America becomes global marketplace

Coke, Big Macs and IPods.
The United States creates some of the world's most innovative products, dominating brands and profitable business models, exporting them around the globe with tremendous success.
Of the world's 100 most valuable brands, 62 are American, according to Interbrand, a consulting group that annually evaluates products. It's a fair accomplishment for a country that produces less than one-third of the world's economic output.
"It's testimony to the superior marketing and business acumen of American companies. We punch 200 percent of our business weight," says John Quelch, a Harvard Business School professor who has studied and written about global brands.
The successes of companies such as Coca-Cola, McDonald's and Apple create wealth and jobs in the United States and overseas. But American brands also generate resentment, copycats and fierce competition.
Business and commerce is one arena where the world is increasingly "American." This series examines nonmilitary, nonpolitical aspects of this pervasive U.S. influence — from democratic ideals and entrepreneurial ingenuity to language, sports and popular culture — and some of the consequences of this influence.
The United States is the world's leading exporter and importer, and its companies spend more money establishing and expanding overseas operations than those of any other nation.
In 2003, U.S. exports of merchandise and commercial services totaled $1.01 trillion, according to the World Trade Organization (WTO). Top exports include $46.1 billion in semiconductors, $31.3 billion in computer accessories, $36.2 billion in vehicle parts, $22.1 billion in cars, $23.3 billion in civilian aircraft and $20.5 billion in pharmaceuticals, according to 2003 Commerce Department statistics.
The United States plays another important role as the world's largest market, with free-spending consumers looking for good deals on quality products.
U.S. imports of merchandise in 2003 more than doubled those of the second-leading country. Consumers and companies bought $1.3 trillion in goods and an additional $229 billion in services, the WTO says.
"The U.S. is the locomotive for global growth. If we were not providing that stimulus, it seems quite possible that the rest of the world economy would slip back into recession," says Kent Hughes, director of the America and the Global Economy Project at the Woodrow Wilson Center.

More than a market
American consumers are not just a market; they are an entire business model for some companies.
"It's 100 percent [that] we sell in the United States," says Ziad Salah, commercial and finance manager for United Garment Manufacturing Co. The Amman, Jordan, company makes pants, jackets and other clothes and sells them to retailers such as Wal-Mart and Target.
The enterprise employs 750 workers. Each of the 300,000 garments made every month goes to the United States.
"If the U.S. market is open, it will create more opportunity and employ a lot of people — it will reduce unemployment in Jordan," Mr. Salah says.
But America's role as the world's most voracious consumer may not be sustainable.
The U.S. current account deficit, the broadest measure of trade, hit $164.7 billion in the third quarter of 2004. The figure represents 6 percent of U.S. economic output and is a record. The deficit is financed by borrowing from abroad and foreign investment in the United States.
Continuing deficits has made the United States the world's leading debtor. Other nations held almost $2.7 trillion in government and private U.S. securities, stocks, bonds, cash and other assets at the end of 2003, according to the Bureau of Economic Analysis. That position is expected to worsen.
"A quarter of a century ago, the United States was still the largest net lender on earth; 20 years ago, its global assets still exceeded its liabilities. Today, however, its net investment position is sinking below negative $3 trillion," Peter G. Peterson, chairman of the Council on Foreign Relations and a Nixon administration commerce secretary, writes in the September-October issue of Foreign Affairs. "Americans may hope that the rest of the world will go on lending unlimited funds forever. That wish, however, is unrealistic."
Mr. Peterson says the United States must export more and save more while the rest of the world must import more and consume more, an adjustment that requires substantial shifts of labor, capital and culture.
"Although no one can predict how the current imbalance in the global economy will play out, trade economists marvel at just how many ways this lopsided flywheel can spin off the axle," Mr. Peterson says.

Investing abroad
Even as the rest of the world finances American consumption, U.S. companies invest more than their counterparts from other nations in new operations abroad.
U.S. foreign direct investment was $1.3 trillion from 1994 through 2003, according to the Organization for Economic Cooperation and Development (OECD). Britain was next, with $878 billion.
The OECD argument, which has its critics, is that foreign investment brings higher wages and introduces new technologies and managerial skills to developing countries. The investments contribute to rising prosperity and create demand for exports from wealthy economies, it says.
Until 2003, the United States also was the world's leading recipient of foreign investment. But dollar figures are dropping, from $321 billion during 2000 to $39.9 billion last year.
China and Hong Kong together received $66 billion, the OECD said, knocking the United States off its perch as the world's top destination for foreign investment.
Aspiring countries hope to surpass the United States in other areas as well. And many believe that the United States — because of its trade deficit, budget deficit and an unpopular war in Iraq — is particularly susceptible to competition.
"Most astute people around the world realize that America is very vulnerable. Its economy is held together by the ability to attract investment and capital. The whole of the American system, which has been a glowing success story, it could come to an end very quickly," says Kalle Lasn, editor in chief of Adbusters, a counterculture magazine that encouraged boycotts against American brands after the U.S.-led invasion of Iraq.
"It is time for the backlash, time for the American economy to get its comeuppance," says Mr. Lasn, a native Estonian who now lives in Canada.

Expansion and growth of America

Cotton, at first a small-scale crop in the South, boomed following Eli Whitney's invention in 1793 of the cotton gin, a machine that separated raw cotton from seeds and other waste. Soon, large plantations, supported by slave labor, made some families very wealthy.

Millions moved to the more fertile farmland of the Midwest. Government-created national roads and waterways, such as the Cumberland Pike (1818) and the Erie Canal (1825), helped new settlers migrate west and helped move western farm produce to market. The Whig Party supported Clay's American System, which proposed to build internal improvements (roads, canals, harbors) protect industry, and create a strong national bank. The Whig legislation program was blocked by the Democrats, however.

Scene of Lockport on the Erie Canal (W. H. Bartlett 1839)

President Andrew Jackson (1829-1837) opposed the Second National Bank, which he believed favored the entrenched interests of his enemies. When he was elected for a second term, Jackson opposed renewing the bank's charter, and Congress supported him. Jackson opposed paper money and demanded the government be paid in gold and silver coins. The Panic of 1837 stopped business growth for three years.

Railroads were, by far, one of the most important contributions to the economy. Many contrasting views exist regarding whether the railroad was "indispensable" or not, but it was undoubtedly very important. The railroad paved the way to new developments in running large-scale business operations, creating a blueprint for future businesses to use. They were first to encounter managerial complexities, labor union issues, and problems of competition. Due to these radical innovations, the railroad became the first large-scale business enterprise.

Panics did not curtail rapid U.S. economic growth during the 19th century. Long term demographic growth, expansion into new farmlands, and creation of new factories continued. New inventions and capital investment led to the creation of new industries and economic growth. As transportation improved, new markets continuously opened. The steamboat made river traffic faster and cheaper, but development of railroads had an even greater effect, opening up vast stretches of new territory for development. Like canals and roads, railroads received large amounts of government assistance in their early building years in the form of land grants. But unlike other forms of transportation, railroads also attracted a good deal of domestic and European private investment.

Some people made fortunes overnight, but many people lost their savings. Nevertheless, a combination of vision and foreign investment, combined with the discovery of gold and a major commitment of America's public and private wealth, enabled the nation to develop a large-scale railroad system, establishing the base for the country's industrialization.

Economic history of the United States

The economic history of the United States has its roots in European settlements in the 16th, 17th, and 18th centuries. The American colonies progressed from marginally successful colonial economies to a small, independent farming economy, which in 1776 became the United States of America. In 230 years the United States grew to a huge, integrated, industrialized economy that makes up over a fifth of the world economy. The main causes were a large unified market, a supportive political-legal system, vast areas of highly productive farmlands, vast natural resources (especially timber, coal and oil), and an entrepreneurial spirit and commitment to investing in material and human capital. The economy has maintained high wages, attracting immigrants by the millions from all over the world.