The main problem is that they do not have patience to ride out a downturn in price. They panic too early and sell too easily. Get to know your markets. Not if you ask Liu Chi-tsun, another Taiwan investor. They don't even read the papers.
Fund managers can be negligent too.
But economic factors are only part of the story. The flip side of the coin is politics, and unstable governments and civil wars have all done their part in making developing markets a risky proposition. Our experience is that generally political and economic stability go together. No one is going to keep their money in a country that is unstable. You may have a chain reaction where ineffective governments fail, economies suffer, companies report poor results and so on.