlier economic and political environment for private sector growth as well as foreign investment.
Simultaneously, Africa is an emerging region that has long been outside the radar of mainstream investors. However, given Africa’s proximity with business centers in Europe and the Indian Ocean region, companies from France, India, China, the Gulf States, and the United Kingdom have substantially increased their presence on the continent over the last few decades. Long associated with poverty and weak governmental institutions, Sub-Saharan Africa has greatly advanced in issues of governance and infrastructure as well as labor force education and skill preparation. In Sub-Saharan Africa, the two top countries for cross-border trade are Swaziland and Lesotho. This should come as no surprise given that both nations are enclaves in between the dynamic economies of South Africa and Mozambique.