The World Economy in Spring 2013

Money and Finance
Finance Chart

The state of the global economy is very important to the venture capitalist like Efraim Landa. Over the last few decades there have been many changes in the VC market. There was a time when the venture capitalists was only interested in investing in their local businesses but over the last few decades as international options have become available, the VC market has continued to expand and to strengthen the global economy. Specifically many areas that were struggling have experienced some level of economic progress due partly to regulations which allowed for international investments. Just where does the global economy stand today? How serious was the latest recession and how has it affected the investment potential of VC firms around the world?

How is the global economy changing?

In 2011 the entire world suffered major economic setbacks. It has continued toward gradual improvement since then due to the institution of better economic policies in the European area and the US improving their global activities. It is likely that recovery will continue albeit slowly and there will continue to be solid activity by VC firms who offer funding which help to improve and sustain a emerging and developing economy. There are many changes occurring in the global economy as innovations are helping to create brand new business models and old ones are being retired. On one hand most changes are not even noticeable because they translate into minor improvements in production methods, more cost effective techniques and increasing efficiency in every way including communication systems. But when they are all considered together, they end up showing some major trends.

How do the changes add up?

These types of “small” changes can have a major effect on the location where products are manufactured and even who gets to consume them and how. Changes are definitive of where wealth is created and in what areas it is destroyed. They can even determine where and why the next “big idea” is generated that will affect the global economy and its progress. Little changes have added up to huge differences in our global economy. For instance, who would have been able to predict how rapidly China would become a major player in the global economy? And would anyone have ever thought that most of the world’s mass production would shift from the US and Europe over to Asia? And who would have been able to guess how powerfully important the internet would be in our lives today?

Where are we today?

It is rather obvious that the global economy is undergoing huge changes and that there are certain sectors that are more likely to grow than others. Highly developed companies have to become more innovative in order to secure investments like venture capital funding. Without innovative thinking these areas are not likely to continue to grow. The world is becoming more organized and there are many rapidly growing multinational technology companies that are benefiting from these current trends. Global companies are known to establish facilities such as production lines or manufacturing companies in developing countries or emerging markets rather than in developed companies. This is because it is cheaper to run but these facilities also work to stimulate the local markets where they are located. According to some economists, manufacturing helps to create relatively well paid jobs, encourages VC investments and helps the economy develop more ways to diversify.

The Role of Innovation

Innovation is occurring in many more emerging markets mostly because of the growing need to adapt to local requirements. The former economy worked well inside the one-size-fits-all mentality but that no longer works. It is important for companies to be innovative in many different ways and locations today. It is becoming more acceptable for companies to partner with local governments. Policymakers will need to make policies which will be supportive of growth in the short term as well as being able to implement changes which will help maintain growth in the long term. The global economy is more “global” than ever before and the changes are still fragile.

Published by Efraim Landa

My name is Efraim Landa I am an entrepreneur and an expert in venture capital. I am the co founder of Effi Enterprises, a venture capital firm as well as the co founder and CEO of Gluco Vista, a company that is in the process of developing a non invasive glucose meter for those with diabetes.

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