Once again, I am humbled. You've seen the Foolishness inherent in small-cap investing, and now it's incumbent upon me to convince you that my team from India and Southeast Asia deserves the top prize in this final match with Western Europe.

Not your average small cap
It's true, in a sense, that there isn't much difference between Jim's last opponent -- South America -- and what India and Southeast Asia have to offer. India is an emerging market, and investing there is riskier than investing in Western Europe. But that's where the similarities with South America end. Let's compare the top countries in each region:



GDP Growth










Data from Economist Intelligence Unit. Projections for 2006.

It would be ludicrous to argue that Brazil has a far weaker economy than India. But isn't it fair to say that India has far more room to grow? And couldn't we also say that, with inflation outpacing real GDP growth, the fallout in the Brazilian Bovespa has been somewhat justified? I'd say so.

Conversely, recent fallout on the Bombay exchange has been largely fueled by fears of rising interest rates, especially here in the U.S. It just smells like panic selling. Maybe that's why the locals are calling it exactly that.

Big where it counts
What's more, India and Southeast Asia have huge economic advantages over Western Europe in two areas that drive expansion -- GDP investment and population growth. Have a look:



Pop. Growth







United Kingdom












Source: CIA World Factbook

Growing economies grow because they invest in expanding infrastructure and have burgeoning populations that produce engaged, educated workforces. India and Southeast Asia have been remarkable in both of these categories.

Meanwhile, Germany's population is shrinking, and France seems to be constantly teetering toward labor strife. Is it really any wonder that one of its best-known businesses, Airbus parent EADS, is plagued by much more than a delay in its signature A380 superjumbo passenger jet?

Risk is relative
Now, let's get back to the question of risk, beginning with the obvious: India and Southeast Asia offer a riskier bet than Western Europe. But that knowledge alone is not enough to help you as an investor.

What you need to know is whether your risks for investing in Southeast Asia will be compensated by higher long-term returns. Figuring that out is a matter of both valuation and history. Let's start with history. Were you to invest $10,000 in the closed-end India Fund (AMEX:IFN) on July 1, 1997 -- just before the Asian financial crisis that threatened to destroy billions in stock market value -- you'd be sitting on more than $55,000 today.

Had you invested the same amount, at the same time, in the Europe Fund (AMEX:EF) you'd have a little less than $40,000 today. Think that's an unfair comparison? Check the fund's latest annual report. A full 100% of its assets are invested in Western European stocks such as GlaxoSmithKline (NYSE:GSK), Total SA (NYSE:TOT), and Novartis AG (NYSE:NVS).

As for valuations, Morningstar pegs Motley Fool Champion Funds selection Matthews Pacific Tiger (FUND:MAPTX) with an average forward P/E of 16.3. Meanwhile, larger cousin Matthews Asian Growth & Income (FUND:MACSX) trades for a similarly reasonable 14.3 times earnings. Neither multiple strikes me as pricey for a fund of high-growth stocks. And both appear to be cheap when compared with the slower-growing Glaxo and Novartis, which trade for 14.7 and 15.2 times anticipated income, respectively.

David 1, Goliath 0
If anything, the World Cup proves that the small and talented can beat the big and experienced. Indeed, that's how it was recently when Ghana delivered a 2-0 defeat to the highly regarded Czech Republic team, and that's how it is in this match-up of India and Southeast Asia versus Western Europe. Only here, you have the power to decide the winner. So, I ask -- in which would you rather invest: a slow-growth region with a history of relative underperformance, or a high-growth region that has, virtually overnight, been made a whole lot cheaper?

Take your portfolio on a market-beating trip around the globe by picking up The Motley Fool's inaugural international stock report, Around the World in 80 Minutes . Or subscribe to any of our investing newsletters and get the report free. All you have to lose is the prospect of richer returns.

India and Southeast Asia are facing Western Europe in this final round of the Investing World Cup. Go back to the intro page to navigate your way to another part of this contest, and then vote for the region that you think should win the tournament!

GlaxoSmithKline and Total SA are Motley Fool Income Investor recommendations.

Fool contributor Tim Beyers has worked with many Indian firms over the years. He's been impressed every time. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what is in his portfolio by checking Tim's Fool profile .

This article represents the opinion of one Fool and should in no way be taken as the opinion of either The Motley Fool, Inc., or the company in question, or as representative of anyone or anything other than that specific Fool's thoughts. So before buying, do your homework and review The Motley Fool's superbly sportsmanlike disclosure policy.