The world can be a pretty nasty and unpredictable place. It is clear that the last 50 years have brought more attention to creating freer and fairer trade. Enforcement of previous agreements, the growing number of free trade agreements, and the resolution of the Doha Round all portend a sanguine future for trade. Because the future promises freer trade does not, however, tell the business planner enough.

A sanguine future suggests a trend but one should continue to expect uneven progress over time and over place. A step backwards is sometimes necessary to move forward. At the root of some of the uncertainty is war and security. The Iraq War and the War on Terror create strains between Moslem and Judeo-Christian countries. They also produced tensions among countries within these “camps”. For example, long-standing trade disputes and differences between the U.S. and Europe have not been ameliorated by their different stances on Iraq.

But even without such extreme security problems there will continue to be local and regional issues that work against the expansion of free trade. We began this note by pointing out how capitalism combines creation with destruction. While we are pleased by the benefits that accrue from the winners’ actions, we can’t avoid the fact that change involves displacement – loss of jobs and income. Every country and every democratic government within each country must resolve these issues or the political process will make expansion of free trade more difficult. The U.S. and the French want to protect their farmers and low-income workers. China cannot turn its back on millions of workers furloughed from closed government enterprises. Brazil’s poor demand better treatment.

 

This all means that business executives have wide information nets to cast. The world economy promises ever larger rewards for companies that take advantage of its growth and change. But the latter won’t announce themselves with blaring horns. The changes will arise abruptly and unexpectedly over time and over space. As in most phenomena, the degree to which these changes are unexpected depends upon how much one invests in learning. Those who pay attention to global economic and business changes will be the ones that best take advantage of the spoils.