Download - USA-Geopolitical Superpower vs. the World
USA – GEOPOLITICAL SUPER POWER
Michael Musgrove
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
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
HOW US ENTERED INTO RECESSION
•“Recession” is defined by NBER as “significant decline in the economic activity lasting more than a few months”
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)
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)
Porter’s Diamond of National Advantage
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
Demand Conditions
Determines the direction of innovation and economic development
Diverse culture Trend setter nation Domestic firm global forecasting
Firm Strategy, Structure, and Rivalry
The U.S. encourages fair competition (FTC)
Labor freedom Privatization
Related and Supporting Industries
Strong global position Judicial system Product performance Environmental safety standards
BRIC Nations
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)
India – Barriers
Rural poverty and slums Entrenched corruption Poor infrastructure Longest national constitution
India - Strengths Second largest English
speaking population Educated human capital Evolving politics and media –
Empowering democracy Impact of services industry
on overall economy
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
Brazil - Barriers
Poverty and slums Poor infrastructure High public debt Unequal income distribution
Brazil Strengths
Brazil is far less reliant on exports Only 17% are exports
Resource-rich country Surge in domestic consumption Attention from global investors
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%
DRIVERS OF CHINA ECONOMY GROWTH
Cheap Labor & Education Government policy High saving rate A strong manufacture base
Barriers OF CHINA ECONOMY GROWTH
The lack of rule of Law Real Estate bubble
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.
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
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
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