In the past, the United States motored along as the worldwide engine of prosperity and economic stability. Many of the global benefits from its economic power came from offshoring activities. Chinese manufacturing, Taiwanese electronics, Indian software development, and Costa Rican business services provided the initial fuel and capital for the current global boom.

All those first-generation activities had one thing in common: They were all based on goods and services destined for use in the United States. The old joke about the global economy was, "When the United States sneezes, the rest of the world catches a cold." Sure enough, if the U.S. faced a recession, it knocked much of the rest of the world for a complete loop.

So who gets the credit for offshoring's success? Much of it boils down to simple economics. The companies that moved production abroad have been able to attract high-quality employees for a fraction of what it costs to hire Americans. While these wages seem low by American standards, they tend to be good for that specific country.

The next boom
The act of paying relatively decent wages for the cost of living has spurred a new phenomenon in many formerly impoverished countries: a middle class. While that may not sound like a big deal to the average American, it is a huge deal for the rest of the world.

Taken as a whole, a solid middle class absolutely dwarfs the spending power of anyone else. While the ultra-rich may have a whole bunch of money, there are only so many of them around. To have a strong local economy, instead of simply an export-driven one, a country needs a solid middle class.

Make money globally
Because of this phenomenon, companies are lining up to serve -- and profit from -- that emerging global middle class. Unfortunately, prospering abroad takes a bit more work than simply opening a foreign office and setting up shop. Some unique concerns that multinational companies face include:

  • Currency fluctuations
  • Workplace culture clashes
  • Unfamiliar consumer tastes
  • Political risks to the business and its products
  • International accounting differences.

Despite the tremendous potential of our global economy, those international issues mean it's still tougher to prosper abroad than it is at home. As such, the odds greatly favor the companies that have already garnered success on a global scale. After all, they've already mastered the intricacies of operating around the world, which gives them a tremendous leg up on the competition.

So who's already winning? Perhaps you've heard of a few of these companies:


Home Country

Market Cap (in Billions)

Sasol (NYSE:SSL)

South Africa


Hitachi (NYSE:HIT)



Posco (NYSE:PKX)

South Korea





Embraer (NYSE:ERJ)



Reed Elsevier (NYSE:ENL)



Barclays (NYSE:BCS)

United Kingdom


Every last one of them is:

  • A multibillion-dollar business
  • Headquartered outside the United States
  • Already a global powerhouse in its industry
  • Poised to go wherever consumer demand takes it.

Thanks to what these companies have already gone through to get where they are, each is perfectly positioned to profit from the tremendous growth that is just now starting in domestic markets worldwide.

Buy the world
With so many global powerhouses outside the United States, you're leaving money on the table if you only focus your investments at home.

That's why my colleague Bill Mann launched Motley Fool Global Gains. Every month, he scours the globe for the best of the best, wherever it may be. With so many newly affluent consumers and strong companies located elsewhere, can you really afford to ignore the rest of the world? Take the next 30 days to look around Global Gains for free.

This article was originally published on Dec. 5, 2006. It has been updated.

At the time of publication, Fool contributor Chuck Saletta did not own shares of any of the companies mentioned in this article. Sasol is a Global Gains recommendation. Posco is an Income Investor selection. Embrarer is a Stock Advisor pick. The Fool has a disclosure policy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.