Things are different in this entrepreneurial world in 2006.

Entrepreneurs used to be able to simply understand their local economy and that was enough. Today, events around the world can dramatically impact local markets.

On Oct. 11, 1998, Merrill Lynch ran full-page newspaper ads proclaiming, "The World is 10 years old. It was born when the Wall fell in 1989. . . . The spread of free markets and democracy around the world is permitting more people everywhere to turn their aspirations into achievements. And technology, properly harnessed and liberally distributed, has the power to erase not just geographical borders but also human ones . . . "

In his book, "The Lexus and the Olive Tree," Thomas Friedman cites a classic example of how economic events spread.

On Dec. 8, 1997, the government of Thailand closed 56 of 58 of its leading finance houses primarily due to the fall of foreign currency reserves. During the next few weeks the Thai currency weakened by 30 percent as locals, fearing collapse, put their money outside of Thailand. Thai businesses that had borrowed foreign currencies to finance their businesses had to have 30 percent more Thai currency to pay their foreign debt and began to default.

Locals in other Asian economies began to fear that their respective governments would do the same and began to put their money in more stable countries and caused their local currencies to collapse as well.

This caused recession in most of Southeast Asia, and their demand for commodities dropped suddenly. As a result, commodity prices around the world began to collapse.

Russia had become critically dependent on oil revenues to pay its debt. As the price of oil fell, the price of Russian bonds fell. Many U.S. hedge funds and banks saw the huge interest rates and bought Russian bonds. But then Russia defaulted on its bonds and hedge funds and banks were in serious trouble.

They sold bonds in financially sound countries to cover their losses. As a result, Brazil, Egypt, Israel and Mexico all had to raise interest rates to meet their borrowing needs, and the disaster spread to much of the rest of the world.

This sequence of events had impact in the United States in two ways. First, it drove up the cost of borrowing for small companies, because small companies are usually "noninvestment grade" and ultimately borrow from the same sources as the foreign governments who were forced to raise rates.

Paradoxically it also drove down the interest rates on U.S. Treasury bonds because people were selling the higher risk bonds and putting their money into safe Treasury bonds.

Since mortgage rates tend to be tied to U.S. Treasury rates, mortgage rates fell. As a result, many people refinanced their houses at lower rates. Many banks that had loaned mortgages and were counting on the higher interest rates got into trouble when those interest rates fell as people refinanced.

Of course, all good entrepreneurs know that such changes can be viewed as a threat or an opportunity. The threat comes from the fact that individual countries can't keep their economies separate from other economies. As those who follow Alan Greenspan and the Federal Reserve know, he frequently cites world events as the reason he must take action.

Entrepreneurs who are willing to broaden their horizons and look past their own state and country can take advantage of these worldwide linkages to offer services and products that help people deal with life in this entrepreneurial world in 2006.