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Recovering from the Great Recession: Entrepreneurial Opportunities

Written By: gutiea on October 6, 2010 No Comment

IMF’s World Economic Outlook 2010

The current IMF Outlook indicates some clear trends, mainly that entrepreneurial opportunities for growth are overseas, in emerging economies, and that some developed countries opportunities fall around delivering revolutionary cost savings for government services, mainly entitlements.

“Most advanced economies and a few emerging economies still face large adjustments. Their recoveries are proceeding at a sluggish pace, and high unemployment poses major social challenges. By contrast, many emerging and developing economies are again seeing strong growth, because they did not experience major financial excesses just prior to the Great Recession. Sustained, healthy recovery rests on two rebalancing
acts: internal rebalancing, with a strengthening of private demand in advanced economies, allowing for fiscal consolidation; and external rebalancing, with an increase in net exports in deficit countries, such as the United States, and a decrease in net exports in surplus countries, notably emerging Asia. The two interact in strong ways. Increased net exports in advanced economies imply higher demand and higher growth, allowing more room for fiscal consolidation. Strengthened domestic demand helps emerging market economies maintain growth in the face of lower exports. A number of policies are required to support these rebalancing acts.” (Ref. Extracted from Executive Summary IMF’s World Economic Outlook 2010, pp. xiii)

There are some important implications:

  1. Emerging Countries have recovered.
  2. Real state in developed countries will remain depressed for another 8 yrs! (p. 40 footnote)
  3. Developed economies will empower exports through tax incentives and monetary intervention.
  4. Government will have to become more efficient.
  5. Entitlements will be reformed in most developed countries.

These conclusions point to some entrepreneurial opportunities:

  1. Exporters in developed countries may see some opportunities (Alternative energy, R&D subsidies, and incentives to export new technologies)
  2. There is a huge need for services and products that reduce the cost of delivering entitlements, that is social security and health care for retired people.
  3. Government will become more efficient, and technologies for efficient public services delivery and comprehensive system-level solutions for attaining the desired efficiencies are urgently needed.
  4. There will be a massive wave of privatizations in developed countries, entrepreneurs may try to capitalize on this.

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