Economists and political scientists have been quipping that it is the economic superpowers Japan and Germany who won the Cold War that was wedged by the military superpowers, the U.S. and Soviet Union. They believe that the United States has been declining economically, politically and even militarily since then.
For a long time, the US dollar has been fluctuating in terms of value, with bounces and recoveries that have been unable to change the downward trend. The noted fluctuations may affect the role of the dollar as an internationally accepted currency. If that role changes, then it is thought that the economic power of the US will also drop.
Besides the ailing dollar, there are several financial obligations that are held by the United States, which add up to one point five trillion US dollars. Examples of such obligations are the contractual requirements of the U.S. government, such as pensions payable to the military and civilians, leases, health benefits of retirees, loan guarantees, and federal insurance payouts. These financial obligations, some of which it has not met, have seen its position threatened as the leader of the free.
Currently, economists widely debate the likelihood of the U.S. currency being rivaled or even surpassed by the euro as a reserve currency. The ailing U.S. dollar will then be replaced as a dominant reserve currency by the euro which will have gained value, world power, and exposure and acceptance by a majority of world economies. Even though its currency keeps on fluctuating in the world markets and other financial constraints that the US might be going through, it still remains the leader in the free world due to a number of factors that favor it.
The views presented below are supported by two articles: “The Decline and Fall of Declinism” by Alan W. Dowd, and “The Last Superpower” by Fareed Zakaria.
Looking at America’s contribution to the world’s economy, the U.S is still the largest contributor. The size of the U.S economy is thirteen point one three trillion U.S dollars, which constitutes twenty percent of the whole world’s global output. The rate at which the United States is growing at is faster than that of the European Union, Britain, Australia, Germany, Japan, and Canada. According to a prediction by Gerard Baker of the Times of London, by 2021, the size of Europe’s economy will be half the size of the U.S. economy.
Although some people perceive China’s economy as a threat to U.S. economic primacy, the addition that the United States is making to global output in absolute terms is twice the addition made by China. The United States per capita’s income of more than forty four thousand U.S. dollars is more than that of china, which is slightly above two thousand U.S. dollars.
The muscular economic output of the United States can be highly attributed to the increased productivity of its workers. According to Matthew Slaughter of the National Bureau of Economic Research, the productivity of the U.S. worker began to increase rapidly in 1995. It doubled to an average annual rate of two point seven percent between nineteen ninety six and two thousand and six.
Any other county in the world would have been overwhelmed by the financial and economic blows that were caused by the bombing of the world trade center and the Katrina, but the United States was able to withstand. It is estimated that the United States could have lost as much as five hundred billion dollars in Gross Domestic Product through the terrorist attack on the world trade center. The amount of this loss is big enough to constitute half the economy of Canada. In the twelve months immediately following the Katrina, Congress allocated one hundred and twenty two billion U.S dollars to the area that suffered the loss as a result of the disaster. The U.S. economy was able to dust itself off and soldier on, despite the fact that none of these disasters had been foreseen or budgeted for.
According to Robert Kaplan, American ships and sailors have contributed a great deal to Globalization.
According to Niall Ferguson, the proportion of global productivity that is contributed by the U.S. is more than twice the highest proportion of global output that Britain has ever achieved.
According to Fareed Zakaria, the United States may not be in decline, but the rest of the world’s powers may be on the rise of the wages. Globalization may be striking back. He argues that as the rivals of the United States have prospered, key industries have been lost by the U. S., the amount of money being saved by its citizens has greatly declined, and the amount of money that its government owes Asian central banks has increased. Despite all these, the US still remains the leader of the free world even though it has lost most of its industries and domestic savings declined.
As globalization and outsourcing have increased rapidly over the past 20 years, America has grown by more than three percent as compared to France, Germany and Japan. Productivity has grown by more than two percent for ten years now. This rate is higher than the average of Europe. American exports have also held up, despite the recently ended ten year spike in the U.S. dollar value. In 1980, the U.S. exported ten percent of the world’s total exports while in 2007; U.S. exports were nine percent of the world’s total exports. The world economic forum portrays America as the biggest economic power in the world. The forum ranks it first in innovation, second in research and technology expenditure by companies. The forum also ranks it second in terms of quality in research institutions and ninth in its readiness technologically. India only breaks the top ten on market size.
U.S firms have always maintained the lead in terms of production and profits. Despite wars, depressions, and a slew of other powers rising, the United States’ position in the global economy has remained the same. The U S has generated between twenty and thirty percent of world output, for one hundred and twenty five years, with only five percent of the world’s population. Although there will be some slippage of America’s position over the next few decades the United States adapted well to the challenges that it confronted over the last century, and can adapt to new challenges as well. The rise of the emerging nations is likely to come in the next few decades mostly at the expense of Japan and Western Europe, which are locked in a slow decline that is demographically determined.
Some citizens of the United States have become acutely conscious of the changing world, and awareness by American business of the shifts taking place around the world is increasing, and their response to these shifts is rapid and unsentimental.
Companies and co-operations based in USA almost uniformly report that penetration of new foreign markets determines their growth. Considering an annual revenue growth of two to three percent annually in the United States as compared to ten to fifteen percent annually abroad, they know they have to compete strongly in order to remain on top of the league.
The United States still has a lot of influence in matters affecting the world. The world has several nations with greater assertiveness and activity from all actors, but the United States remains the most powerful country by far. We are likely to live with such a hybrid international system for several decades. Such a system would be more open, more democratic, more dynamic, and more connected. Europe cannot act as one, whether militarily or politically, while Germany and Japan are hamstrung by their past. China and India are not yet fully developed.
In the emerging system, the United States occupies the top spot. The new order mostly challenges the U.S., but does not herald American decline, because America’s strengths are enormous. The new world will introduce a diversity of forces, rather than introduce a new superpower.
Britain and America helped create and maintain an open world economy. They have been protecting sea lanes and trade routes, holding the reserve currency, investing abroad, acting as lenders of last resort, and keeping their own markets open. The majority of humankind has benefited from this order.
Technologically, United States stays ahead of all other nations. Foreign firms taken over by U.S. firms usually enjoy a tremendous productivity advantage over those that are taken over by non-American firms. Reenen and his colleagues conclude that U.S. firms appear to be organized or managed in a way that enables better exploitation of information technology.
Dell and HP, manufactured by the United States, dominate the global Personal Computer market. Microsoft software is run by more than three hundred and thirty million PCs all over the world. Sony’s music downloading system has been displaced by Apple iTunes inside Japan. The EU is spending almost three hundred million U.S dollars finding an answer to Google, a creation of Stanford graduate school students.
The military of the USA is the most powerful in the entire world. It has a base in many countries and its soldiers are well trained. It has managed to maintain some form of stability in the world through the fight of terrorism and piracy in the deep seas. It is equipped with advanced technologies that keep it on the lead and distinguishes it from other countries.
For over twenty years, the international order has given different definitions to the power of the United States. Global action has started from American ideas about economics, foreign policy, and politics. The most important relationship for every country in the world from Russia to China, and South Africa to India has been with the U. S.
In the case of Iraq, the United States invaded a sovereign state without much opposition from other countries.
In conclusion, the United States is still on the lead in many aspects. The country is a leader politically, economically and technologically. Many countries look up to the US for support when faced with calamities or when they have an economic problem or faced with a threat of war. Its military power is felt by more than half of the whorls nations. Its ideologies spread fast in the modern world. Technological innovations of the country are easily accepted and embraced. The country is, and will be for a long time, the leader of the free world.