Economic growth is what drives stock markets higher. So rather than put up with slow growth in the U.S., with its threats of recession, shouldn't you invest your money in countries with growing economies?

Across the world, economies are slowing down. According to the International Monetary Fund, world economic growth will slow to 3.7% in 2008, down from almost 5% in 2007. Although worldwide totals may show lower growth rates, many places in the world are seeing healthy expansions in their economies.

What slowdown?
There's a lot of debate right now among economists about whether foreign markets have "decoupled" themselves from the U.S. Theoretically, if the economy were truly global -- with free flows of labor and capital across borders -- you'd expect local variations in growth rates to disappear as the world reached a new equilibrium.

However, despite ongoing growth in international trade, there's still plenty of room for parts of the world to grow much faster than others. When you look at the numbers, you can see these regional differences quite clearly. Although industrialized economies in the U.S., Europe, and Japan are all likely to see slow growth in the next couple of years, emerging markets are still going strong:

Country

GDP Growth --
Past 12 Months

2008 GDP
Growth Estimate

2009 GDP
Growth Estimate

United States

2.5%

1.1%

1.7%

Germany

1.8%

1.7%

1.6%

Japan

2.0%

1.3%

1.5%

China

10.6%

9.6%

9.0%

India

8.4%

7.8%

7.2%

Brazil

6.2%

4.6%

4.0%

Russia

8.0%

7.1%

6.2%

Source: The Economist. Last 12 months includes first quarter of 2008 if available.

Even if the emerging market economies see their GDP growth moderate somewhat, they'll still be growing at a healthy clip compared to most countries.

Priced to move
With such high growth rates, you might expect stocks in emerging markets to be extremely overpriced. Indeed, in some markets, overseas stocks have fallen substantially in recent months because of overvaluation. India is down 23%, and China is down 14% thus far year to date. Baidu.com (Nasdaq: BIDU) lost nearly half of its value from December to March before recovering strongly, and Tata Motors (NYSE: TTM) is off nearly 20% since January.

Yet by one simple measure -- the P/E ratio -- emerging-market countries have quite reasonable stock market valuations. And in some cases, they look downright cheap.

Country

Trailing P/E

Estimated
Forward P/E

United States

19.2

14.8

Germany

12.4

11.9

Japan

16.6

15.6

China

19.5

16.2

India

22.0

20.9

Brazil

16.2

13.2

Russia

10.4

11.6

Source: Standard & Poor's.

You can see the same attractive valuations by looking at individual stocks. Brazilian miner Vale (NYSE: RIO), for instance, trades at around 15.5 times earnings. That's much lower than competitors like Australia's BHP Billiton (NYSE: BHP) or Britain's Rio Tinto (NYSE: RTP), with P/Es of about 19 and 22, respectively. Similarly, China Mobile's (NYSE: CHL) stock price, at about 28 times earnings, is roughly comparable to British telecom Vodafone (NYSE: VOD), despite China Mobile's faster expected growth rates going forward.

Improve your chances
Even when the economy is slow, you can always find companies that will do well. And if you focus on growing markets, you'll have a better shot at picking winning international stocks that will capitalize on favorable economic conditions.

For more on going global to find profits, read:

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Fool contributor Dan Caplinger owns plenty of international funds, but he doesn't directly own shares of the companies mentioned in this article. Baidu.com is a Motley Fool Rule Breakers recommendation. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy is good around the world.