Economic Globalization, Essay Example

After the continuous growth of the American economy in the late 20^th century, America had to face some challenges. While in the 1970-s the growth was unchanged, in the 1980-s, the economy started to face the challenges of emerging fast-growing markets. The growth of U.S. economy in the 1980-s was lower than Japan’s and some Western European countries. Nevertheless, this competition has created new opportunities and called for a change in international trade arrangements. As a result, in 1994 the country proposed the North American Free Trade Agreement. In the 1990-s, as a result of international relations decisions and trade agreements, the American economy became one of the key players of the world. This period, however, was not free from challenges, either. Technological innovation was the key to succeed and the competition of the “Asian Tigers” and Western Europe was fierce.

The key to regaining its prominent position within international economy for America was to leave behind traditional industries, such as steel and mining and focus on the future. The development of computing and the rapid growth of Silicone Valley companies’ influence on global marketplaces and businesses was creating a new momentum. The U. S. economic expansion, (globalization) described by Kotz (2003) was based on a neoliberal reconstruction of international and trade relations. The United States managed to create a competitive, international liberal economy that was built upon expansion of markets and growing domestic demand for goods and services.

The impact of demographic change and immigration also was significant in the U.S. economy during the 1990-s. Attracting, creating and utilizing talent in knowledge-based industries was one of the main drivers of economic growth. The increased rate of immigration means that – according to Little & Triest (2001) – “the foreign born provided about 30 percent of

total U.S. population growth in the second half of the 1990s”. By allowing immigration, the country was able to tackle the challenges of the aging population and the higher dependency ratio (Little & Triest, 2001, p. 141.)  and maintain industries where skilled, low-paid jobs were available. Most immigrants came from Central and South America, where wages are much lower than in the United States. Since the 1930-s, immigration had been increasing in America, and between 1980 and 1990 it accounted for almost 30 percent of total population growth.

Little & Triest (2001) also confirm that between 1980 and 1990 the population growth within the age group 25-65 was high, and productivity grew at a high rate at the same time.

Population changes resulted in demand for work, education and second generation immigrants achieved higher school attainment levels than their parents. This has supported the growth of knowledge-based, technology-enabled industries in the United States. The dot.com boom, and the Silicone Valley industry required highly trained computer experts, and the influence of the United States was again increased by making its computer industry more competitive. This was true until Japan discovered that technological innovation was the key to global economic competitiveness, which created a great challenge for the United States.

Still, the involvement of the United States at the early stages of the world economy’s globalization through information technology has created a good starting point for growth. However, the price, technological and opportunity advantages of the country were overshadowed by the increasing wage inequality, social problems and the credit, housing bubbles that created the economic crisis in 2007.

References

Kotz, D. (2003) Neoliberalism and the US Economic Expansion of the 1990s,  Monthly Review, Volume 54, Number 11, April 2003, pp. 15-33.

Little, J. & Triest, R. (2001) The impact of demographic change on U. S. labor markets. Conference Series 46 June 2001