By Marvin Zonis

“Folks are dumb where I come from,
They ain’t had any learning.
Still they’re happy as can be

Irving Berlin wrote the music and lyrics for the 1946 musical, Annie Get Your Gun that starred Ethel Merman. It was a smash hit with over 1100 performances in New York alone.The advice in the song seems to me to be perfect wisdom for businesses today. “Doin’ what comes naturally” for business is to seek ever expansive markets at ever lower real production costs commensurate with levels of assumed risk.

That is precisely what businesses should be doing now despite the chilling terrorist attacks in Paris and Brussels and what appears to be other insurmountable global obstacles.

China is the throes of a massive growth slowdown and a massive distribution of political power. President Xi is centralizing power in his hands in a fashion not seen since the days of Mao while militarizing the South China Sea.

The countries that had benefitted from China’s rise by supplying it will all manner of raw materials and minerals find their export revenues slashed and their economies dramatically weakened. What looked like the ‘Great African Boom’ has turned into more of growth as usual.

EU members are struggling with the refugee crisis, a possible Brexit, a possible Grexit, an increasingly authoritarian Poland and Hungary, a menacing Vladimir Putin, the threat of ISIS terrorism, and slow economic growth.

The Middle East continues to live through an Islamic civil war with Iran and Saudi Arabia supporting their proxies and also intervening directly in the wars in Libya, Syria, Iraq, and Yemen. Power in the Kingdom of Saudi Arabia has flowed into the hands of the 30 year old, inexperienced son of King Salman, who has insisted on maintaining oil production levels. The result has been turmoil in global oil markets.

Even the United States, the bastion of political stability, has been shaken by the Trump phenomenon, the staggering increase in the wealth and incomes of the already rich, the hollowing out of the middle class, the slow growth of productivity, and the increase in the death rate of middle aged whites.

“Doin’ what comes naturally” for business in conditions of what looks like global political and economic turmoil would seem to suggest it’s time to batten down the hatches; to seal every company from the variety of risks that are everywhere in the world.

But to the contrary. It was Baron Rothschild, the 18th century member of the legendary family, who argued, “Buy when there’s blood in the streets, even if the blood is your own.” That explanation for what it meant to be a contrarian investor is appropriate for today.

For there is an entirely different story that can be told about the world and that story argues for a far more ambitious stance towards the global economy. Businesses should be investing now to acquire market access, shut down competitors, and boost profits. Globalization has not run its course but will strengthen once again as the economy passes through this current period of turmoil, driven by the inexorable logic of larger markets and facilitated by the exponential growth of technology.

But why not wait until then? For one thing, firms that operate in the dollar economy can acquire the currencies of many other countries at bargain basement rates. For another, in the slowdown, foreign investment has been particularly welcomed by most developed and emerging markets.

Where to go? One way is to look at where other firms have made foreign direct investments. According to the Financial Times, these are the developing countries that received more foreign direct investment in the first half of 2015 than the comparable period of 2014 ($ Millions):

(https://next.ft.com/content/540c5470-5ac1-11e5-9846-de406ccb37f2)

Other developing countries received substantial investments in the first half of 2015, but less than in the first half of 2014. ($ Millions)

(https://next.ft.com/content/540c5470-5ac1-11e5-9846-de406ccb37f2)

While total capital investment flows to developing countries diminished in the first six months of 2015, the total capital invested was substantial. Many firms are obviously not put off by the perceived increase of global risks.The Institute for International Finance estimates that total private capital inflows to Emerging Markets, in 2015 were $981 billion – substantial – although less than in any year since the global financial crisis.
(https://www.iif.com/publications/capital-flows)Moreover, it appears that as 2015 ended, the flow to emerging markets turned up dramatically.

(http://unctad.org/en/PublicationsLibrary/presspb2015d14_en.pdf)

Capital flows to the developed economies also weakened considerably in 2014:

(http://unctad.org/en/PublicationsLibrary/wir2015_en.pdf)

Nonetheless, it is still the case that firms outside Europe and North America were willing to invest billions in developed markets.

Not that Baron Rothschild’s advice need be taken literally. There are streets in which blood flows. Those streets in those countries can be bypassed. But there are a very large number of countries whose economies are still growing substantially, although slower than in the boom days, and whose political risks are not substantially greater than they were.

“Doin’ what comes naturally” – embracing the global economy — is still the best advice.