The World’s Surprising Economic Superpower

The yearly lot 500 rankings have become an iconic measure of bodily influence in the U. S. moving in world. But just as major(ip) league baseballs World Series stacks the deck in kick upstairs of U. S. baseball teams, the event 500 is limited to U. S. companies. And just as the join States failed to end up at the jacket crown off in this years (genuinely globular) World baseball Classic, the relative position of U. S. companies changes once you step onto the globose playing field. The coupled States unruffled dominates the Fortune Global 500 with 140 U. S companies, its 30% share equaling roughly the United States share of the global economy.Thats twice as many as its nearest competitor, Japan, with 68 companies on the list. But U. S. office is clearly eroding. Most notably, a U. S. company is no longer at 1, with Royal Dutch Shell displacing U. S. -establish Wal-Mart as the worlds largest company with revenues of $458 billion. Thats the first prison term a non-U. S. co mpany has been at the head of the list since 1996. The 140 U. S. companies that did need the list combine for the lowest number since Fortune magazine began lay in the list in 1995. Recall that 2008 was particularly unkind to the United States.Within the cover of a remarkable 12 months, household names uniform AIG, Freddie Mac, Lehman Brothers, Merrill Lynch, Wachovia, and uppercase Mutual all disappeared from the list. The Fortune Global 500 BRICs Rising? The needful try of the BRIC economies Brazil, Russia, India and china is now taken as holy judicial writ among the U. S. business press. With the BRIC countries now boasting more than a quarter of the worlds republic area and more than 40% of the worlds population, its now considered inevitable that, in toll of size, speed, and directional flow, the transfer of global wealth and stinting power is change over from West to East.While its true that the BRICs offer some of the best enthronization opportunities, in terms of companies on the Fortune Global 500, the dominance of the BRICs is still removed from todays certainity. The BRICs account for 58 companies among the Fortune Global 500. China stands head and shoulders in a higher place its rivals, with 37 companies on the list a gain of nine companies from exactly a year ago. India has seven companies on the list, while Brazil has sextette and Russia has eight among the top 500. As pundit David Rothkopf observed, Without China, the BRICs are ust the BRI a bland, overstuffed cheese that is primarily known for the wine that goes with it. That said, even the Chinese companies on the list are spartanly world call downers. Most are state-owned behemoths not known for savvy or innovation. Chinas second-biggest company is the creatively named State Grid, which ranks (a shocking) 15 in the world. And in 2009, you toilette still win bets at about any U. S. bar by betting someone that she cant name a Chinese brand. Most of the Chinese compa nies on the list are like a 7 5 basketball player who can moreover dribble the ball.Sure, its hard to ignore that he is an intimidating presence on the basketball court. But that doesnt mean that youd want to put him on your All-Star team. And its hard not to notice that the largest BRIC companies outside of China are largely based on natural resources that is, trust fund countries pumping wealth from the ground. Take outdoor(a) the oil and steel industries, and Russia, India and Brazil all suddenly rank aboard Denmark, Austria, Ireland and Finland, with two Fortune Global 500 companies each.In terms of heft, the BRICs are still distinctively minor league. Brazil has one company in the top ascorbic acid, Russia has two, India has zero, and China has five, measureing eight companies from the BRIC countries in the top 100. By this measure, the combined BRICs beat Britain alone but not France. The Fortune Global 500 The Worlds strike Economic Superpower? With all eyes looking t oward the inevitable rise of the BRICs, its easy to spurn Old Europe as a global economic force. Im guilty of it and Ive spent my entire adult life here.There whitethorn be a handful of contrarians willing to say that China may not be all that its cracked up to be. But in over 15 years of active investment reading, I can recall only a single book that ever viewed Europes prospects in a positive light. Taken together, Europes economy is not only big than the U. S. economy, but its companies also rival the United States for corporate oomph. The economy of Germany, with a population of 80 meg people, is the size of Chinas, and it both exports more and boasts more companies among the Fortune 500 than its Asian rival (39).Throw in France (40), the United terra firma (26), Switzerland (15), the Netherlands (12), and Spain (12), and the top six European economies boast an impressive 155 companies among the Fortune Global 500. Not bad for a combined population of 266 million substanti ally less than the United States. Include the Scandinavian countries of Sweden, Norway and Denmark (combined population 19 million) landing nine companies on the list, and you skew the list even shape up in Europes favor. And unlike the BRICs, the European companies are distinctly top-heavy.Germany has 15 companies in the top 100, France, 10 Britain, six Italy, five Spain, three and Netherlands, two, for a total of 41. That far outpaces the United States collective 27 companies on the list of the worlds 100 largest. The Fortune Global 500 A Welcome Correction Parsing the Fortune Global 500 rankings offers an important correction to what you hear in the mainstream business press. First, on a farming level, U. S companies still dominate the global economy. And Japan, for all of its widely publicized problems, is still a powerful economic force.Second, China plays a much smaller role in the real world than it does in your email inbox. Third, and perhaps most surprisingly, taken toget her, the European companies outrank the United States both in the top 100 and top 500 of the Fortune Global 500. Think of Europe as a single country and you suddenly realize that it trounced both the United States and China in the Beijing Olympics. And it wasnt even close. Yet, consider how likely it would be that youd ever subscribe to an investment newsletter that focused solely on investment opportunities in Europe.The broader lesson is that distinctions on national lines are increasingly irrelevant. A superb example is Arcelor Mittal, the worlds largest steel-maker, which grew its revenues faster than Google did over the past five years. Arcelor Mittal is technically a Luxembourg-based company, run by an Indian, who lives in London. And Id be surprised if you even knew (or cared) that the worlds 1 company, Royal Dutch Shell, is actually based in the Netherlands. For true multinationals, country of origin is so yesterday. And thats the way it should be for you in looking at you r investments.