Emerging markets have long been considered a double-edged sword: although the potential for making big bucks in developing countries can be seductive, the risks can be equally high. One of the best indicators used when analyzing market potential is foreign direct investment.

According to Yu Ching Wong and Charles Adams of the regional office for Asia and the Pacific, International Monetary Fund, foreign direct investment is "increasingly seen as a 'desireable' form of capital inflow compared with other more volatile flows. There are, in addition, other more fundamental reasons why emerging market economies might be interested in attracting FDI. Beyond providing additional financial resources (when not financed locally), FDI can facilitate the transfer of intangible assets such as technology, skills, and management know-how, thus helping to directly boost productivity, and growth; in addition, FDI may help secure foreign market access."

There's no lack of emerging market candidates, but changes in the line-up can be capricious--even stable and established economies can experience turbulence in today's fast-changing global economy. But there are a number of good choices in regions all around the world. Here are a few for consideration:

China

The full impact of the SARS virus on the country's economy has not been tallied yet, although experts think the damage won't be as severe as many have worried. China's economic expansion would have naturally slowed anyhow, given the rapid growth figures that the country has experienced. Obviously, tourism and domestic trade have taken a hit, however most of the foreign manufacturing operations have been unaffected.

In the meantime, ocean carriers say cargo volume in the eastbound trans-Pacific trade lane is shaping up to exceed last year's peak season levels. Of course, this also means that carriers will have more leverage in negotiating price hikes.

Keeping up with the manufacturing boom has at times been a challenge for China, not unlike any other emerging economy. Guangzhou, a vital city with close links to Hong Kong and leading gateway for imports and exports, recently announced that it would invest heavily in three international logistics centers over the next ten years. The projects include improvements to ports, airports, and railways.

Singapore

Singapore has already done a fair amount of 'emerging,' proving to be a fairly safe bet for the most part. The country has relied heavily on the electronics sector, which has suffered a temporary setback. A recovery, though, is likely to gain momentum starting in the third quarter of this year. Total exports for Singapore are forecast to grow steadily over the next few years, with a 3.6 percent gain estimated for 2003, a 4.7 percent expansion for next year, and a 5.7 percent growth for 2005.

The country's financial services sector is strong and healthy, setting it apart from other Asian competitors. Information and communications technology, transportation, and overall infrastructure are very sophisticated, making Singapore a major attraction for investors. The new U.S.-Singapore free trade agreement will also provide considerable impetus to business between the two countries.

Brazil

President Lula da Silva has thus far been finding favor with investors, who are pleased with his willingness to undertake economic reforms that promise to make the country more competitive. The International Monetary Fund's director of the western hemisphere, Anoop Singh, says, "The appreciation of the currency is helping to reverse much of the inflationary pressure that followed last year's depreciation, and it is now being reflected in a drop in interest rate futures."

Brazil is the largest Latin American destination for American exports, and southbound trade is expected to grow by as much as 2.8 percent this year, which the IMF says is double last year's rate.

A general strengthening of the entire Latin American region bodes well for Brazil, which is closely linked to other economies. Improvements in Argentina, for instance, will go a long ways toward enhancing the business climate for Brazil and other regional neighbors.

Mexico

Although Mexico's maquiladora industry has faced stiffening competition from Asia and Central America, manufacturers have hardly abandoned the country. While Mitsubishi and TDK have relocated operations to Asia, the Economist Intelligence Unit reports that South Korea's Samsung is opening its largest Latin American white goods plant in the country.

The country's proximity to the U.S. is still a key consideration for manufacturers, especially those who incorporate just-in-time principles in their supply chains. And despite increased security measures, Customs clearances along the U.S.' southern border have not encountered delays.

The same cannot be said for the progress on structural reforms, however. President Vicente Fox's government will continue to deal with congressional opposition, which may create a drag on some of the country's prospects.

Poland

The outcome of June's referendum regarding EU membership was not known when we went to print, but most indications point to a "yes" vote. Preparing to join the EU has been a good exercise for this rising Eastern European star, which has made significant strides in privatization, liberalization, and other measures aimed at getting Poland on par with EU standards.

Although exports have been hampered due to weak foreign demand, sales are expected to pick up throughout the year. Consumer spending is also forecast improve over this period.

Poland's GDP is expected to expand by 2.7 percent this year, 3.8 percent in 2004, and 4.0 percent in 2005.

Czech Republic

Similar to Poland, the Czech Republic's economy has benefited from reforms designed to bring it in line with EU member countries. Nonetheless, the devastating floods that hit Prague and other areas last August have caused a setback to the country's GDP growth--tourism and manufacturing operations for many companies were negatively affected.

The upside, says the Economist Intelligence Unit, is that growth "is being underpinned by sustained large inflows of foreign direct investment, which reached $4.8 billion last year. This has led, in turn, to high productivity and wage growth, which is further spurring domestic demand. Both personal consumption and investment are projected to grow at solid rates" over the next few years.

Funding from the EU will help the Czech Republic boost construction of roads, railways, and telecommunications networks.

Egypt

The impact of the war on Egypt's tourism industry will be hard felt, as tourism foreign direct investment represents the second largest FDI sector in the country, after manufacturing. Recently, FDI has also been targeted towards such areas as research and development.

Earlier this year, Nortel Networks signed a 5-year agreement with Telecom Egypt and the Ministry of Communications for expansion and modernization of the country's telecom network. The total cost of the deal, which includes installation of equipment designed to allow fixed wireless services, is estimated at $60 million.

Ongoing efforts toward trade liberalization, better governance and transparency, and improved transport and telecommunications are helping to define this African nation.

Bahrain

With the war in Iraq behind it, Bahrain is looking forward to getting back on the "economic" track. According to the Economist Intelligence Unit, the country "will step up efforts to maintain Bahrain's position as a services hub. With limited oil reserves, Bahrain's prosperity rests on its ability to diversify its economy. It has well developed finance and tourist sectors, but is pushing the development of other service industries such as information technology, healthcare, and education. The government will improve its already efficient regulatory structure to encourage foreign businesses to use Bahrain as a regional base."