Harry Broadman, PWC’s Chief Economist and leader of its emerging markets practice, makes an overwhelming case that the economic future of the world lies in the Far East, including but not limited to China and India (which between them have 1/3 of the world’s population).

In remarks delivered this weekend in Philadelphia, Broadman demonstrated that emerging countries are the engines of global growth, and that the trend is increasing.  The growth of the economies of emerging countries is not cyclical; it is a long-term structural change driven by the world being flat, the speed of communication and change, and the rise of the middle class.  Indeed, emerging economies fared better than established economies in resisting the 2008 economic collapse. 

According to Broadman, we need a strategy which he calls “China 2.0.”  It is not just China; it is Vietnam, Myanmar, Philippines, South Korea, Indonesia. 

A related trend in emerging economies is more sophisticated buying.  Noting that equipment purchased at low cost often is of lower quality, buyers in emerging markets are moving toward buying the best possible equipment, as the amortized true cost over time is less. 

The key to marketing emerging economies is that you need a package; the country may need railroads, but it also needs banking, water management, IT and the like.  Larger companies servicing the emerging market must cobble together a package responsive to a broad spectrum of needs. 

Finally, we have to stop thinking about emerging economies as markets, or as labor pools.  To a growing extent, innovation itself is coming out of emerging markets, including out of Africa. 

So we used to say glibly that the “East is red” but, at least to PWC and Broadman, it looks more like greenbacks.  There are lessons for United States manufacturers, service firms and, indeed, mid-term and long-term investors in the equities markets.  Ladies and Gentlemen: replace your bets.