When official resources are limited, where can small investments from the United States have the biggest impact on helping to build and open new markets that also help create jobs at home? Some of the fastest growing economies are in the developing world, and a newly released report suggests that the developing world may also be one of the best places to invest.
The annual Baseline Profitability Index, an innovative tool for determining the best countries for foreign investment, found that seven of the top ten countries are located in the developing world: Botswana, Ghana, Malaysia, Mongolia, Rwanda, Sri Lanka, and Zambia.The index aggregates factors of a country’s economy to calculate the return on investment such as corruption, conflict, and crises in these countries that could impact potential investments. Notably, these are some of the elements where development and diplomacy have the greatest impact by helping countries promote rule of law, fight corruption, and strengthen governance and transparency – all of which are critical to creating an environment for U.S. foreign investment.Many of the countries listed on the index as good places to invest – Ghana, Mongolia, Rwanda, and Zambia – also partner with the United States through the Millennium Challenge Corporation, Power Africa, and Feed the Future. These programs focus on a wide range of issues, but all seek to work with countries to make the policy reforms that enable private investment, fight poverty, and create sustainable economic development. With potential free trade agreements in the headlines, this new report reminds us of the powerful link between development and trade.