U.S. investors must adapt to a world economy in flux.
“India and China can together reshape the world order,” Indian Prime Minister Manmohan Singh said upon the recent signing of a new strategic partnership for economic cooperation between his country and China.
Those two nations account for more than one-third of the world’s population, a low-wage workforce of a size almost beyond our comprehension.
The U.S. National Intelligence Council estimates India could overtake China as the world’s fastest-growing economy by 2020. Both nations have education and training systems to help them compete effectively in technology and other advanced fields.
Meanwhile, tens of thousands of Chinese have taken to the streets to protest Japan’s World War II atrocities and bid for a permanent seat on the United Nations Security Council. China has made it clear it will no longer pull any punches with this regional rival that long was the economic dynamo of Asia.
This is not to say the U.S. will give up its mantle as the world’s economic leader, but American companies must get used to dealing with other nations in a more equal way than they are accustomed.
The firms in which investors hold stock will face even tougher competition than in the past as alliances among other nations exert influence. Inroads of aggressive U.S. firms won’t be accepted as unquestioningly as in the past.
Meanwhile, we have to accept realities at home.
When U.S. companies expanded into Ireland, it was called “the Irish miracle.” When U.S. companies expanded their use of workers in India, it was called outsourcing. There are parts of the world with which Americans have little experience, which causes anxiety.
“We have a highly educated, motivated global investment research team in India and communicate with them mostly through e-mail chats,” one member of a California consulting firm told me. “We couldn’t afford this level of talent in the U.S., so this represents an expansion of our overall business that simply wouldn’t exist otherwise.”
Some Americans complain when they must choose between English and another language, most likely Spanish, in financial transactions.
Banks don’t do this just to seem more global. Hispanic customers have been among the most reliable savers, with those new to this country saving even more because they consistently send some earnings back to families in their home countries. It is good financial sense to make things easier for Hispanic customers and attract their business.
The U.S. and its companies must put greater emphasis on training and retraining of workers to meet demands of a changing world economic order. Meanwhile, investors must monitor the ability of companies to compete in a tougher global game. At home, everyone must adapt to a more international population.
The rest of the world has dealt with us for a long time, and now we must adapt to dealing with the rest of the world.