10. Issues in International Investing: The following figure presents something of a para- dox: it shows that the correlation between a country's stock market returns and the same country's growth in per-capita GDP is actually negative. Real equity returns and per capita GDP, 19002013 Source: Elroy Dimson, Paul Marsh, and Mike Staunton, using data from Barro and Maddison Countries ranked by growth of per capita GDP 7.4% South Africa New Zealand Switzerland 1.1% 13% 14% 16.0% 14.4% UK 14% 5.3% 17% 13.2% 17% 7.4% 18% 4.9% 5.2% 18% 18% 18% 2.6% 19% Correlation = -0.29 3.2% Germany Australia Netherlands Denmark Belgium Spain France Austria Canada USA Portugal Sweden Italy Finland Norway Japan Ireland 19% 07% 2.0% 15.7% 6.5% 3.7% 70% 5.8% 2.0% 2.1% 2.2% 2.2% 2.4% 2.5% 2.7% 2.8% 5.3% 4.3% 4.1% 4.1% 5% 6% 7% 0% 1% Real total return on equities 2% 3% 4% Growth rate of per capita real GDP The findings above may be counterintuitive, as one would expect countries with higher rates of economic growth to produce superior investment returns, that is, stronger GDP growth is generally good for investors. Why, then, has it been so difficult to make money by buying the stocks of countries that are improving their economic position? What are the various issues one needs to consider besides the Portfolio Theory when making international investment decision