(Fortune Magazine) -- Just how red-hot is the current worldwide expansion? "This is far and away the strongest global economy I've seen in my business lifetime," U.S. Treasury Secretary Hank Paulson declared on a recent visit to Fortune's offices.
That may come as news to many Americans, whose boom-time memories are stuck in the 1990s, when Silicon Valley was the epicenter of our growth fantasies. But the fellow now occupying Paulson's old office at 85 Broad Street in downtown Manhattan shares that upbeat view. Just returned from a ribbon-cutting ceremony in the Middle East, Goldman Sachs (Charts, Fortune 500) CEO Lloyd Blankfein waves out toward the East River as he explains how the rise of the "BRICs" has altered his strategy and his travel schedule. (BRIC is an acronym Goldman coined in 2001 reflecting the rising economic power of Brazil, Russia, India, and China.)"I helped make my career by being very disciplined about opening offices," he says. Yet in nine months Blankfein has announced or opened offices in São Paulo, Moscow, Tel Aviv, Mumbai, Qatar, and now Dubai. "We've never done anything close to that before," he marvels. "The week before Dubai, I was in Turkey, and before that, Russia and China. I'm really living the BRICs-plus-Middle East kind of life."
These days more and more CEOs are livin' la vida BRIC. GE's (Charts, Fortune 500) Jeff Immelt devotes 12 weeks a year to foreign travel and is looking for his company to grow "twice as fast outside the U.S. as inside - 12% a year, vs. 6%." Immelt expects to see even more robust growth - 20% a year - in emerging markets, which last year accounted for $30 billion of GE's nearly $170 billion in sales.
John Chambers, who last fall opened Cisco's (Charts, Fortune 500) new Globalization Center in Bangalore, seconds the notion that "this is the strongest global trend" of his career. "There is a unique balance today," he says. "More than half of GDP growth is coming from emerging countries. And yet the developed countries are also doing pretty well. It is something we have never seen before."
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Note this, unlike previous booms, is a truly global expansion. The developing world is growing faster than the developed, Europe faster than the US. Real incomes are rising everywhere. The wealth of the world is growing at an amazing rate. The human race, despite rapid population growth, is nearly three times richer today than we were back in the 1970's. The old post-war development models upon which so many of our transnational institutions are based, are hopelessly out of touch with today's reality. These are the best of times..., ever in human history.
And there is always the possibility of a major war. That has been diminishing in recent decades as the global level of warfare, both international and civil, has been in sharp decline, but it could happen -- remember, just a few years ago India and Pakistan were teetering on the brink of all out nuclear warfare.
And there is always the political factor. Reactionary leftists in Europe and the US could gain power and institute protectionist legislation that would severely inhibit global economic activity.
These are all short-term dangers and at some point one of them or more is bound to kick in, but as Fortune notes, the long-term prospects are much more optimistic.This is because of deep, structural changes that are taking place all over the world. The tech bubble of the nineties may have burst, costing investors trillions, but the tech industries march on, generating new profits. Global consolidation of production, which a generation ago produced huge profits in the steel industry is now doing the same in other industries. Lending institutions, other than the World Bank which has resisted all attempts at reform, have changed their practices, becoming far more canny in choosing who to lend to and how. The consumer market, previously confined to the developed West is now going global and spurring entrepreneurial booms in far flung reaches of the globe. There will be a correction (there always is) and it may be deep and long, but these changes in global business patterns are here to stay.
What Fortune has not noted is just how much this transformation has been facilitated by American political leaders. The much-maligned trio of internationalist presidents -- Bush, Clinton, Bush -- promoted, over determined Congressional opposition, free-trade policies that brought much of the world into the interactive mix. All three heroically resisted pressures from international agencies and the environmentalist movement that would have imperiled global prosperity. The current administration, in particular, has worked assiduously toward creating new security arrangements, both bilateral and regional, that will replace those old Eurocentric institutions inherited from the mid-twentieth century. These new agreements, on defense, on the environment, on property rights, on nuclear proliferation, and a host of other matters are centered on Asia, and are designed to protect the favorable business climate that has emerged there. These three presidents, especially Dubya, may well go down in history as the most forward-looking in our history since the days of Lincoln and Grant.