As we enter 2011, investing abroad has become awfully tricky. Emerging market economies have been the shining stars of the past few years, and many of their stock markets have been on a tear. As I noted a few weeks ago,  some of them have seen their markets double in value in a very short time.

If you have a long-term market view, countries such as Brazil, Chile and Thailand hold a lot of promise. However, these dynamic countries may see their stock markets sputter in 2011 as recent gains get consolidated. In that context, it pays to focus more on countries — and their respective exchange-traded funds (ETFs) — that haven’t joined the global rally but are showing signs of a strengthening economic foundation.

Here’s what investors should pay attention to in 2011 as they seek profits in foreign markets…

Canada 
iShares MSCI Canada Index (NYSE: EWC)
Canadian stocks had a decent run in 2010 — the ETF noted above rose about 15% this year. But the investment picture in Canada looks even brighter than that performance indicates. For many decades it was assumed that the Canadian dollar would need to be far cheaper than the U.S. dollar to maintain trade balances. The United States benefited from scale economies that strengthened many industries, so Canada needed an edge (in the form of a cheaper currency) to compete. That myth was dispelled in 2010. The two currencies are now equal in value, and the Canadian economyhas barely been dented.

Moreover, many assumed that a deeply slumping U.S. economy would drag Canada down with it. That myth has also been dispelled. The Canadian economy shrank a relatively small amount in 2008 and early 2009, and recent economic data imply that economic activity will be robust in 2011. For starters, Canadian businesses registered a sharp 4.6% uptick in business equipment investment in the third quarter of 2010, which is an indication of stronger economic output. In addition, consumer spending remains healthy, even being a bit below historical trends. Lastly, rising oil prices should help boost exports for this energy-rich country.

My top reasons to invest in Canada: its very healthy financial picture, its vast storehouse of agricultural and mineral wealth, and its eventual benefit from a rebounding U.S. economy, which is likely to take in more Canadian exports. This looks like a great place to invest in the near and the long-term.

Vietnam
Market Vectors Vietnam ETF (NYSE: VNM)
This ETF was launched at a price of $26 a share to considerable fanfare about 15 months ago. And, despite a few zigs and zags, it’s still at $26 today. Perhaps that performance should have been expected — inflation was on the rise when the ETF was launched in the second half of 2009, and the government has not been able to reduce persistent trade and budget deficits. But if you take a step back, you start to see a country that could be the next Asian Tiger.
 
Vietnam is blessed with a low-cost but hard-working labor force, an increasingly strong transportation infrastructure, a domestic population of 88 million (larger than any country in Europe), ripe for a burgeoning middle class, and fairly impressive offshore oil and gas deposits.

The country has seen remarkable gains in the past decade: per-capita income has risen more than 400%.Nowadays, tourism revenue is surging and Vietnam could easily catch up to Thailand as the go-to destination for Southeast Asia beachgoers. Secondly, wages in China are starting to rise and Vietnam is steadily taking its share of new Western manufacturing plants. The country is also emerging as a key agricultural supplier to China. It’s blessed with fertile soil, impressive irrigation systems and an increasingly efficient distribution network.

As long as inflation and trade imbalances persist, this ETF could stay range-bound. But once the country starts to grow its way out of these problems, the Vietnam ETF may really take off. You don’t want to wait too long until the time is right to jump in.

Turkey
iShares MSCI Turkey Invest Mkt. Index (NYSE: TUR)
This ETF has fallen about 20% since early November 2010, creating a nice entry point. The Turkish economy has really become a regional powerhouse in recent years, highlighted by very strong banking, tourism and manufacturing sectors. However, this play is all about geography: Turkey is possibly the most advantageously-situated country in the world, just steps away from Southern Europe, central Asia, Russia and the Middle East. As a result, the country is boosting trade in virtually every direction.

Turkey’s industrial output is up more than 10% from a year ago. Few countries in the world can say that right now. As Turkey’s trading partners get back on their feet, the country’s low-cost but very efficient industrial sector has the potential to emerge as the backbone of the region, much as German factories export across Europe. Equally important, Turkey’s economy and stock market are being increasingly de-coupled from the West, so any hiccups in the United States and Europe aren’t likely to be felt as severely with this ETF.

I’m a bit concerned that Turkey’s current government may undo many of the strong relationships the country has built with Israel, the United States and elsewhere. But economic development is so important for this nation, especially in the lagging eastern part of the country, that any economy-impeding moves would create a strong backlash among voters.

Action to Take –> Vietnam, Turkey and Canada are each at very distinct phases in their market economy development. Vietnam has the least mature market and carries the most risk, while the converse in Canada is true. Turkey may represent the best of both worlds. All three of these countries are in geographically beneficial positions and would surely benefit from improving economies as key trading partners.