As you know, Gross domestic product (GDP) is the main economic indicator. The USA has been the world’s richest country (in terms of GDP) over the last 70 years. China, India and Russia occupies the 2nd, 3rd, and 6th place correspondingly (the US GDP is 1,5 , 3,4 and 7 as big as the GDPs of these countries).
Are the Americans more hardworking than Chinese (who work 12-16 hours a day) or smarter than the Russians (who learn the multiplication table in the 2nd grade while most US pupils have difficulty learning it even in the 5th grade)? What are the real reasons?
will help us to find out the truth.
How Do Americans Explain Their Economic Superpower?
The USA is the leader according to 3 GDP-at-PPP charts composed by the IMF, the World Bank and the CIA.
The following factors are believed to contribute to the leadership:
Innovation technologies. Motor industry, residential construction used to be the key US industries. Now it is all about innovation technologies and hi-tech. They account for 1/3 of the entire US economy. It is sufficient to mention just some of the giants: Microsoft, Apple, IBM, Intel, Adobe Systems, Google…
Financial services represent another key industry. SP 500, Dow Jones, Fannie Mae, Freddie Mac, Citigroup, Merrill Lynch, Goldman Sachs, JP Morgan Chase… These names sound familiar to many people around the globe, don’t they?
Constant inflow of investments. It is sufficient to say that all the central banks around the globe store a part of their currency reserves in US dollars. Moreover, they purchase long-term US bonds, thereby investing in the US economy.
The US is the world’s leader in terms of external trade. Globalization let foreign companies enter the US market, thereby improving the economic situation in the country. US companies grew more competitive (the quality of their products increased while the prices declined) and started conquering foreign markets.
The US controls all the capital markets around the globe through its financial system, marketplaces and Forex. It holds true for stock indexes, gold and oil, food commodities, energy carriers, currencies etc.
Brain drain. They attract the world’s best and talented scientists and experts by offering them decent salaries.
As a result, manufacturing production migrates to other countries with cheap labor power. However, the US remains the leader in numerous cutting-edge industries, including computer technologies and internet, pharmaceutics, astronautics, nuclear physics, defense industry etc.
What Do Opponents Think About It?
Strange as it may seem, most countries with high labor efficiency (China, India) and abundant natural resources (Russia, Australia, Canada, Iran, Libya) are far from competing with the USA in terms of GDP. What prevents them from catching up with the USA? The skeptics say that:
The USA prints the global reserve currency. In plain words, the USA keeps leaving at the expense of the entire world while the Federal Reserve may cover the US budget deficit up to $400-800 bn per year. Give this money to Ukraine or Belarus, for example, and these countries will live much better than the USA.
US assets are totally overvalued. US companies are focused on promoting their products. They spend millions on PR and advertising campaigns to create a positive image and increase sales. Otherwise, how can you explain the nonsense that Gazprom, which owns 18% of the global reserves of natural gas, is priced at $158 bn while Apple’s capitalization is over $600 bn?
The USA influences other currencies through the US Dollar. According to , during crises, the US Dollar appreciates versus other currencies while any economic recovery and growth around the globe is attended by USD weakness.
What Next?
Will China, India, Japan, Germany or Russia manage to outpace the USA in the coming decades?
Masterforex-V academy experts say that the USA will never give up for its economic and political leadership. The USA’s power is based on its status of the world’s major financial, political and military center rather than powerful economy. Most countries around the globe have unofficially accepted this status.
The NATO headed by the US and its allies is ready to destroy anyone who questions its dominance. When Muammar Kaddafi decided to abandon the US Dollar in favor of gold in Libya’s oil trade, the US and its allies supported Kaddafi’s enemies in the civil war.
Another thing is American lifestyle (the so-called American dream), which is a part of the ideology promoted by the USA through movies, music and mass media. The USSR used to be the only serious rival to the USA with its own strong currency, ideology and military power. These days neither China, nor Russia can be compared to the USA.
