The United States has a GDP of 9.25 trillion and GDP per capita of $33,900. This makes it the most economically powerful national in the world. The United States has the third highest population in the world at almost 275 million people. The total area of the United States is over 3.7 million square miles, making it the third largest nation in the world. Because of its high population and large size, the United States provided an ideal economic market for itself. In the past this has decreased the need for international markets. Despite this, the United States has traded and invested internationally. Historically, such activity was fairly limited for political, social and practical reasons.

Telecommunications, satellites, the Internet, the World Wide Web and other technology has offered speed and accessibility to world markets. The increased support of free trade has further opened the door to world market exchange. As a result U.S. trade jumped from 9 percent of the GDP in 1959, to 25 percent in 1997. The world total of exports plus imports increased from $643 billion in 1970 to over $10.2 trillion in 1995. This significant change to a global economy has presented many opportunities and many challenges.

CS Question #1: In the past, how was the U.S. able to insulate itself from the need to trade internationally at a high level?

The market economy of the United States allows for individuals and business to make their own economic decisions. The government market controls are limited. U.S. businesses are free to make layoffs, sell public stock, invest in foreign nations, and develop new products. This is an advantage over nations where government controls are more stringent.

The United States is home to many multinational corporations who operate and produce in more than one nation. Typically, U.S. multinational corporations will place the production portion of their business in a nation with lower wages, lessened environmental controls and/or less costly property value. The majority of U.S. production in foreign nations is in Central and Latin America, China, India and Southeast Asia.

Paying lower wages in foreign nations also means lower purchasing power in foreign nations. Despite the direct investment, the actual market for goods and services is not dramatically increased. Consumers in those nations can not afford to purchase U.S. goods and services. For some multinational corporations, there is a move to pay higher wages thereby increasing the consumer purchasing power for U.S. goods and services.

The upper-management, professional, technological, creative, financial and marketing portions of multinational corporations often remain in the United States. One could argue the downside of lost jobs for the United States. However, the overall unemployment rate of the United States is 4.2 percent, less than half of the average for all world nations of 9.04 percent. One could also argue the upside of increased production and growth of higher paying jobs that require more human capital. The following breakdown of the labor force reflects the importance of higher paying non-production jobs:

CS Question #2: What is your opinion of the relocation of production to foreign nations?

Language and culture can create barriers to international trade. The speed of communication and the power of international corporations influence the world's societies and cultures. The United States is the largest trading nation in volume as well as the biggest economic power. This leaves the U.S. in a position to influence other nations. The ethics of this influence is highly debated. The U.S. can cause economic growth or suffering by its decisions on who and who not to trade with. Similarly, unity among nations can also be a powerful influence on international trade. If the European Union should decide to enact trade barriers against U.S. goods, services or investments, it could cripple the United States international trade, straining the economy.

Events and decisions in one nation effect other nations. Nations that lack political stability can drastically effect U.S. trade and foreign investment. The economic interdependence of nations motivates nations to seek or maintain political stability with each other. Environmental, economic and political issues that affect one nation become the world's issues. While, this can provide increased support and stabilization it can also cause a lot of problems. There no agreed upon, supreme world leadership to settle disputes, maintain order and address world problems. The United Nations offers some relief. But its capacity is limited by the nations that agree to its authority and the limits of its own charter.

Barriers to international trade take many forms. Historically trade tariffs and trade quotas are used to control incoming foreign trade. More and more, legal standards controlling production or distribution and product safety standards are being used protect nations against competition. Japan, for instance, uses a high amount of exclusivity agreements among Japanese business. Such agreements effectively exclude foreign competition.

CS Question #3: What is your opinion on the U.S. power to influence other nations? Do you think this influence is overused, underused or at an acceptable level?

In the coming decades, the United States is projected to have slower population growth than the world average. Continued progress in technology combined with individual, business and governmental investment in capital goods and human capital is expected to keep the economy strong. Provided open trade policies remain in practice, the United States is expected to continue its current rates of international trade, if not increase them. These factors will lead to a higher standard of living for U.S. citizens. Distribution of wealth, will become more of a problem. Incomes for educated and professional workers will rise at a faster than average rate. While, incomes for workers will low levels of training and education will increase at a much slower rate and even decline as inflation effects their real wage. The economic growth rate of other nations is expected to rise to, if not exceed that of the United States. Remember that international trade in a global economy is beneficial to both parties. These benefits will continue to promote the growth and importance of other nations in the global economy.

CS Question #4: Think about how these projections will affect your future. What might you do in the next few years to prepare yourself?

Further Thought:

1. Do you think it is still possible for the U.S. to retain some or any isolation from the world economy? Explain your answer.
2. Explain a way your community benefits from international trade. If you can't think of one, explain a way it could.
3. Devise a proposal for a world authority to handle global issues. Think about how it is chosen, how it operates, who makes final decisions and whether or not there is a checks and balances system.