Speak to many people in the international business community about Latin America and they immediately focus the conversation on Brazil, citing glowing comment in the top-tier business media about the ‘country of the future’.

For some Brazil is principally a commodities play, with huge reserves of oil and gas, iron ore and agricultural goods. Others talk of the domestic market of over 190 million and one of the fastest growing middle-classes in the world. Others talk of the unique opportunity of the 2014 World Cup and 2016 Olympics. Most agree Brazil is one of the most exciting global emerging markets opportunities.

Since Goldman Sachs Economist Jim O’Neil coined the term BRIC in 2001 - referring to the grouping of Brazil, Russia, India and China - it has become shorthand for high-potential, high-growth global emerging markets. For much of the last decade in boardrooms from London to New York the question has been asked: what is our BRIC strategy? But there is growing recognition that the term has outlived its usefulness, both because it over-emphasises the similarities between the four BRIC countries and also because it implicitly relegates other global emerging markets to a ‘tier two’ deserving of less attention.

The reality is that the BRICs have always been uneasy bedfellows. In very different ways the fundamentals of China and India point to a prospect of sustained high-growth over many years, whereas the fortunes of Russia ebb and flow with the price of oil and gas, on which its economy is hugely dependent and where structurally the possibilities seem far more modest long term than India or China .

Having spent the last four years working closely with top-tier investors entering the Brazilian market, and with top-tier Brazilian companies on international growth I can attest to the fact that Brazil has its own very Brazilian set of challenges which - as yet - have not fully fed through to boardroom or media sentiment.

While Brazil has achieved strong year-on-year growth in recent years fuelled both by the commodities ‘super cycle’ and its growing domestic middle-class, the economy suffers from a number of fundamental structural weaknesses. Most notably there has been a huge lack of infrastructure investment, a huge lack of education & skills training, and a complete absence of fiscal reform.

Taken together these three factors not only restrict its medium and long-term growth potential, but build inflationary pressures into the system and prevent a reduction in interest rates, driving the appreciation of the currency and harming industrial competitiveness.

The international business community is slowly starting to recognize this. In recent months Brazil has repeatedly downgraded its growth outlook, and the slowdown in China has led to close scrutiny of economies that are heavily reliant on Chinese commodity demand, with Brazil at the top of the list.

This has resulted in bullish coverage of Mexico as the next ‘go to’ investment location – pointing to a strong fiscal and monetary position, a broad-based economy, strong manufacturing base, and limited reliance on China and commodities. This reflects our own optimism about Mexico.

Beyond Mexico, Chile is also a broad-based economy with strong buffers against a Chinese slowdown and a highly-developed service sector, well positioned for international growth. Peru and Colombia have both traditionally been seen as commodity-based economies, but both have been successful in implementing ‘pro business’ reforms and are attracting high (sustainable) rates of FDI with a huge pipeline of infrastructure investment in the coming years.

In the PR sector the BRIC craze continues. Historically high multiples are being paid to acquire Brazilian full-service agencies and specialists in social media and sports marketing. This either serves as a point of entry into the market or to bulk-up to existing network offices. But much as we raised eyebrows in the 90s and 00s by evangelizing about some of the less ‘appealing’ Eastern European markets, we now feel some of the ‘tier two’ markets in Latin America also deserve attention.

The Brazilian agency sector is starting to become increasingly sophisticated, but elsewhere in the region there remains a strong focus on consumer and media relations focused activity. This is at odds with the challenges being faced by multinational companies seeking to enter or grow their operations. Resource sector investors are grappling with significant, growing levels of stakeholder unrest. Telecoms, healthcare and financial services sector companies have to navigate hugely complex regulatory environments, carrying significant reputational risk.

The PR sector must recognize that both in terms of its footprint across Latin America, and its service offering across the region, times are changing.  

Alistair McLeish is a co-founder of Speyside Corporate Relations.