Political Science
Textbooks
Boundless Political Science
Foreign Policy
Foreign Policy
Political Science Textbooks Boundless Political Science Foreign Policy Foreign Policy
Political Science Textbooks Boundless Political Science Foreign Policy
Political Science Textbooks Boundless Political Science
Political Science Textbooks
Political Science
Concept Version 7
Created by Boundless

Economic Prosperity

Economic prosperity is necessary to achieve foreign policy goals, and despite the 2008 recession, the U.S. economy is still powerful.

Learning Objective

  • Identify the sources of the United States' economic prosperity


Key Points

    • The United States is economically one of the most prosperous countries in the world, composing nearly one-quarter of the world's GDP.
    • Reasons for the United States' economic prosperity include a large unified market, plentiful natural resources, a strong and vibrant political regime, immigration, technological and industrial innovation, and a spirit of entrepreneurship and capitalism.
    • With such a large economy, the United States has been able to maintain and develop a substantial military force, which is necessary for the pursuit of most foreign policies and national interests.
    • The 2008 recession, despite government attempts to halt or diminish the effects, has and will undoubtedly affect the United State's economic prosperity, and consequently, its ability to carry out its foreign policy goals.

Terms

  • American Recovery and Reinvestment Act of 2009

    An economic stimulus package enacted in 2009 to save and create jobs, provide relief for those industries most impacted by the recession, and to invest in infrastructure.

  • human capital

    The stock of competencies, knowledge, social and personality attributes, including creativity, embodied in the ability to perform labor so as to produce economic value. It is an aggregate economic view of the human being acting within economies.

  • gross domestic product

    Abbreviated GDP. A measure of the economic production of a particular territory in financial capital terms over a specific time period.


Full Text

Sources of the United States' Economic Prosperity

In the two hundred and thirty years since the independence of the United States, the country has grown to be a huge, integrated, industrialized economy that makes up nearly a quarter of the world economy. The main policies that contributed to this economic prosperity were a large unified market, a supportive political-legal system, vast areas of highly productive farmlands, vast natural resources (especially timber, coal, iron, and oil) , and an entrepreneurial spirit and commitment to investing in material and human capital. The United States' economy has maintained high wages, attracting immigrants by the millions from all over the world. Technological and industrial factors have also played a major role in the United States' economic prosperity .

Advanced Technology

The United States has been able to grow into a world economic power in part due to the rapid advances of technology and industry.

Trans-Alaska Pipeline

One of the reasons for the United State's economic prosperity is the abundance of natural resources, such as oil. This picture shows the trans-Alaska oil pipeline, which carries oil from northern Alaska to the rest of the United States.

Economic Prosperity and Foreign Policy

The United States is highly influential in the world, primarily because the United States's foreign policy is backed by a $15 trillion economy, which is approximately a quarter of the global gross domestic product (GDP). Economic prosperity is a central component of any states' foreign policy. Without substantial economic means, a state cannot expect to have influence on the world stage. Similarly, economic prosperity is tied to the maintenance of a global military presence. Without a strong military, the pursuit of national interests becomes more difficult.

Continued Economic Prosperity?

In 2008, a perfect storm of economic disasters hit the United States and indeed the entire world. The most serious began with the collapse of housing bubbles in California and Florida, along with the collapse of housing prices and the construction industry. A series of the largest banks in the United States and Europe also collapsed; some went bankrupt, others were bailed out by the government. The United States government voted 700 billion in bailout money, committed trillions of dollars to shoring up the financial system, but the measures did not reverse the declines. Banks drastically tightened their lending policies, despite infusions of federal money. The stock market plunged 40%, wiping out tens of trillions of dollars in wealth; housing prices fell 20% nationwide wiping out trillions more. By late 2008, distress was spreading beyond the financial and housing sectors. President Barack Obama signed the American Recovery and Reinvestment Act of 2009 in February 2009; the bill provides 787 billion in stimulus through a combination of spending and tax cuts.

Due to the close relationship between economic prosperity and foreign policy, the recession has impacted all elements of the United States' foreign policy. Cuts to the military and defense spending have been threatened, and this economic crisis will undoubtedly take a toll on the United State's position as a global superpower. However, despite the economic recession, the sheer size of the United State's economy ensures that it will remain an important actor in the world economy .

The United States' Share of World GDP

The United States' share of world GDP (nominal) peaked in 1985 with 32.74% of global GDP (nominal). The second highest share was 32.24% in 2001. Note that it is been declining since then.

[ edit ]
Edit this content
Prev Concept
International Humanitarian Policies and Foreign Aid
The President
Next Concept
Subjects
  • Accounting
  • Algebra
  • Art History
  • Biology
  • Business
  • Calculus
  • Chemistry
  • Communications
  • Economics
  • Finance
  • Management
  • Marketing
  • Microbiology
  • Physics
  • Physiology
  • Political Science
  • Psychology
  • Sociology
  • Statistics
  • U.S. History
  • World History
  • Writing

Except where noted, content and user contributions on this site are licensed under CC BY-SA 4.0 with attribution required.