After the dismal results of the last years, the economies of the U.S. and the E.U. have been dealt another blow by the economic community forecasters.
According to the IMF and the FED, the expected U.S. is expected to grow only between 2%-2.5%, or about 50% less than expected by the administration of president Obama, and a figure that will need to be supported by additional measures from the FED or risk to go even lower*. On the other side, the E.U. news are potentially worst, with an expected flatten to negative growth during the same period, partly caused the existing crisis, and partly because of the potentially lower than predicted U.S. growth*. In contrast with this figures, the emerging countries continue to trend up, and the projected Latin America growth could exceed 4% during 2013, or almost a 100% more than the U.S. or Europe.
One of the potential reasons for the fundamental growth difference between the developed and emergent countries could be the Globalization movement, which was identified many years ago as one of the fundamental new forces in the world economy by the Pulitzer winner Thomas Friedman on his book “The World Is Flat“. Globalization has been characterized by the reduction to trade barriers in the form of Free Trade Agreements, improvements in the world financial markets with the development of Global Capital Markets **, the improvements in communications with the worldwide adoption of the Internet for international business, and the improved political environment in Latin America, Asia, and Africa countries.
Considering the current economic predictions, what are my options?
One of the fundamental principles of economic and investment return is based on Markowitz “Modern Portfolio Theory“, which in lay terms simply states that by diversifying an investor (person or company) will increase their returns by reducing the risk associated with choosing a single investment tool. While there are many debates about the theory itself, we have seen during the last few years that even when the market collapses in one single country or economic region (U.S. or E.U.) a diversified portfolio can withstand the drop if a portion of it is allocated in other markets (Asia, Latin America) which are experienced an unprecedented growth. In addition, the recognized growth in tourism****, and the increased focus on exports as a source of revenue, can be combined to provide organizations with new avenues to expand their business and to reduce their exposure to their single market economic perils.
Even in a country like the U.S. only 12% of the GDP is derived from exports, and a figure that the government is attempting to influence by implementing new measures designed to facilitate the development of the export business in the country. According to a report by the U.S. National Export Initiative:
Exporting companies created 1.2 million jobs
- Exporting companies pay 13%-18% higher wages
- Exporters are 8.5% less likely to go out of business
- Small and Medium business increased their share of exports from 27% (2004), to 34% (2011)
Considering these statistical figures small and medium business and individuals, interested in developing their competitiveness in the market; should consider learning to export as one of their fundamental tools for the future. In future articles we will review the process of developing a sound export business by reviewing how to identify if there is a market for your products or services, how to sell and get paid, and how to deliver your products to your potential customers on a worldwide basis. If you are interested in receiving these articles as they are published, just subscribe to our site.
Inloso offers strategic business consulting in Latin America and the U.S., in the areas of multinational strategic business development, multinational operations, and entrepreneurship. We have over 20 years of experience and can help you expand your business, improve your profits and customer satisfaction, and/or reduce your costs of operations. Please visit our contact page if you are interested in our assistance in any of these areas.
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