U.s. Trade And Economy

World War II is a great example of how war helped the US strengthen their economy because ending the policy of isolationism and joining the war ended the Depression. In the 1940’s, when the US was isolated from the rest of the world due to the Great Depression,

Although the USA was well into its industrialisation programme and its economy was growing steadfast, the impact of the war effectively ground Europe’s economy to a halt, thus allowing the US to catch up. In the period that followed it is estimated that the US economy grew by triple that of Europe’s in relative terms[2]. As a result investment in Europe fell, enhancing the problems already facing the economies of the continent. Newly established Japanese firms decided to relocate to the US, and many European firms decided to cross the Atlantic to save their businesses.

The U.S. needed to improve its economy in the late 19th-century and early 20th-century as well because the markets had been saturated with goods. For a while the economy was fine and everyone was buying goods but marketers didn’t plan for obsoleteness and so they made goods to last and therefore didn’t have anyone to sell to. This was when the country began to look towards other countries markets. Alfred T. Mahan even said at the time, “Americans must now look outward.

During World War II the United States began to manufacture war materials to support its allies through lucrative government defense contracts as automobile factories like Ford and General Motors put aside their usual business operations and began to produce tanks and airplanes, shipyards too expanded their operations . The demand for war equipment naturally increased the demand for labor and as a result helped pull the American economy out of the grips of the Great Depression. Then as the unthinkable happened, on December 7, 1941, Japan bombed Pearl Harbor, which drew many young American men into the battlefield.

U.S. trade patterns are an important topic of study due to America’s power and central position in the international market. This topic of US trade partners and our trading patterns with those partners has been approached from a variety of perspectives by several economists. Namely, Sattinger (1978), Srivastava and Green (1986), Summary (1989), and Pollins (1989a and 1989b). The literature draws many conclusions from American competitiveness and the political and social factors that help explain bilateral trade patterns the choice of trade partners. And while there is an abundance of literature concerning this topic there has been little done from the perspective of how America’s trade partners have developed and shifted over the last 25 years, which is what this paper will focus on achieving. International trade flows are also an important topic and have been estimated by many economists including, Tinbergen (1962), Anderson (1979), Helpman and Krugman (1985), Helpman (1987), Feenstra (2002), and Anderson and van Wincoop (2003). Each of these researchers used a variant of the gravity model to estimate trade flows which not only demonstrates the continuing empirical validity of the model but gives firm background with which to base this analysis. The basic gravity model states that the volume of trade between two countries is proportional to the size of the two economies, and various measures of trade resistance such as geographical distance between the countries,

In the lead-up to WWI, the United States faced a variety of economic fortunes and misfortunes. After the Civil War, there had been unprecedented economic growth, however the Panic of 1873, shook the economy to its core. Recovering from the Panic took the recovery of American industries, such as tobacco farming and cotton. However, competition in both of these areas had increased and markets that previously relied on American exports, such as Great Britain, had found, or created, new sources for these goods. That left the US in a position where it needed to find new markets for its goods. And if Europe wasn’t that market, then it had to be South or East.

When a surplus of imports is brought into the US, American businesses can suffer due to increased foreign competition. A product in which there is an import surplus is oil. The Wall Street Journal in August 2011 predicted the US would experience an oil surplus. (Herron, J., 2011) Because the US had continued to import at the same levels and domestically produce at the same level, the U. S.has a surplus of oil stored. Since the article was published in late summer 2011, the US has experienced the surplus and has since decreased the amount of imported and domestically produced oil. One would expect that having a surplus of oil; consumers would benefit with lower prices of petroleum based products. As we all experience when we go to the gas pump; this is simply not the case. While this process has many more components to it, the base of it is that a surplus of an import can cause business and domestic consumers to suffer.

After the war, Britain was financially weaker and the U.S. had the strongest economy. The products from the U.S. were dependable, cheaper and more convenient than products from Britain. Canadas relations to the American economy brought growth to the country. During the war, economic collaboration between Canada and the United States increased. Both countries supplied the allies with food and military equipment. By 1952, “77 per cent of foreign investment in Canada was American”. Billions of American dollars were invested in Canadian industry. In return, Canadians bought more from the United States than any other country in the world. By the 1970’s, more than 70 percent of Canadian import and export trade was with the United States. During and after the second world war, industrialization quickly advanced through investments of capital and major advancements in

In 1981 Ronald Wilson Reagan was elected as the 40th president of the United States. Reagan won in a landslide over former president and democratic candidate Jimmy Carter. In his inaugural speech he made the famous statement “government is not the solution to our problems, government is the problem.” This statement would later set the tone for his two consecutive terms as president and his instrumental role in shaping the values of generations of conservatives. ‘Reaganomics’ became household slang for the economic policies sanctioned by Reagan’s administration that developed a free enterprise market, high interest rates, and hands-off social policy that benefited America’s wealthy and depleted it’s poor.

The United States has an absolute advantage over the technological products and services which are critical. Within the global markets, the U.S has been able to provide tech products and services appropriately. However, it has comparative advantage of offering tech services while the absolute advantage exists in technology design and providing industrial capacity. The U.S is a major exporter in the international markets of products such as civilian aircraft, semiconductors, cars, car accessories, fuel oil, and organic chemicals among others. Such exports improve the U.S's comparative and absolute advantage.

Before World War I, the United States was in a period of isolationism, and a determination to stay out of European wars and affairs, while trying to maintain its status as one of the world’s biggest superpowers, militarily and economically (“United States Before”). America was just exiting the Gilded Age, which was an important time of growth and prosperity. Despite this, the American economy was in a small recession when entering the war, which was reversed by a 44 month period of growth caused by production for the war (NBER). This 44 month period helped the economy expand, and furthered the strength of the country. It also furthered the confidence of American businesses and the government which contributed to the attitude that caused overconfidence and helped to spread the Great Depression.

Third, the U.S started importing more products than we exported causing a deficit for the competition products made here had with imported goods, which was very high

The United States is currently experiencing a slow recovery from the recession of 2008-09. The current unemployment rate is 7.7%, which is the lowest level since December of 2008 (BLS, 2012). However, this rate is believed to higher than the rate that would occur if the economy was operating at peak efficiency, and it is also believed that there are structural issues still underpinning this performance. For example, the number of Americans who have exited the work force as the result of prolonged unemployment is believed to be higher than usual. In addition, the Congressional Budget Office (CBO, 2012) notes that long-term unemployment of greater than 26 weeks is at a much higher rate than normal, which will have adverse long-run effects on the economy, since workers with long-term unemployment often find their career paths derailed.

In the recent years, business become more larger due to the advancement of technology, a renewed enthusiasm for entrepreneurship and a global sentiment that favors international trade to connect people, business and market. The economist emphasize about the international trade can increase the production of goods and service, increase the demand from the consumer in local or international, the diversification of goods and services and the stability in the supply and prices of goods and services. As a result, it becomes the main part of the international business and motivated countries to trade with borders. The United States implied the government intervention since the great depression through the financial sector rescue

World War 2 drew a hard blow and left a serious and lasting effect to many Asian countries. This however, did not hamper the growth of countries such as China, Japan and Vietnam as their governments were taking serious steps to recover economically. Thus, the global market cannot