It's been a tough few months for stocks generally and for emerging-markets stocks in particular. And even though the global economy is slowing down and investors worldwide have turned exceedingly risk-averse, there are a few valuations out there that dumbfound us.

One is American Oriental Bioengineering (NYSE:AOB), which, thanks to the market's misunderstanding of a recent property acquisition, has become one heckuva cheap stock (click on the link to learn more).

Another is Cresud (NASDAQ:CRESY), a Buenos Aires-based asset holding company that owns and operates farms in Latin America and that holds equity stakes in IRSA (NYSE:IRS), a mall and hotel owner in Argentina, and BrasilAgro, an agricultural asset play in Brazil. We've watched over the past few months as the stock has dropped from $18 to $14, then $14 to $10, and finally from $10 on down to $5. It's since rebounded to around $8, but that price still seems too cheap for a company with Cresud's quality management team and asset base -- regardless of what commodity prices do in 2009. Further, Ian Cumming and Joe Steinberg of Leucadia National (NYSE:LUK) -- two value investors with a stellar track record -- own shares, having bought in for a far higher price.

It's to the point where I (Tim) turned to Nate recently and asked, "Does the market think Argentina is going to nationalize all of its land and shut down its export market?"

To which he replied, "Well, it's Argentina. It could happen."

Welcome to Latin America
And Nate's right. Latin America has -- in modern times -- been the most unstable region in the world. In fact, from 1950 to 1990, "Latin America accounted for 45% of total worldwide regime changes ... [and] there was not a single Latin American country that did not experience at least one regime change during this period."

That data is courtesy of Falling Behind, a new collection of essays edited by political economist Francis Fukuyama that sets out to explain the development gap between Latin America and the United States. It's a fascinating read and one that ultimately lays blame at the inability of most Latin American countries to set up the institutions necessary for long-term growth. Those, specifically, are "democratic political regimes and decentralized market economies, with clear and well-protected guarantees for property rights."

Argentina, for example
Argentina was home to successful or attempted military coups for four straight decades from 1950 to 1990. The country then went on to pile up debt in the 1990s -- another hallmark of Latin American economies -- only to default on that debt, prompting another crisis in 2001 and 2002.

And another economic crisis threatens Argentina today. A country already on edge thanks to President Cristina Kirchner's plan to nationalize their pension system has now been hit by collapsing commodity prices and a rapidly devaluing currency that could lead to a run on the banks.

This constant upheaval has manifested itself, in Fukuyama's words, in "a notable politicization of the Supreme Court, which ... can only guarantee those rights of interest to the incumbent president." Thus, without the guarantee of multiyear property protections, private investors are loath to invest in the types of projects -- infrastructure, real estate, successful private enterprise -- that would help end this cycle of instability.

This needs to be fixed
While certain countries in Latin America, notably Brazil, Chile, and Colombia, have made progress toward making their countries more attractive for long-term investors, the region as a whole has a long way to go. That's evidenced this week by Venezuela's Hugo Chavez, in his second attempt to get Venezuelans to "vote" away the term limits that prevent him from becoming a permanent dictator. After all, as the Los Angeles Times pointed out on Wednesday, with oil prices plunging and government revenue drying up, this may be Chavez's last chance to make a mockery of the electoral process before the Venezuelan economy -- and with it his popularity -- comes crashing down.

Optimally, a credible voice such as that of Brazilian president Luiz Inacio Lula da Silva would take the lead in the region and stand up against wannabe dictators like Chavez who stack the courts in their favor and spit on property rights. Until that happens, however, the market will continue to remain skeptical of companies such as Cresud that -- if domiciled anywhere else in the world -- would be selling for significantly more.

Speaking of fixing
Weakening regimes like Chavez's are one of the reasons President Bush and President-elect Obama are pushing for energy independence. Bush took the first step, admitting we had an addiction to oil. Now Obama has taken up the charge, pledging $15 billion a year on advanced energy technology.

This effort to promote increased energy efficiency and next-generation energy production has sparked intense investment in clean technology. Even companies that make their livings off oil, like BP (NYSE:BP) and Chevron (NYSE:CVX), have spent millions on alternative energy research (and millions more making sure we know about it).

Now Middle Eastern countries are getting in on the act, funneling their petrodollars into cleantech. Middle Eastern oil producers have realized what the push for greener energy and declining oil reserves mean for their way of life and are taking steps to secure their economic futures by funding research into alternative energy and energy efficiency at renowned institutions such as Stanford, MIT, and Cambridge.

Could they succeed?
Taking things to the next level, Abu Dhabi is spending more than $20 billion to build Masdar City, the world's first carbon-neutral city. The plan is to attract technological innovators to this sustainable city in order to create cleantech's version of Silicon Valley.

While investors around the world have been tempted and burned many times over by the lure of cleantech, the field may have found fertile ground in the Middle Eastern desert. Abu Dhabi, Saudi Arabia, Kuwait, and Dubai boast sovereign wealth funds holding more than $1.6 trillion between them. This is exactly the kind of patient, seemingly bottomless funding that early-stage research requires to blossom into next-generation technology.

Think about it: The United States could break its addiction to oil by employing technology developed and exported by the very countries that were once vilified for their control over global oil supplies. Eerie.

That was this week in emerging markets. To learn more about emerging-markets investing, check out Motley Fool Global Gains free for 30 days.

Tim Hanson is co-advisor of Motley Fool Global Gains. Nate Weisshaar is an analyst for the service. Tim owns shares of AOB and Cresud. Nate owns shares of Cresud. Cresud is a Global Gains pick. The Fool owns shares of AOB, which is a Motley Fool Hidden Gems recommendation. The Fool's disclosure policy is written in plain English.