The Second World War, albeit being the bloodiest conflict in human history, saw both victors and losers rise into a new-found world. Subsequent years would also witness a major increase in economic and industrial production that was unprecedented. Among the victors was the United States that had played a vital role in assisting the Allies to win the war. They were seen as a powerful force that would later be marked and the worlds super-power. This however, did not concur with other nations such as the USSR that believed their country to be a domineering force in global affairs. The cold war arose from this tussle in an aim to establish which of the two was the most powerful. This ended with no clear winner despite the major destruction and sour ties that exist to this day. Nevertheless, the US had by the time already defined itself as a super-power.
It had a major influence on global politics, economy, and military activities. In terms of the economy, which this paper will focus on, the US has been a dominant force having the biggest and most influential economy in the world. Still, it has played a central role in other economies, especially in the third-world, where it provides different forms of aid. Many of these nations have been dependent on American aid for decades. In the process, they have offered the US numerous powers over their economic choices and outcomes. Times have changed, and the US seems to be losing its grasp as an economic powerhouse on a global scale. This paper will gain insight into Americas broader economic ambitions particularly in the realms of development assistance and trade policy.
The US has for a substantial period played a vital role in supporting Least Developed Countries (LDCs) economically. This has been achieved through different forms of financial aid, grants, and loans as backing for development programs in the respective nations. This has in turn established America as a global power of influence for decades in nations that depend on them. This has to some level extended to influencing political decisions made by leaders in these countries. It should be acknowledged that America still stands as the worlds most powerful economy despite many challenges that have arisen recently. There are concerns on many fronts that the country is retreating from economic leadership in the world, right when it is required to hold its ground (Weisman, 2015). This has been attributed to major divisions in the countrys corridors of power. This has immensely raised the risk of ceding the global economic power that was hard-build post-WW2. Officials have increasingly become concerned with other rising powers in the world that could take advantage of the situation in the US. Tight budgets, political tussles, lack of sufficient resources, and dysfunction have meant that America is restricted in projecting its economic might like before.
The US has had a vital role in combating climate change especially through financial aid to the developing world. In 2009, then secretary of state Hillary Clinton promised $100 billion per annum in financial aid to poor nations to help in the fight against climate change. This would be disbursed up to 2020 to address their needs. The money necessary to achieve this feat would come from a wide array of sources; bilateral and multilateral, public and private, as well as alternative finance sources (Porter, 2015). However, this money has not yet been expended despite there not being a strong road-map towards how the whole amount is going to be raised.
The US has in recent times resulted to playing an unassertive role reinforced mainly by budget politics and a low willpower. Other nations such as Britain and France have in their part pledged lower figures in the tune of $3.4 and $5.6 billion respectively towards the same purpose (Porter, 2015). These are achievable figures by all means and more practical than the American figures. Republicans in the US Congress are seeking to block a mere $3billion pledge by the president of the UNs Green-Climate fund. As such, it has been widely perceived that achieving the $100 billion mark will be more of a diplomatic stance than impacting climate change.
Experts are becoming more and more apprehensive of Chinas influence in global economic affairs that is gradually shifting the field of play towards them. They have begun establishing themselves in the Asian continent as well as Africa. US government officials and the Obama administration are also well-aware of this trend. The worrying part is that the shift is taking place with a lack of proper standards of environmental protection, business transparency, and worker rights. This is contrary to the already normal operations and checks in western institutions.
Still, there is the aspect of the IMF that has created its fair share of problems. In 2010, President Obama brokered a deal that sought to elevate Chinas IMF stake from 3.8% to 6%. This overhaul also incorporated other emerging powers to offer the more power proportional to their respective economic might. For years, China had made their intentions clear to create an institution to rival the wests IMF and World-Bank and also a reserve currency to rival the dollar. This step by the Obama administration was seen as one intended to curtail this threat. However, they were unsuccessful since Congress blocked this adjustment as proposed despite the US still holding a 16.5% share in the IMF (Weisman, 2015). Still, conservatives in Congress have increasingly taken steps to kill-off the Export-Import Bank. This action has the potential to restrain American aid in foreign nations and in turn cut down on its economic power.
Subsequently, China established their multi-lateral lending institution as they had threatened. This was undoubtedly a direct competition for the wests behemoths. Chinas establishment of the Asian Infrastructure-Investment Bank has stamped them as a rising economic force. This factor combined with Americas failure to keep hold of its long-time partners signals the USs falling dominion as a global economic powerhouse. To have a better perspective on how grave the situation is, Americas Export-Import Bank has loaned out $590 billion since founding in the 1930s. It comparison, China has lent out $670 billion in just two years (Weisman, 2015). As a result, they are entitled to attract former American associates in South Asia, Africa, and even Latin America. Having approximately $4 trillion as foreign-exchange reserves, it is evident that Chinas position as an economic power is going to rise even further in coming years. The loser I this case is the US whose power, by the judgment of recent trends, is waning and the nation is forfeiting a leadership position it has held for decades.
The contest with China over Economic prominence has led the US to establish a 12-nation trans-pacific partnership (TPP) with Asian nations including Malaysia and Japan (Perlez, 2015). This comes amid rising concern from Asian states of their dependence on China as well as future implications. As much as it will not be much of a game-Changer for the US, failure would prove to be detrimental to the countrys credibility as a powerhouse. This outcome is not unachievable considering Congress has to approve of it before it goes through (Calmes, 2015). It may prove to be a hurdle, but the Obama administration is confident of a positive outcome, albeit marginally. It is hoped that this move would destabilize Chinas growing ties with conventional American economic allies. However, this will be a daunting task considering how much chinas institutions; Export-Import Bank of China and China Development Bank are gaining prominence.
The US has been heavily involved in a considerable number of trade partnerships that have borne fruit for parties involved. Chief among these is the NAFTA (North American Free-Trade Agreement), which was launched in 1994 between Canada, US, and Mexico (The Economist, 2014). As a result of the partnership, USs trade with Mexico rose by 506% between 1993 and 2012 while non-NAFTA nations accounted for 279% (The Economist, 2014). This collaboration has been so successful that the nations trade with the two nations exceeds those with the other major trade-economies combined. Despite facing major hurdles in the process, steps are being taken to end them courtesy of NAFTA. Still they have been able to necessitate, as a regional collaboration, deals with other unions for favorable trading terms.
The US may be facing numerous challenges, both internal and external, in maintaining its stance as an economic powerhouse in the world. However, it remains to be the strongest industrial nation currently and can keep it that way despite competition from China. Establishment of the Trans-Pacific Partnership and an ever strengthening NAFTA are some of the factors that will assist in achieving this. Further, the US continues to be a major influence in providing development aid to poor nations, especially when fighting climate change. As such, the future is still bright, and it is believed there is more on offer even as the economic tussle ensues.
BIBLIOGRAPHY Calmes, J. (2015, Oct.). Trans-Pacific Partnership Is Reached, but Faces Scrutiny in Congress. Retrieved from The New York Times: http://www.nytimes.com/2015/10/06/business/trans-pacific-partnership-trade-deal-is-reached.html?_r=1
Perlez, J. (2015, Oct.). U.S. Allies See Trans-Pacific Partnership as a Check on China. Retrieved from The New York TImes: http://www.nytimes.com/2015/10/07/world/asia/trans-pacific-partnership-china-australia.html
Porter, E. (2015, Sep.). Getting to $100 Billion in Climate Change Aid. Retrieved from The New York Times: http://www.nytimes.com/2015/09/30/business/getting-to-100-billion-in-climate-change-aid.html
The Economist. (2014, Jan.). Deeper, better, NAFTA. Retrieved from The Economist: http://www.economist.com/news/leaders/21592612-north-americas-trade-deal-has-delivered-real-benefits-job-not-done-deeper-better
Weisman, J. (2015, April 17). At Global Economic Gathering, U.S. Primacy Is Seen as Ebbing. Retrieved from The New York Times: http://www.nytimes.com/2015/04/18/business/international/at-global-economic-gathering-concerns-that-us-is-ceding-its-leadership-role.html
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