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The Great Global Economic Boom

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A feature story in this week's Fortune Magazine presents the case that we are right now living in the greatest global economic boom ever. A few salient statistics from the article drives the point home:
  • World GDP growth averaged 4.9% from 2003 to 2007 on a total GDP of over $36 trillion (!). To put this number in perspective, right now GDP annual growth is approximately $1.8 trillion, or an amount greater than the entire annual economic output of France, the world's 8th largest economy.
  • Trade growth is even more impressive, with cross border financial flows growing at nearly a 11% compound annual growth rate since 1990. For perspective on this number, this means that international investment (the U.S. investing in China, China investing in Brazil, etc.) has close to tripled in the past 17 years.

 

More specifically:

  • Boeing booked 634 firm orders for its new 787, "predominantly to Asian and other emerging-market buyers."
  • General Electric is growing "twice as fast outside the United States as inside - 12% versus 6%" says CEO Jeffrey Immelt, with emerging market revenues growing at more than 20% a year a now accounting for $30 billion of GE's $170 billion in sales.
  • Goldman Sachs is focusing its expansion strategy around the so-called "BRICs" - Brazil, Russia, India, and China plus the Middle East.
  • Over 500 million households are connected to the Internet, more than double the number in 2000, and ¨? of these households are in the emerging world.

 

What does this mean for American managers and entrepreneurs? In our view, quite simply, economic and business-building opportunity for American business has never been greater than it is right now. Far too often the media and politicians focus on the threat of overseas competition to American business and workers as opposed to the enormous new marketplaces for American goods and services that are expanding at far faster rates overseas than in our mature domestic market. As overlooked are the opportunities for domestic businesses to raise capital overseas. The combination of strong world GDP growth with extraordinary growth in cross-border financial transactions lead to the hypothesis that there is now probably more money overseas than domestically looking for investment opportunities in the U.S. And our experience at Growthink is that overseas investors are also seeing far less deals than their U.S. counterparts, thus creating more favorable competitive conditions for U.S. businesses seeking growth capital. In short, no matter what your business, from both a market expansion and an investment perspective, thinking and planning globally has a profit potential greater than at anytime in human history. Enjoy the ride. The full Fortune article can be seen here.


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