A Closer Look at Frontier & Emerging Markets

Developing countries. Emerging and frontier markets. They represent the last bastion of fast, substantial growth in the world today, and an incredible source of continuous fascination.

I have loved developing countries ever since I went to China for the first time in 1998. The bustling city dynamic got me hooked. 10 years later, I went back to live there, and study Mandarin.

Today, I spend most of my time hopping around places, looking for opportunities in the up-and-coming markets around the world. Why? Because I believe that emerging and frontier markets represent the absolute best opportunity for anyone today - the investment returns are much higher than in developed markets, and the potential for impact exponentially larger than anywhere else.

I want to take a minute to explain to you why the best lifestyle and business opportunities today are created by developing countries.

What is wrong with the West? 

The West experienced tremendous growth in the 20th century. America became the world's superpower, overtaking the British. The nations that emerged victorious from the world wars enjoyed glorious times of pronounced economic growth.  

Aging demographics do not prone well for most Western countries. In Europe alone, the number of workers per retiree is set to halve, from 4 to 2 by 2050. 

In Japan, the population is predicted to fall by a third by 2060, with 40% being over 65. 

This presents huge structural challenges. Just recently, despite a sounding victory for Emmanuel Macron, France gave Marine Le Pen and Jean-Luc Mélenchon a total of 40% of the votes at the presidential election. 

One is a communist, the other a stark nationalist, with a heavily socialistic economic policy - both massively opposed to the European project. 

This isn't Poland. This is France. A founder of the European Union, and the driving locomotive of the future of Europe together with Germany.

There are examples everywhere. Not all is bad of course - Southern Europe still boasts some of the most amazing beaches I have ever been to. Were I retired, I'd strongly consider Portugal, or Spain. 

The food in Italy is incredible. Very few places have culture like France. Greek islands are the envy of the world. But their economy is in shambles. The euro's future is doomed. 

So where do we turn, if we want opportunity, growth, dynamism, entrepreneurship?

China's stock market is already bigger than that of all of Europe. It now exports 40% more than the US, and 45% more than Germany. It is slowly catching up to, and overtaking the USA's share of the world economy.

Other regions will quickly follow.

Wealth growth in China, Latin America, India and Africa during the period 2000-2015 were exponentially higher than that of the West. By a factor of 3.

And if you didn't know it - the best stock market in the world for the period  1900-2013 wasn't the USA. It was South Africa (with a return of 3372% - 3 times that of the US)

Only 4 out of 10 people in the world have access to the Internet at least once per year. Huge opportunity is still out there for the entrepreneur who acts on riding the wave of the internet in developing countries. 

PwC estimates that the world economy will grow around 2.6% per year until 2050. But the difference between emerging and developing countries will be huge: 3.5% for the E7 (Brazil, China, India, Russia, Indonesia, Mexico and Turkey) against just 1.6% for the G7 (Canada, France, Italy, Japan, the United States, the United Kingdom and Germany).

Population demographics play a large role in this. But so do reforms. Desire to push the country forward, to do what's necessary.

The trend is clear. Growth in the West has declined. Between 2000 and now, the G7 grew 1.8%, better than it will in the future. But this pales in comparison to the 5.8% growth annually in the E7.

Empires rise and fall.

The Spanish dominated the 16th and 17th centuries. The British the 18th. The 19th century was dominated by the French. Until World War 2, Britain once again was the superpower from the start of the 1900s. After the war, America took the centre stage.

Today's age belongs to China. 

The rapid growth in China over the past 20 years provided incredible opportunities in markets serving their needs. Commodities prices have soared - and the countries exporting them too. 

Chile, one of the world's largest copper exporters, is now a member of the OECD, a club of rich countries. It is the richest country in Latin America.

Profits of miners around the world soared, as China was building its developed economy, using raw materials. 

China's growth may now have slowed a bit, but it is still a growth machine marching forward. Its shift to a domestic consumer economy leaves huge untapped opportunity. 

Increased food consumption - notably meat, and rice. Foreign luxury products. Personal care. Pet care. And many many more.

The world may see China slowing down, but the bigger picture is still clear.

Countries dealing with China will benefit. Agriculture could blossom in Cambodia. Tourism could go to Myanmar. Cheaper manufacturing to Vietnam. 

Chinese tourism is already a massive market, and will become more so over time. 

But other regions offer opportunities too. 

Contrary to Europe, where populism is on the rise, Latin America has learned its lessons after decades of populist mismanagement. 

Pro-business leaders are elected, and real changes happening.

After half a century of war, Colombia should prove to be the next rising star of Latin America. 

Peru is growing at incredible rates, and resembles where Chile was 20 years ago. Huge opportunities are present in the agriculture sector. 

Mexico is enacting reforms, and remains a competitive place to do business, which will greatly benefit the economy.

The unstable regime in Venezuela will not last, and its recovery will be a once-in-a-lifetime opportunity. 

For many, Africa seems the ultimate frontier. And it is. A popular saying "Africa is the last place where you can be the first one to do something" resonates.

Entrepreneurship is rooted in the continent, historically out of necessity. As leaders wake up and enact reforms, the continent can channel the skills into more than just subsistence-entrepreneurship.

Rwanda, Ghana and Botswana among others are making great strides. Kenya is branding itself as a hub for technology and innovation. 

The slump in commodities has taken its toll on many economies there - notably Angola, Zambia, Nigeria and South Africa.

But things improve - and they will - so will investor's confidence, and entrepreneurial opportunities. 

The world is big. Huge changes are coming around in some parts of the world. Ride the wave, and come out on top.