U.S. foreign trade and global economic policies
have changed direction dramatically during the several years that the United States has been a country. In the early days of the nation's history, government and business mostly concentrated on developing the domestic economy irrespective of what went on abroad. But since the Great Depression of the 1930s and World War II, the country generally has sought to reduce trade barriers and coordinate the world economic system.
This commitment to free trade has both economic and political roots; the United States increasingly has come to see open trade as a means not only of advancing its own economic interests but also as a key to building peaceful relations among nations.
Average annual growth of population has been 1.1% from 1997 to 2003, which is still higher than other high-income countries’ figure of 0.6 %. The US economy has an edge over other rich countries as indicated by its labour force growth rate of 1.3% (1997-03), while other high income countries have less than 1% growth in workforce over these years.
However, since the end of the 20th century, a growing trade deficit has brought some ambivalence in the minds of American people about trade liberalization. The United States had experienced trade surpluses during most of the years following World War II. But oil price shocks in 1973-1974 and 1979-1980 and the global recession that followed the second oil price shock caused international trade to stagnate.
At the same time, the United States began to feel shifts in international competitiveness. By the late 1970s, many countries, particularly newly industrializing countries, were growing increasingly competitive in international export markets. South Korea, Hong Kong, Mexico, and Brazil, among others, had become efficient producers of steel, textiles, footwear, auto parts, and many other consumer products. The 2003 estimates show a current account deficit of $ 541,834 million.
CHALLENGES IN THE 21st CENTURY
Recently, the IMF has described the US current account deficit as unsustainable . The International Monetary Fund has said it could have a significant adverse effect on interest rates and global capital markets.
The American economy is observing a record-low household saving rate and a large federal fiscal deficit. Thus it is essential to support the adjustment by strong US national saving to avoid a burden falling on investment and growth, both in America and abroad.
Like many countries in the world, the United States too had been undergoing profound economic changes. A wave of technological innovations in computing, telecommunications, and the biological sciences were profoundly affecting how Americans work and play. At the same time, historical factors like collapse of communism in the Soviet Union and Eastern Europe, the growing economic strength of Western Europe, and more recently the emergence of powerful economies in Asia, expanding economic opportunities in Latin America and Africa, have had affected US economy.
The increased global integration of business and finance posed new opportunities as well as risks. All of these changes were leading people in the US to re-examine everything from how they organize their workplaces to the role of government. Perhaps as a result, many workers, while content with their current status, look to the future with uncertainty.
The US economy though a lot better than many economies, face some other long-term challenges. Notwithstanding the fact that many Americans have achieved economic security and some have accumulated great wealth, significant numbers -- especially unmarried mothers and their children -- continue to live in poverty. Disparities in wealth, while not as great as in some other countries, can be seen as still larger than in many. Environmental quality remains a major concern. Substantial numbers of Americans lacked health insurance. And global economic integration has brought some dislocation along with many advantages. In particular, traditional manufacturing industries have suffered setbacks, and the nation has been facing a large and seemingly irreversible deficit in its trade with other countries.
The response to the terrorist attacks of 11 September 2001 showed the remarkable resilience of the economy. Moderate recovery took place in 2002, with the GDP growth rate rising to 2.45%. A major short-term problem in first half 2002 was a sharp decline in the stock market, fueled in part by the exposure of dubious accounting practices in some major corporations.
The Iraq war in March/April 2003 shifted resources to military industries and introduced uncertainties about investment and employment in other sectors of the economy. Though, the United States will continue to be the world leader for many more years, it will have to resolve some long-term problems in order to sustain the growth. These include inadequate investment in economic infrastructure, rapidly rising medical and pension costs of an aging population, sizable trade deficits, and stagnation of family income in the lower economic groups US Trade Figures