The United States has long served as a worldwide engine of prosperity and economic stability.

Many of the global benefits from its economic power have come from offshoring -- that is, relocating business operations to another country. Chinese manufacturing, Taiwanese electronics, Indian software development, and Costa Rican business services provided the initial fuel and capital for the current global boom.

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

The success of offshoring largely boils down to simple economics. The companies that moved production abroad have been able to attract high-value employees for a fraction of what it costs to hire Americans. Those wages seem low by U.S. standards but tend to be good for that specific country.

The next boom
The act of paying decent wages in relation to cost of living has spurred a new phenomenon in many formerly impoverished countries: a middle class. Not a big deal to the average American -- but it is a huge deal for the rest of the world.

On the whole, a solid middle class absolutely dwarfs the spending power of anyone else. The ultra-rich may have a whole bunch of money, but there are only so many of them. 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 more work than simply opening a foreign office and setting up shop. 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 the global economy, those concerns mean it's still tougher to prosper abroad than it is at home. As such, the odds greatly favor companies that have achieved global success. After all, they've mastered the intricacies of operating around the world, and that gives them a tremendous edge on the competition.

So who's winning? Perhaps some of these names are familiar:


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 one of them is:

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

Because of the work these companies have done to get where they are, each is perfectly positioned to profit from the tremendous growth that's 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 focus your investments only 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 and Income Investor recommendation. Posco is an Income Investor choice. Embraer is a Stock Advisor recommendation. The Fool has a disclosure policy.