The world is changing rapidly. People are becoming more interconnected than ever. Information is increasingly easier and cheaper to come by. Whether it's texting, social media, emailing, faster logistics, or finding information on the internet, it all leads to one thing, making a faster paced and more competitive business environment. Here are some top trends in business that are already happening but will play a significant role in the future.
globalEDGE Blog - By Author: Michael Dimitrov
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These are the goods that run the world, where people put their fortunes, and fortunes are made. Thinking about internationally traded goods (commodities) brings to mind vast ships, supply lines, and intense logistics, not to mention the more devious trades (a.k.a. blood diamonds). The truth of trading is completely different.
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Everyone has been hearing about it lately. Look at any news site and it will be the top story if not many of the top five stories. Ever since Mohamed Al Bouazizi set himself on fire in December to protest Tunisia’s economic situation, revolution has been spreading across the Middle East. These conflicts are demonstrating how some of the world’s smallest countries can have great effects on the rest of the planet.
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Qatar has said it is looking at spending $100 billion as it is currently trying to revamp its infrastructure in preparation for the 2022 World Cup. In response to the government of Qatar’s request, the United States government is sponsoring a trade mission to Qatar in June this year. The country has been growing rapidly and is looking to build multiple new stadiums to host the event. The growth potential in this country and for this trip is phenomenal.
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For just about as long as any living person can remember, Bollywood and Hollywood have both been producing movies and been dominating their respective countries and audiences. As far as Bollywood goes, many people in the U.S. view this burgeoning industry as a distant neighbor (although Bollywood was created 11 years before Hollywood, in the 19th century no less) of our hallowed Hollywood. In some sad cases people think it is just a misspelling of Hollywood. With both Hollywood and Bollywood having already survived over a century each and the massive trend towards globalization, most people would think the similarities between the two would be great. In actuality, the difference is vast.
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It is a country already considered one of the biggest maritime arms smugglers, in addition to being accused of letting its military charge “protection fees”, akin to those of mobs, to companies operating within its borders. However, Yemen has devised a strategy for raising money that can be considered either ingenious or moronic. Already faced with corruption through the majority of military branches, it has decided to use its military for a more economic and productive purpose.
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After the official unpegging of the Renminbi (Also referred to as the yuan) to the dollar mid-way through last year, China has surprisingly started to increase the flexibility of the Renminbi and is actively encouraging the globalization of the currency. Much of this change has come for two reasons. The first is as China has become the world’s second largest domestic economy, the need for a globalized currency becomes exponentially more important. Also, international pressures on the Renminbi and China, especially from the U.S., have started to force change.
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Traditionally free trade agreements and their kin are the principle agents of more competitive, efficient, and economically viable countries. However, people often look at the overall effect of FTA’s in their questioning for whether or not FTA’s should be implemented. The smaller country is usually considered the major benefactor after an FTA is implemented, but what happens when the opposite happens? There is an obvious, glaring example that is often overlooked, I myself just stumbled upon it a few days ago. Looking at Europe currently, you have the PIIGS, the countries that seem to be on the fast track to nowhere, and the rest of the Union. The idea behind the Union was that the economies could build on each other and raise the smaller less developed countries to the same standard as the U.K., France and Germany. Did this actually happen though?
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Wondering where to go next? The answer is easy, Korea. Approaching the top ten largest economies in the world, it is often overlooked because of its physical distance and the close proximity of its big brothers China and Japan. In fact, Korea has recently doubled its GDP and its imports from the United States. So while recent news may be bringing adverse attention to Korea, it is starting to bring to the spotlight an economy that is growing and is expected to soon become a major economic partner of the United States.
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Do you ever wonder why Facebook and websites always manage to have ads that seem very specific to you? Originally it was the cookie that tracked what you did, where you went, and how you used your internet. After that big scare many people started deleting their cookies every time they surfed the internet. Now? Facebook had the novel idea of the “like” button. Every time a person “likes” something, “magically” they will start seeing more ads geared towards that interest. The next step you ask? The digital fingerprint.
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Free trade agreements (FTAs) have long been in controversy. By some they are hailed as the end all be all of economic growth, while others view them as a tool for the strong to exploit the weak, or a hindrance of worker’s prosperity. While there are degrees of truth to both arguments, the fact remains, trade increases, economic activity increases, and average wealth increases. FTAs need to be utilized with caution however, as many industries in many countries are not up to the competitive standards of the established powerhouses of developed countries. In addition, first-mover advantages often need to be cultivated in insulated environments where kinks in production can be removed and experiments explored without loss of the initial advantage. All of that being said, FTAs drive competition, and competition, in the end, is the best driver of economic growth and innovation.
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China has recently come under pressure from Europe for its domestic bias to companies competing for public construction contracts. While China has had to loosen the wording of laws after coming under fire before, many companies are up in arms after trying to endure some of the trials entailed in entering the Chinese economy.
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There has been a debate going on for many years, the true value of investing in frontier markets. The results of investing in frontier markets seem inherently leveraged when compared to the results of investing in the more steady paced developed markets. While people with safety as the forefront of their current investment philosophy may not have any desire to invest in these markets, the intelligent investor with the time and knowledge to invest for the long run can benefit greatly from investing in the frontier. I believe that right now is a good time to put money down for the long run in these growing markets.
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Just two years ago the second worst depression in history hit us. Recently we have started pulling ourselves out of it, albeit slowly. Looking around at the depression’s results, the question is almost begging to be asked, did we learn anything from the first one?