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Globalization 3.0: competing for growth - EY - Global

Composition of respondents

World-class companies are now found everywhere, and in the rapid-growth markets, prudent fiscal policies are now the rule rather than the exception.

Between 2011 and 2025, emerging economy GDP is expected to grow by about 4.7% every year, more than double the 2.3% pace of the developed world, according to the latest World Bank forecast.

If growth continues in line with these expectations, nearly half the world’s GDP will be produced in rapid-growth markets by 2015.

“The fast rise of emerging economies has driven a shift whereby the centers of economic growth are distributed across developed and developing economies — it’s a truly multipolar world,” said Justin Yifu Lin, the World Bank’s Chief Economist and Senior Vice President for development economics. The primary cause, in his view, is “emerging market multinationals are becoming a force in reshaping global industry.”

Our report, Globalization 3.0, looks at a key force behind this revolutionary shift: a dynamic group of leading companies now dominant in rapid-growth markets. We compared the performance of 150 enterprises from rapid-growth markets to 80 leading US and European companies.

Our analysis found that whatever short-term volatility may be ahead for businesses across the world, the longer-range trend is toward a broader geographical distribution of market leading enterprises.

  • For established companies that grew in an age of more limited competition, this new era is likely to prove an exciting and dangerous time — it’s now a much more complex game with threats and opportunities in all directions.
  • For investors, our findings suggest that balanced portfolios can no longer be neatly divided between well-established, financially sound companies at home and potentially more volatile ones abroad.
  • For business leaders everywhere, the old certainties are gone too — where the serious competitive threats will come from, where the richest markets are located, and which locations will have the greatest cost advantages.

As a result, we all must learn to compete in a world turned upside down.

In this report, we explore these issues across the following topics:

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