Question

What factors and events have led to the increasingly global nature of the U.S. economy?  How is it changing the nature of democracy with respect to international economic policies?  Do these events represent an approach to democracy?  Why or why not?

Answer 1

Over the years, the globalization process across all major countries has increased over a period of time. Globalization refers to countries consider markets to be one and allow free flow of goods as well as capital from one country to another which will help in increasing trade volumes and ensuring that the needs and wants of customers is satisfied in the best possible way and manner. We have examples of companies such as Apple, which is headquartered in USA, produces in countries such as India and China and sells its products to the entire globe as an example of the globalization and the extent of it.

One of the key factors and events which has made the United States of America an increasingly global country in existence is the concept of floating exchange rates which were established by the "Bretton Woods Agreement" which was signed in 1944 and is largely seen as the reason for the rise of global trade across different countries.

Prior to its existence, global trade happened through fixed exchange rates between countries which valued their currencies on the basis of the amount of gold which they were holding.

As this changed to dollar, all international transaction then happened in dollar between countries that agreed to the same. This increased the demand for dollar in the international markets, making its value go higher over time.

The United States also followed a capitalist approach in which free markets were always encouraged and as the world economies began to embrace this idea, the capital gains to America were much higher in return.

Most economic policies which the United States follows has encouraged those that follow free market economies and discourage those that have protectionist norms running in the country. It allows for the country to dominate in most markets as the product and services provided are much superior than most competitors. Further, this approach matches the idea of a democracy in which the ultimate choice lies in the hands of the consumer.

With a growth in free market economics, democracies are also created and are helpful in promoting the idea that consumer choice is what determines supply as well as prices in the market place. The core idea of democracy which is individual freedom and choice gain maximum from the evolution of free trade in markets.

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