Walking through the spice markets of Tashkent or down the Champs-Elysees in search of something unique that I can't find at home, I am struck by two things:
* Nothing has changed in hundreds of years. Marco Polo, Christopher Columbus and other explorers couldn't resist the urge to trade in goods that they could not find at home, such as precious metals, spices and silks.
* Everything has changed. The world has become a much smaller place. It is more and more difficult to find things that are unique. I can explore the world's offerings and gather my trinkets via the Internet without ever leaving my living room.
The globalization of the markets is not limited to trinkets. Multinational corporations of all sizes take advantage of the availability of raw materials and lower labor costs overseas to provide us with a wide array of goods and services at lower cost. Foreign companies in growing numbers routinely raise money in U.S. financial markets, and U.S. investors increasingly seek to diversify through foreign investments. As of April the 48 major world stock exchanges listed 39,152 companies, of which 2,648 were cross-border listings.
The clients we serve, the companies we work for and the students we educate are all affected by the world economy. They will increasingly take advantage of the international opportunities that await them. There is no doubt this globalization of the world's markets has been enabled by technology, which allows us to reach millions of people around the world in a matter of seconds. That has created new opportunities for businesses and investors and new sources of capital for issuers.
Is this a good thing? My answer is "yes." We need to embrace the world economy. It is a powerful force for raising living standards around the globe. The free flow of goods, labor and capital lowers costs as it increases investment and provides jobs. Higher living standards around the world would contribute to economic, political and social stability. Whether we like it or not, globalization is happening. The real question is: How can we take advantage of the opportunities?
It is a misconception that international opportunities are available only to large, multinational organizations or that access to large amounts of capital and global reach are necessary to be successful. In fact, smaller and more nimble organizations can do quite well in the international markets. They can act quickly and focus on niche markets--such as specialized computer software or equipment or one-of-a-kind consumer goods--that larger companies may overlook or not be interested in serving. Furthermore, the financing needed is often less than anticipated.
We also need to remember that not all exports are physical goods. In fact, companies in the service industries make up the fastest-growing sector of the global economy, and the United States is the largest exporter of services. CPAs in public practice can advise clients interested in exporting the services they offer--and also can export their own services.
The advantages to exporting are many, including increased profits and the chance to take advantage of idle capacity and certain tax incentives, as well as expand the company's market. But, of course, there are risks. Small and midsize businesses or practices considering going international need to hire advisers familiar with laws and regulations, trade restrictions, distribution requirements and other business practices and standards in the countries where they will be working. Depending on the country, the business environment can be quite different From our own.
CONVERGENCE OF STANDARDS
Here in the United States, we are accustomed to an infrastructure with national rules that reduce risks--giving us the confidence to enter into transactions--and contribute to a smoothly functioning economy within our borders. The global markets require a similar set of international rules to achieve a smooth functioning of the market economy. …