Raw material resources will determine country rankings in the world economic pecking order in years to come as strong demand and limited supplies ensure commodity prices hold their upward trajectory.

Hedge funds say demand for the commodities that countries produce, plus demand for their stocks, bonds and currencies, will likely dominate market and investor psychology for at least another 10 to 15 years.

We won't be thinking of countries in terms of emerging or emerged but whether they have commodities or not, said David Murrin, chief investment officer at hedge fund Emergent Asset Management.

Countries that will benefit from the raw materials windfall include Russia and Canada with plentiful precious and base metals alongside oil and gas.

We are 15 years away from the peak ... The last (commodities cycle) peak was in 1975 ... Since then the system has mostly been consumer and technology driven, Murrin said.

Middle Eastern countries with large reserves of oil are also likely to figure in the economic league tables, but the hedge funds interviewed by Reuters did not mention Africa.

However, Asian economies such as Japan, with few natural resources cannot be ignored as its economy, reliant on exports until recently, is reviving and is likely to show much higher growth rates as consumer confidence and demand strengthen.

There will be exceptions of course, a hedge fund manager said. But in the main, investments will be concentrated on things to do with commodities, whether they be stocks, bonds or currencies such as the Canadian or Australian dollars.

The most obvious losers are likely to be countries in Western Europe, mostly reliant on imports of commodities that are becoming increasingly expensive.

MISSING IMPORTANT NUANCES

Other countries likely to benefit from the commodities bonanza include Brazil, Peru, Mexico, Chile and South Africa, rich in precious and base metals.

Resource-rich countries are certainly benefiting from a commodity boom right now, another hedge fund manager said.

But does that determine their success going forward? Maybe not, because other factors are economic growth ... Saying the world is divided into commodity and non-commodity producing countries is missing some important nuances.

China has a lot of metal and oil resources. But the country doesn't have enough copper or oil to meet its needs and has to import both. So, how does it fit into the commodity scheme?

China's strength, some hedge funds say, is an abundance of cheap labor, which will help sustain high growth rates.

Other countries in Asia, such as India, are also likely to be exceptions. India's educated work force and a growing middle class with an appetite for consumer goods will continue to underpin strong economic growth.

Recently investors have flocked to Asian stocks because of growth and earnings potential and to Latin American bonds because they are backed by rising revenues from the raw materials bonanza.

(Latin American markets) have been determined by the ability of lenders to pay off their debt ... It's to do with credit quality, the hedge fund manager said.

In Asia, the main focus has been equities ... Equity investing is determined by the ability of companies to grow and to be profitable ... Underpinned by strong economic growth.

But many hedge funds expect this to change and are already eyeing up stock markets in Latin America, which they expect to catch up and probably overtake Asia.

You can't bet against Asia entirely, but it will be less easy for them to make an impact against commodity-producing countries, said Dawn Kendall, investment directors at hedge fund firm GAIM Advisors.

Asia has a very high savings ratio and in the long term that is deflationary.

The high savings rate was one of the biggest problem in Japan during the 1990s, when deflation and recession dominated consumer psychological and demand collapsed.

The United States with a low, sometimes negative, savings rate, does have raw material resources, but has to import around half of its energy needs, which hedge funds say will damage the country's growth prospects given record high prices.

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