Besides, as the intense of U.S partisan struggle, the political inefficiency of the United States was lack of capacity to solve the financial challenges. Since 1962, the United States debt ceiling had raise for many times, while the financial situation is getting worse. On July 31st, 2011, the Democratic party and the Republican party of the United State reached the agreement on raising the debt ceiling. After that, U.S. Senate and U.S. House of Representatives passed the increase of U.S. Debt ceiling and the deficit reduction bill to avoid the event of default. The contents include raising the debt ceiling at least $2.1 trillion, and reduce deficit more than $2.1 trillion within a decade. (International Monetary Fund, 2011) Although the crisis was relieved, however, the U.S debt has already serious over the long period. Agreed to raise the debt ceiling means that the debt levels of the United States will rise in the short term, and the financial situation will deteriorate as well. And the percentage of debt has increased in the gross domestic product(GDP) year after year. ( see Appendix ). From the International Monetary Fund (IMF) latest data indicates that the U.S. debt to GDP ratio will reach 99% this year. (Financial time, 2011)
In the meanwhile, the growing debt crisis in Europe also adding the debt ceiling risk to the United States. Either the American or European debt problems linked together through the banking system.(The Wall Street Journal, 2011) The international financial system will face risk as the debt crisis in Europe.
Furthermore, On August 5th, 2011, U.S.' s credit rating was downgraded by the the international rating agency Standard and Poor from AAA to AA+, and given the negative rating outlook. This is the first time to loss of 3A sovereign credit rating in American history. As the world's biggest economy, the drop of the United States' sovereign credit has already hit the national credit and international image of the U.S.
Recently, on September 17th , the American protesters called for "Occupy Wall Street" street protests and they expected to weaken the power of the big banks and end the policy of tax cuts for the rich and company.The high unemployment seems to be one of the main factors to trigger the movement. According to the figures released by the Labour Department of the United States, in August the employment of the United State's 30 states had dropped, especially the state of New York had the largest decline.It revealed that the economy and the employment situation is not optimistic in the state of New York.
The market worries about the treasury bonds of U.S. will no longer be regarded as one of the world's safest investment, and if this will shake the economy of the U.S., or whether the downgrade given by the agency will overwhelmed the U.S. like other European countries. The predictions about the United States are not optimistic.
Moreover, in recent years, the rising influence of the "BRIC" and other emerging and developing countries have got more attention, especially China which becomes a focus topic. According to the estimates of IMF, the contribution made by the developed countries had declined from 88.6% in 1990 to 30% in 2010. The contribution made by the "BRIC"( Brazil, Russia,India,China) had increased from -0.6% in 1990 to over 60%. (Marr and Reynard, 2010) The increased position of China and other emerging developing countries had apparently affected the international standing of U.S.
However, there also have some views to insist that the U.S. will not lose its hegemonic position in the world. The second part of the essay analyses the competitive factors of the U.S., and make an objective judgement on the national trend of the United States.
In terms of one country's natural endowment and development potential, the unique natural conditions and geographical location of the U.S. is its "hard conditions" of development. Immigrant community and the talent,law spirit, innovation mechanisms, federalism, complementary of the multiculturalism and mainstream culture, social progressive improvement, the large middle class, relatively open domestic market and overseas expansion, those are the "soft environment" of the U.S. development. These hard conditions and soft environment has no change, so the U.S. Still has a huge potential for development.
GDP and GDP per capital reflect the ability of a country to create wealth and the level of a country's wealth. According to the World Bank's World Development indicators, in 2010 the United States GDP occupied 23.1% of the world's total value, Japan 8%, Germany 5%, France 4%, United Kingdom 3%, Italy 3.2%, Canada 2.4%. ( The World Bank, 2010) Apparently, the advantage of the U.S. compared to other developed countries is it dominate the world GDP ratio and has a faster GDP growth. However, compared to emerging market countries, the GDP growth of the United States is slow. But the economic size and wealth level of these emerging market countries do not quite as well as the United States. Therefore, it should take a long time to overtake the United States on the scale.
Additionally, the labour productivity means the output of per worker per hour. The increase of the labour productivity is to use less labour and time to produce the same or more material and spiritual products. It determines the competitiveness of an corporate, and also determines the competitiveness of a country.
The labour productivity of the United States is in the lead of the major developed countries. According to the Statistical Abstract of the United States in 2010, it showed that between 1995 and 2000, the average annual labour productivity of the United States' non-farm sector is 2.1%, and between 2000 and 2008 is also 2.1%. During this time, the European Union countries is 2.1% and 1.5%. (United States Government, 2010). Apparently, the United States has the advantages.
What is more, as the first country to implement compulsory eduction in the world, the United States established the most important infrastructure to support innovation. The Universities in United States have a strong competitiveness. Especially the Research Institute and laboratories of the University had fostered a large number of outstanding talent. As the government and corporate has given the universities a large number of funding to support the basic research. The university is the main executor of the basic research, they approximately use two in three of the whole society's basic research funding.
Take Nobel Prize winner as a ruler to measure, from the beginning of the award establish to 2010, the Nobel Prize winners of the United States had accounted for 39% of the total world figure, and occupied 47% of the world's science, medicine and economics, with a total of 315 winners, 317 received awards.
According to the statistics, the funding used by the United States was accounted for 2.4% of the country's GDP, while Federal government assumed 32% of university expenses, but only assumed 7% of the primary and secondary school expense. The fact can explain why the university of the United States are better than primary and secondary schools.
In addition, U.S. dollar as the world's leading reserve currency, trading instruments and pricing tools has a strong dominant force for the global financial activity. The status of the U.S dollar in the international settlement is very high, and accounting for about 62% of the total. Even in the euro area, the majority of the outside trade also still use U.S dollar.
The hegemony of U.S. Dollar in the world is closely interlinked to the rise and fall of the United States. According to a report published by the U.S Council on Foreign Relations in 2010, it is said that the dollar as the world's reserve currency and the status will not be threatened within a short time.
Besides, the advantages of the U.S. economy are from the competitive industries. Such as aerospace, military industrial, pharmaceutical, information technology, movies or entertainment. The main reasons for the United States have the dominant position of these industries is the United States has the largest market for the industries (the market of U.S information technology industry may not as bigger as China now, but is the largest U.S. market in the past.) Another reason is the high-quality population groups of the United States provide a wealth of talent, which is an important basis of the U.S. development of these industries. These industries are either high-tech industries or high level industries, both of them demand for more high quality talent.
Moreover, there are two different trends of human resources in today's world. Some countries have a flourishing population, and appears an upward trend in population growth. While some other countries appears a downward trend and have a low population growth. The United States belongs to the former, and this is one of the beneficial factors to the economic of the United States.
By 2010, the population of the United States has rose to 3.07 billion, 2.1 times for Russia, 2.4 times for Japan, 3.7 times for Germany. In the consecutive 50 years, the growth rate of the United States has already remained more than 8% every 10 years. This prompted the labour force of U.S. maintain an upward trend, and helpful to the continued prosperity of the United States' economy. The main source of U.S. population growth is immigration and higher birth rate of migration. From 1990 to 2000, the immigration into the United States were nearly 11 million, and accounted for one in three of the total population. From 2000 to 2005, the U.S foreign-born population growth rate is 16%.(Bureau, 2010) The diversified population structure brings the vitality to the United States. The age structure of population create favorable conditions to the development of the United States' economy.
At present, the elderly population was growing and put pressure on many countries. But in the United States, the percentage of over the age of 65 accounted for 12%, and the average age of the nation was 36 years old. The aging problem in the United States is not serious and this is a rare phenomenon in the developed countries.
As far as the natural resources is concerned, the abundant natural resources is the objective conditions of the economic development. The United States has rich resources in water, land, mineral and climate, and the advantages of these natural resources would be fully utilized by the U.S.
Technological innovation and institutional innovation also provide a powerful impetus for the social development.Every three or five years will emerge an innovative company, like the FaceBook. In the past 100 years, the innovative R&D and technological innovation is the reason for the United States can maintain the status of world economic power.
After discussing both the negative and positive factors influenced the U.S. economy, it is can be seen that although the prospective for the future economy of the U.S. is not optimistic, but U.S. are still vibrant in the aspect of technology, innovating and competitiveness. There is no basis to come to a conclusion of the drop of the United States' economy only according to the developments in one or two years or one or two major events. The world status of U.S. will not sway under current economy.
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by
sabrinashine88 (student)
