The United States may have the world’s largest economy, but investing solely in this economy prevents you from benefiting from investments in mutual funds that cover the remaining 70 percent of the world’s economy. Every year, markets in certain countries of the world rise, while the markets decrease in other parts of the world. One country may be doing well, but its next door neighbors might be declining. The increase in markets does not impact every country in a region equally. Markets in one country may have the best returns one year and then fail miserably the next year. There are many reasons certain markets in the world outperform other areas, and here is a list of some of the reasons.

Shifts in GDP Distribution

Almost every country in the world starts out an as agricultural society. Citizens of the country grow their own food. Survival is determined by whether the crop is successful. Famines in agricultural societies can lead to great devastation as people starve to death. Over time, improvements in agriculture allow a country to shift to manufacturing as the leading contributor to the country’s GDP. The shift from an agricultural to a manufacturing society results in a rapid increase in a country’s income. The next larger shift occurs when a country shifts from manufacturing to services. Services is intellectual capital that has no upper limit to its worth as manufacturing has. Countries that shift to services have meteoric increases in their economy. Once a country relies on services for the largest part of its GDP, it will generally have smaller increases in market value year after year because its market is saturated.

5-Year Market Dominance by Latin American Countries

As of 2010, for the past five years, Latin American countries' mutual funds have experienced the greatest growth. This is due to their shift from manufacturing to services. Many of the Latin American countries have recently overturned the yoke of dictatorship and moved toward democratic societies. As their citizens have gained increased freedom to earn a living without fear of reprisal, they have become industrious, and this shows in the growth of their market value.

Land of the Rising Sun

For the past ten years, Japan had the second largest economy in the world. They were second only to the United States. Less than 50 years ago, Japan was recovering from the devastation and destruction of World War II. Japan achieved this growth due to its improvement in manufacturing. Japan is not known for creating many products, but it has excelled at making current products smaller, faster or cheaper. This growth in manufacturing has propelled Japan to the world’s second largest economy. Japan has not been able to make a successful transition from manufacturing to servicing, and this has caused it to lose its spot as the second largest economy to China.


Recently, China has emerged as the second largest economy in the world. China has achieved this prominence both through the use of manufacturing and services. China has the world’s largest population. This population has been put to work in factories throughout the country. By paying very low wages, China has been able to produce a wide range of products cheaper than in any other country. The large population allows them to have enough workers for every factory.

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