USA-Geopolitical Superpower vs. the World

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USA – GEOPOLITICAL SUPER POWER Michael Musgrove

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A little something from Spring 2010 regarding America and the "Rise of the Rest," being Brazil, Argentina, Russia, India, China.

Transcript of USA-Geopolitical Superpower vs. the World

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USA – GEOPOLITICAL SUPER POWER

Michael Musgrove

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Agenda

Recession and recovery – Ross Porter's diamond analysis – David India and Brazil – Raj China – Lisa A closer look at the rising rest – Adam Strategy and wrap up – Thomas

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HOW US ENTERED INTO RECESSION

• NBER (National Bureau of Economic Research)•Declared beginning around December 2007

• Recession = Domino EffectSubprime Mortgage

Crisis

Banks Collapse

Lending Frozen

Manufacturing Layoffs

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HOW US ENTERED INTO RECESSION

•“Recession” is defined by NBER as “significant decline in the economic activity lasting more than a few months”

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How US is Getting Out of Recession

Governmental Actions October 2008

$700 billion TARP (Troubled Asset Relief Program) January 2009

$787 billion Stimulus Lowering Interest Rate Home buyer tax credit Job Creation Bill (Pending)

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How US is Getting Out of Recession

Reason for Optimism Well-developed Economy

Leadership in Auto, Telecommunication, Aerospace, IT

Trade Deficit Lowering Slightly Shrank in 2008 (707.8 bn to 681.1 bn)

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Porter’s Diamond of National Advantage

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Factor Conditions (to produce wealth)

Strong entrepreneurial culture Technological advancement leader China is forcing the U.S. to become more

efficient Excellent infrastructure to promote trade Communication is widely available

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Demand Conditions

Determines the direction of innovation and economic development

Diverse culture Trend setter nation Domestic firm global forecasting

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Firm Strategy, Structure, and Rivalry

The U.S. encourages fair competition (FTC)

Labor freedom Privatization

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Related and Supporting Industries

Strong global position Judicial system Product performance Environmental safety standards

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BRIC Nations

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India - Facts

Population: 1.1 billion GNI Per capita: $1,066.5 Starting business – 13 procedures and 195

days Profit tax: 25.1% Closing a business: 7 years (for resolving bankruptcies)

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India – Barriers

Rural poverty and slums Entrenched corruption Poor infrastructure Longest national constitution

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India - Strengths Second largest English

speaking population Educated human capital Evolving politics and media –

Empowering democracy Impact of services industry

on overall economy

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Brazil

Population: 191 million GNI Per capita: $7,351.22 Starting business – 16 procedures and 120

days Profit tax: 21.3% Closing a business: 4 years (for resolving bankruptcies) Latin America’s first super power

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Brazil - Barriers

Poverty and slums Poor infrastructure High public debt Unequal income distribution

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Brazil Strengths

Brazil is far less reliant on exports Only 17% are exports

Resource-rich country Surge in domestic consumption Attention from global investors

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Current facts of China

Population: 1.3 billion GNI Per capita: $ 2774.88 Starting business – 14 procedures

and 37days Closing a business: 1.7 years (for

resolving bankruptcies) Profit tax: 6.3%

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DRIVERS OF CHINA ECONOMY GROWTH

Cheap Labor & Education Government policy High saving rate A strong manufacture base

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Barriers OF CHINA ECONOMY GROWTH

The lack of rule of Law Real Estate bubble

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China’s benefit to US

China has been the fastest growing U.S. export market among its major trading partners.

China has become the second-largest source for U.S. imports.

China has become the second-largest purchaser of U.S. Treasury securities.

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The Rise of the rest - China

The Rise of China 9% growth over past 3 decades 20 fastest growing cities Industrial growth

Top Down Growth Communist government 400 million pulled out of poverty

Future of China Future growth Government stability Reliance on exporting

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The Rise of India 6.9% growth over past decade Shift in poverty and income

Bottom up Growth Initiated from the people Language and services

Future of India Expected growth Reliance on exporting Democratic government

The Rise of the rest - India

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The Rise of Brazil 5% growth rate Leading emerging market

Well Planned Growth Top economists and international bankers Structural reforms and fiscal policies

Future of Brazil Exports account for 13% of GDP Commodities exports Domestic focus

The Rise of the rest - Brazil