Download "Realigning world economic balance"

Overview

PricewaterhouseCoopers' economic projections show that rising world prosperity will actually drive US economic growth over the next two decades, rather than threaten it. In "The Upside of Change," we explore why the roles and alignments of US companies may be altered, but that the contributions that the US makes to the world-and what we receive in kind-will remain very healthy. The American outlook, as de Tocqueville noted two centuries ago, "accepts tradition only as a means of information, and existing facts only as a lesson to be used in doing better." It's an observation of the American character that remains true today as we enter a new millennium and a new era of multilateralism, globalization, risk and opportunity.

Much has been made of the weakness of the US dollar, but in "Dips Happen," we trace the dollar's decline and show how it fits a cyclical historical pattern that can be exploited. Businesses can profit and/or allay risk by understanding that a relatively weak dollar is neither an anomaly nor a precursor to the stagnation of the American economy. What is unusual about this current cycle is that the dollar has dropped even while global growth has remained robust. Herein lies a huge opportunity for US exports.

Many US companies are adapting to globalization by collaborating in joint partnerships in emerging markets. While there are many hazards here, as we explain in "Running the Gauntlet of Protectionism," many US businesses are successfully "glocalizing"-operating internationally, but acting locally in the markets they serve. In Russia, for instance, McDonald's has carefully used a strategy of glocalization, describing its business there as a "Russian company that knows the priorities of the Russian community." In other examples, Coca-Cola and PepsiCo have cited water scarcity as a crucial risk and are actively working with local communities to manage the problem. And Wal-Mart's strategy for entering India takes into account the country's restrictive investment policy, as well as popular and political opposition to big-box retailers.

Business leaders also have a job to do countering protectionist policies at home. It's hard to miss the protectionist sentiment in the recent anti-immigrant backlash, in increased supply chain scrutiny, and, perhaps most importantly, in the concern voiced over the rise of sovereign wealth funds. But, as we explain in "The Long and Short of Sovereign Wealth Funds," US business must continue to clearly articulate the benefits of global economic integration. As Jim Owens, chairman and CEO of Caterpillar Inc, observed recently, US companies need "to do a better job of helping the public understand the benefits of global engagement and international competition and how these can benefit and lift everyone."