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Everybody Wants to Rule the World

Ever since Christopher Columbus discovered and introduced the New World to, well, the Old World, America grew and became a world leader. We lead the world in lots of ways, not just in capitalism. We made blue jeans popular. Rock and roll. And Hollywood is one of our most thriving exports.

So everybody else wants to be just like us – live the coveted Western lifestyle. Though years of late have robbed that lifestyle of some of it allure, it does endure and probably always will but for one simple reason: the grass is always greener somewhere else.

In emerging countries, there are some two billion people who aspire to work the same types of jobs, live in the same kinds of houses, eat the same (albeit unhealthy) food, wear questionably distasteful or inappropriate clothes, and drive the (oft times) gas guzzling cars we own. America is all about excess; the fast food value meal an emblem of the American Dream. Ironic, isn’t it, that one of our most iconic fast food chain symbols is a crown.

Not that aspiring to our lifestyle is a bad thing. On the contrary, demand from other nations will help fuel our economy via our global companies helping to provide new urban infrastructure – roads, bridges, schools, hospitals and energy grids for modern cities in emerging countries.

Rebranding: Growth Markets

It’s been 10 years since Jim O’Neill, then an economist and now chairman of Goldman Sachs Asset Management, coined the term BRIC as a reference to Brazil, Russia, India and China. The term clustered countries he believed offered strong growth prospects, and became a mainstay phrase that focused attention on emerging markets.

Recently, O’Neill published a book (The Growth Map: Economic Opportunity in the BRICs and Beyond; Portfolio Hardcover; December 8, 2011) that provides a BRIC analysis from the last ten years. The book also refers to the “Next Eleven” countries – Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey, and Vietnam – to drive global change.

O’Neill also suggests that we should rename emerging countries (or “rebrand” them, as marketing gurus would call it) to call them “Growth Markets.” By this new definition, a “Growth Market” would be regarded as “one that is likely to have favorable demographics and achieve rising productivity going forward.” Furthermore, a Growth Market would include any economy outside the Developed World that is at least 1% of current global GDP.

[CLICK HERE to read the Financial Times article, “Brics at 10: not dead yet”; December 5, 2011.]

[CLICK HERE to read the Goldman Sachs Asset Management fact sheet, “It is Time to Re-define Emerging Markets;” January 31, 2011.]

[CLICK HERE for a video interview with Jim O’Neill of Goldman Sachs Asset Management; April, 2011.]

Perhaps a rebrand is a good idea for emerging markets. For one thing, more than half of the world’s total stock market capitalization lies outside the United States, so eliminating the reference to “emerging” may help mediate the stigma attached to investing in these potentially high growth (and yes, high risk) economies.

But another reason is because these countries – while not full-grown – have certainly emerged from infancy. In fact, the last few years have showed them off, economically speaking, like debutantes. And as teenagers are apt to learn, grownups don’t know everything. There’s a lot we can learn from these countries. Their cultural dishes typically boast more nutrition and less fat than the average American holiday dinner. They tend to drive smaller cars, ride bikes, and get more exercise simply as a means of transportation. And in China, the average household savings rate is up to about 26%.

[CLICK HERE to read an interview with Sheldon Garon, Princeton Professor and author of Beyond Our Means: Why America Spends While the World Saves; December 6, 2011.]

Sure, maybe everybody does want to rule the world, but depending on the way you look at it –  there are no clear winners. You can start by just ruling your own world. Please contact me if you’d like to engage in a full financial review and analysis to help you start off your New Year with a stronger financial plan.


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