Globalization has played a crucial role in the revival of the US economy. Increased economic integration and reduced trade barrier have been two primary impacts of globalization on the economy of the United States.
Globalization has resulted in increased economic interdependence among the developed and developing nations of the world. At the end of the Second World War, the internal conditions of the United States of America were favorable for it to support globalization. The Federal government of the United States also realized the need of globalization to maintain the nation’s competitive edge in global market.
As we enter the 21st century, we find the United States of America as the unchallenged economic leader of the world. Much of the economic prosperity of the US has been the result of open trade policy followed by the US Federal Government. With its relatively open borders, the United States has encouraged a number of nations across the world to get involved in bilateral trade with the US. Inflow of foreign products with zero or low tariff has proved to be of great use in keeping the US inflation level under control.
Globalization has also helped the US economy to make use of cheaper workforce of the developing nations through the process of offshoring and outsourcing. Majority of the multinational corporations based in the US get their jobs done by technically skilled labor force of the developing nations like India and China. This process helps the US firms to reduce their operational costs to a significant extent.
The World Trade Organization and the International Monetary Fund played crucial role in promoting the concept of globalization across the nations of the world. The World Trade Organization was created so that the trade disputes between various countries could be settled amicably in the presence of the leading nations of the world. The International Monetary Fund was created to help the countries in times of distress.
There are certain challenges that lie ahead for the United States of America if it has to remain as one of the leading names in the globalization scenario. One of the first steps would be for the International Monetary Fund, as well as the World Trade Organization to be more patient with countries that are less willing to adhere to the policies formulated by these two entities. Experts are of the opinion that the United States of America has to approach globalization without a stringent policy as such. It should make policies in a way so that the economic requirements of various countries could be adjusted within the frame. This is expected to make globalization a successful and profitable process for the United States of America.