21. General review of the usa economics

American economy is a market economy. It is a free enterprise system. But actually it is mixed because it consists of two sectors: private and government.

The system of economy is based on the theory of Adam Smith: « Demand forms Supply». He considered that market forces should work on their own. The government should not regulate the market. The Americans believe that the free market is compatible with the idea of individual liberty.

With only about 5 per cent of the world's population and about 6 per cent of its land area, the United States still produces about 25 per cent of the world's in­dustrial products

about 30 % of population are employed in small business.

Small business is very important for American economy as about a half of American technical innovations came from small business.

In any nation there are three main chief fields of economy: production and manufacturing, agriculture and service. In USA the share of service in the Gross Domestic Product is more then 60 %.

A BRIEF HISTORY of the U.S. ECONOMY

The American economy had to be built from the ground up. In the beginning there were simply no farms, no houses or factories. Whatever was needed had to be made by the settlers themselves. The colonists were left to build their own communities and their own economy. People lived primarily on small farms and were self-sufficient.

Early colonial prosperity was resulted from trapping and trading in furs. Fishing was a primary source of wealth in Mas­sachusetts.

Industry developed as the colonies grew. By the 18^th century regional-pattern of devel­opment had become clear: the New England colonies relied on ship-building and sailing to generate wealth; plantations (many used slave labor) in Maryland, Virginia and the Carolinas grew tobacco, rice and indigo; and the middle colonies of New York, Pennsylvania, New Jersey and Delaware cultivated general crops. Except for slaves, standards of living were generally high.

The U.S. Constitution, adopted in 1787 established that the entire nation —stretching then from the Atlantic Ocean to the Mississippi Valley — was a unified or "common" market. The Constitution provided that the federal government could regulate commerce with foreign nations and among the states, es­tablish uniform bankruptcy laws, create money and regulate its value, fix standards of weights and measures and establish post offices and roads. The last-mentioned clause was an early rec­ognition of the importance of "intellectual property", a matter that would assume great importance in trade negotiations in the late 20^th century.

Inventions and industrial development

The rapid economic development following the Civil War laid the groundwork for the modern U.S. industrial economy. An explosion of new discoveries and inventions took place, caus­ing such profound changes that some termed the results a "sec­ond industrial revolution". Oil was discovered in western Penn­sylvania. The typewriter was developed. Refrigeration railroad cars came into use. The telephone, phonograph and electric light were invented. And by the dawn of the 20^th century cars were replacing carriages and people were flying in airplanes.

Coal was found in abundance in the Appalachian Mountains. Large iron mines opened in the Lake Superior region. Mills were built in places where these two important raw materials could be brought together to produce steel. Large copper and silver mines opened, followed by lead mines and cement factories.

As industry grew larger, it developed mass-production meth­ods. Frederick W. Tailor pioneered the field of scientific man­agement in the late 19^th century. True mass production was the inspiration of Henry Ford, who in 1913 adopted the moving assembly line, with each worker doing one simple task in the production of automobiles. Ford offered a very generous wage ($5 a day) to his workers, enabling many of them to buy the automobiles they made, helping the industry to expand.

The "Gilded Age" of the second half of the 19^th century was the epoch of tycoons. There appeared such tycoons as John D. Rockfeller (who did with oil), Pierpont Morgan (banking), Andrew Carnegie (steel) and others. Some tycoons were honest according to business standards of their day; others, however, used force, bribery and guile to achieve their wealth and power. For better or worse, business interest acquired significant influ­ence over government.

MATERIAL-ECONOMIC RESOURCES of the U.S.

The mineral and agricultural resources of the United States are tremendous. Although the country was almost self-sufficient in the past, increasing consumption, especially of energy, con­tinues to make it dependent on certain imports. It is, neverthe­less, the world's largest producer of both electrical and nuclear energy. It leads all nations in the production of liquid natural gas, aluminum, sulphur, phosphates, and salt. It is also a lead­ing producer of copper, gold, coal, crude oil, nitrogen, iron ore, silver, uranium, lead, zinc, mica, molybdenum, and magnesium. Although its output has declined, the United States is among the world leaders in the production of pig iron and ferroalloys, steel, motor vehicles, and synthetic rubber.

Agriculturally, the United States is first in the production of cheese, com, soybeans, and tobacco. The United States is also one of the largest producers of cattle, hogs, cow's milk, butter, cotton, oats, wheat, barley, and sugar; it is the world's leading exporter of wheat and corn and ranks third in rice exports. In 1995, U.S. fisheries ranked fifth in the world in total produc­tion.

Major U.S. exports include motor vehicles, aircraft, food, iron and steel products, electric and electronic equipment, in­dustrial and power-generating machinery, chemicals, and con­sumer goods. Leading imports include ores and metal scraps, petroleum and petroleum products, machinery, transportation equipment (especially automobiles), and paper and paper prod­ucts.

The major U.S. trading partners are Canada (in the world's largest bilateral trade relationship), Mexico, Japan, the United Kingdom, South Korea, and Germany. The volume of trade has been steadily increasing.

The development of the economy has been stimulated by the growth of a complex network of. communications not only by railroad, highways, inland waterways, and air but also by tele­phone, radio, television, computer (including the Internet), and fax machine. This infrastructure has fostered not only agricul­tural and manufacturing growth but has also contributed to the leading position the United States holds in world tourism reve­nues and to the ongoing shift to a service-based economy.