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The big global news this year, was the Asian economic crisis ... and it affected our retirement index as well. But not necessarily in a negative way.

These days, you can buy low everywhere-especially in Southeast Asia. It is unclear when these economies will turn around. This has been good the world over for the dollar investor. Now let's see who's at the top of our list...

The winner? Mexico, where the low prices, good climate, and an easy lifestyle prevail. The conflict between President Zedillo and Zapatista guerrilla leaders is still burning in Chiapas, causing headaches for the government. Still, no military threat has yet tarnished the country's international image.

And, Chiapas isn't our choice for retirement in Mexico-among the places we prefer are the Pacific coast, near Zihuatanejo and Ixtapa,  and we like Lake Chapala where you'll find low prices in a great climate and a large expatriate community.

Honduras remains attractive, holding its position this year in the top 10. Import duties here have been reduced from 40 % to between 5 % and 20 %. There has been an increase of almost 400 % in U.S. exports to Honduras in recent years. And then there's our recent new discovery of Utila, where properties near the beach sell for 325,000 lempiras.

Nicaragua is the most noticeable newcomer to our winner list this year. It is increasingly stable, with a ripening investment climate, good politics (the government has even beefed up banking controls) and positive growth in Managua. Our inhouse real-estate guru, Robert Fordi, rates this country a 10 out of 10.

When you consider these attractions, plus the country's low-priced real estate, its rank makes sense. Probusiness, pro-foreign-investment President Arnoldo AlemAn, who was elected last year, is intent on moving his country forward, and the 10 years of leftist Sandinista rule are quickly fading. Property values have already jumped more than 50 %.

And Nicaragua has other enticements. It is extraordinarily beautiful, with lakes, islands, tropical forests, and unspoiled beaches. Its people are culturally close to the United Statesmost have relatives here or have lived here themselves. Wage rates are as low as or lower than those in any other Latin American country, and its financial system is open and free of exchange controls.

Best of all, however, is its pensionado program. Remember when everyone was talking about Costa Rica? Its system grew so popular that it was disbanded. The Nicaraguan system is structured in much the same way. It provides significant tax incentives for foreigners, and it's easy to qualify for retiree status-the paperwork is minimal.

If you are older than 45 and have  an income of more than $400 per month, you pay no taxes on any out of-country earnings; you can bring in up to $10,000 worth of household belongings duty-free; and you can import one automobile duty-free and sell it after five years, free of consumer tax. You can then import another car, also duty-free and repeat the process every five years.

To top it off, an acre of beachfront property here costs as little as $15,000. A few of us here at International Living bought the very thing.

Peso pressures
Other Latin American countries are still trying to woo back international investors after the Mexican peso crisis three years ago, and they are more open to foreign investment than before. Again in the top 10 is Ecuador, where  foreign investment is at an all-time low. Its low-priced real estate (a recent listing in the hot-springs town of Banos: a beautiful bed-and-breakfast for 204,516,000 sucres) has dropped lower than ever after El Nifio's visit, says Jonathan Harris, our contributor currently traveling through Ecuador. Amid bargains, the country still shows signs of its recent economic recession. Buying property here is painless-especially if you pay in cash. You rarely hear about ugly civil disputes here. Hostilities in the disputed border area between Ecuador and Peru have ceased; this border is open. The Ecuadorian government has increased police patrols in tourist areas, mainly to prove a point, as  most crimes are nonviolent and even these are rare. This is a "blood-inthe-streets play" (without the blood). just don't settle in the northern province of Sucumbios-or any place close to neighboring Colombia.

Ecuador depends on hydroelectric power, and last fall, with severe droughts and El Nifio, parts of the country were only running electricity about half the time, sometimes during the day and sometimes at night. Also, the sucre is steadily depreciating. Jonathan says that in the past nine months the sucre has been devalued from around 4,500 sucres to the dollar to 5,000 sucres to the dollar-and is still weakening. Maybe a new president (president elect Jamil Mahuad) will help them out of their hole.

The cultivation of guinea pigs is  booming in Ecuador. The creatures are eaten in the highlands, and Jonathan says that everywhere you walk in Cuenca you see them roasting on spits. Apparently some people are looking to export them.

Finally, it's dirt cheap to travel there. Accommodation in one local hotel in south Ecuador costs a dollar per night-though that included chickens, guard dogs, rats, and a junior high dance-what more could you ask for?

There are some creative economic initiatives underway in Ecuador. One is a black-cayman farming operation that will help repopulate these amphibians, which were once hunted almost to extinction in certain areas, while providing skins to the world. Another is for Brazil nut farming in the jungle.

Last year, we had high praise of Panama. Although we've seen no real change in this country this year, its score-though not its rank-dropped slightly in our index. There is a reason: The auction of old U.S. military housing hasn't worked well. Corruption is at normal levels (mostly insider dealing), as is inefficiency. The countdown to 1999 and the Panama Canal turnover has everyone nervous. All this makes Panama a big question mark.

We also told you last year to watch Argentina's austral. A devaluation of the currency would mean real bargains. It wasn't devalued, however. It's still quite costly to live in Argentina-especially in Buenos Aires. Privatization is occurring, but the process is mixed.

Happily, President Menem has decided not to run for an illegal third term. Most Argentines are sick of his party's austerity measures.

The government here-and everywhere else in Latin Americas encouraging market reform for health care, the last sector to privatize.

Argentina is especially interesting because it spends more on health per capita and as a percentage of  gross domestic product than does any other Latin nation and has lots of medical services-with 500 separate health-insurance companies.

The almighty dollar means bargains. One country to offer bargains is Greece, which moved way up on our list this year. Long popular among vacationers, its economy has been a pleasant surprise this year. March's 14 % devaluation drew a wealth of foreign investment.

Although France's recent victory in the World Cup sent Frenchmen into a   state of euphoria, its franc  is still sagging-which in  bur mind only serves to  make the country more enticing than ever for investment.

As we go to print, the Athens stock exchange index is among the world's best-performing this year, up 75 % in local-currency terms unlike other emerging markets suffering in the wake of Asia's continuing economic crisis.

The drachma. is appreciating, with gains against the dollar and the mark. This makes for a stable economy-and, as prices have remained among the lowest in Europe, an attractive retirement destination as well.

Greece's downside is a lack of top-notch medical care. The closest thing to a general practitioner in Greece is the patholoyos, who is not as highly trained as our GP. The Greeks must practically diagnose themselves and then head to specialists instead of to available GPs.

Greece is, however, known for its hairdressing schools and hairdressers. Students from all over the world come here to learn this art. (The cost of the professional coif? About 7,000 drachma, or $24.)

A step ahead for Spain
Another survivor of the Asian  roller coaster is Spain. Moving away from its reputation as a "Latin laggard," Spain is fast becoming one of Europe's healthiest economics. And there are positive feelings about the Euro and what it will do for the economy in the years to come.

The country has a new self-image. To change its poor-country status, it embraced free-market reforms with greater zeal than France or Germany. Isolated, even backward, 20 years ago, Spain no longer looks to France as its economic model but instead looks to the United States and England as benchmarks.

Spain's progressive attitude will serve it well in the European Monetary Union. With taxes and labor costs still running 10 % below the E.U. average, Spain is attracting investment. And its policy of distributing economic decision-making authority to local governments will set an example as Europe's borders fade.

Today, Spain's factories are among the most productive on the Continent, its banks among the most profitable. In 1995, corporate tax rates were slashed from 40 % to 35 %-a big draw for new investment. Spain is overhauling labor markets and nurturing its entrepreneurs.

When European nations realize that they must compete for jobs and capital in a single-currency Europe, Spain will be ahead of the game.

The downside? Spanish unemployment, at around 19 %, compares with 11.2 % in Germany.

Retire to paradise
The Dominican Republic, new to our index and already in the top 10 this year, is one of the few inexpensive destinations left in the Caribbean. A real push for U.S. tourism is now under way in this undiscovered Caribbean hideaway; until now, only European package tour companies have been promoting the D.R. It's president is U.S.-educated and looking forward, not backward. Incredible property deals exist, especially along the northern Redrement Index, coast (Sosfia and Puerto Plata). The downside to the island is that it remains a "plantation," with an overactive military hierarchy. You'll want to steer clear of drug trafficking.

For a warm-weather existence in the blue Caribbean, however, we recommend the DR It's cheap.
The authorities just changed the laws for foreigners buying real estate -now you don't even need a permit from the government (previously mandatory). We recommend you don't drive at night in the D.R., roads are not great, and the U.S. State Department warns that "undisciplined driving is common." Travel at night on rural intercity highways is not recommended.

Euro watch
The Eastern European countries are doing well as they continue their transitions to market economies: Two, Poland and Hungary, are among our top 10.

Eastern Europe still enjoys low crime rates-much lower than the United States. The Czech Republic alone has crime at any significant levels-probably because it sees the most tourists. Then comes Hungary, then Poland.

Hungary also has zero tolerance for driving under the influence of alcohol-so it's safe on the road.

Poland's economy is showing significant growth-the highest among the countries and steady even during the recent crisis. And as we see evidence of more comfort among the people, things will continue to improve. The recent performance by the 30year-old Czech band the Plastic People at the Intel New York Music Festival proves that culture is reasserting itself in these countries as well. (Singled out in the '70s by Czechoslovakia's Communist regime as a bad moral influence and imprisoned, the band was not allowed to play in public after its release and went underground.) The only problem, it seems, with these countries is the climate. It's cold.

Elsewhere in Europe? Green, lush Ireland is still bursting with incentives for retirees: free transportation for residents over the age of 66, even free health care, for example. And property here can be cheap. But stay away from the cities: Although Dublin's market has declined from its soaring prices of last December-up 25 % in the space of six months, with buyers camping out overnight to slap down deposits on newly built flatsit is still overpriced.

Portugal offers all the beauty and culture offered by its neighbors-at lower prices. just watch for Portuguese drivers who have produced the highest motor-fatality rate in Europe. Still, doctor's bills are inexpensive: the bill for a checkup for one friend with several X-rays was $8.

In Italy, prices continue to fall. They have dropped nearly 3 5 % over the past five years. Although a beautiful place to live, Italy has its problems: few phones, for instance. The government is beginning to address this. Rome is close to introducing legislation to open up Italy's electricity market. Competition will afford case in reading electricity bills-and promised discounts.

Although France's recent victory in the World Cup sent Frenchmen into a state of euphoria, its franc is still sagging-which in our mind only serves to make the country more enticing than ever for investment. Not only does it hone its long-lived attractions of wine, food, and song, but now it's cheaper. David Morgan, an IL staffer who headed off for a trip around the world a few months ago, has decided to stay for a while, while prices are so low.

Currencies in context
Look toward Asia, where troubles began. The key to profitable reale state investing is timing. The timing in the Philippines, one of our more interesting choices this year, couldn't be better. It was at the top of our index two years ago, fell drastically last year, and has since recovered

some of its allure. This long-standing ally-whose people have historically called themselves the "brown Americans" and use English as the language of public education-the Philippines was one of the victims of the Asian crisis. (Another in our index was Thailand.) The peso fell. Global investor Robert Czeschin, our longtime contributor who lives and works in Manila, explains that with depressed real-estate market comes an interesting new climate for investors.

Unfortunately, its infrastructure needs drastic revamping. You won't find phone lines outside major cities. The phone company has 10-year waiting lists for installation. Still, market-oriented Ramos opened the doors for competition during his term, and so this, too, should improve. Czeschin himself moved his business here from Hong Kong partially because of lower costs. The country offers some of the lowestpriced real estate and is emerging as an attractive destination for businesses.

Labor is abundant, and the cost of space modest. With the proper company structure, you don't have to pay income tax at all. In Makati-the "Manhattan island" of Manila-you can buy an office for as little as $150 per sq. ft.. Living standards are rising.

New Zealand is back on our list of retirement destinations. We had retired it last year, but its affordability this year made it another good choice. If you're looking for beauty, a good climate, and quiet, this-a place with more sheep than people-is a place to go to get away from it all. It's not impossible-nor is it terribly easy-to retire here ... but people say it's worth the red tape. And the timing here, too, is good: The average price of a home fell NZ$4,100 at the beginning of this year; the average home costs around NZ$164,000. Other advantages: the country has a declining immigrant population now and a depressed real-estate market, and good medical care is widely available.

Crunching the Numbers

Here's an explanation of the categories in our global retirement index:

Real estate. Countries where real-estate prices are low and the purchase of real estate is relatively easy receive the highest scores. We spoke with agents all over the world about real estate in desirable locations. For example, in Mexico we considered property near Lake Chapala; in Portugal, properties in the Algarve; and in Honduras, property on the Bay Islands. Weight. 15 %

Culture. This is where our Western bias becomes evident. This category considers the number of newspapers per 1,000 citizens, the number of museums and cinemas per capita, the number of university students, the national literacy rate, and the variety of cultural and recreational offerings. Weight. 10%

Cost of living. This score is based on statistics from the Judexes ofLiving Costs Abroad, Quarter Allowances, and Hardship Diffi,rentials, published by the United States Department of State, and on data published by Business International. The lower the score, the higher the cost of living. Weight: 20 %

Safety and stability. This measure of unrest in each country is based primarily on Interpol data and the status of each country in State Departirient advisories, as well as on the civil liberties and political rights granted by each government. Weight. 5 %

Health care. Considered in this category are the cost of a typical visit to a general practitioner and the cost and quality of health insurance. Weight. 20 %

Climate. Countries with temperate weather throughout the year, moderate rainfall, and little risk of natural disaster come out on top in this category; we use data representing each country as a whole instead of favoring one region over another. Weight: 5 %

Special benefits. This category considers government provisions that make moving to and living in each country easier and more affordable. Taken into account are property rights for foreign residents, property-tax rates, duty-free imports on personal belongings, currency controls, employment, voting rights, and transportation discounts for older people. Weight., 20 %

Infrastructure. This section considers the number of automobiles and telephones per 1,000 residents, the length of railroad track in usable condition, the number of airports, the quality of the country's road and highway network, and the availability of telecommunications. Weight. 5 %