Categories: Economy

Why The United States Economy is Number 1?

THE UNITED STATES ECONOMY– The economic health of a nation is determined by the GDP (Gross Domestic Product) which refers to the total market value of all the goods and services a nation produced in a given particular year. The nominal GDP estimates done each year helps in ranking the countries economically. Variations in the rate of a country’s currency can also lead to varying results.

The united states dominate the topmost spot in the ranking of Gross Domestic Product (GDP) or the sum total of goods produced and services rendered in a particular country.  In the second place, we find China, then Japan, Germany, and India. After India’s sixth to the tenth position is backed by the United Kingdom, France, Italy, Brazil, and Canada. Russia and South Korea just missed out on a ranking in the first top 10.

There are various reasons because of which US economy remains at the top position

ENTREPRENEURIAL CULTURE

People in the U.S. show a desire to start businesses and grow them, as well as a willingness to take the risk. There is less penalty in the U.S.  for failing and starting again from the lowest step. Even students who are going to college or a business school also show this entrepreneurial desire, and it is self-reinforcing. Silicon Valley successes like Facebook inspire to practice further entrepreneurship.

FINANCIAL SYSTEM SUPPORTING ENTREPRENEURSHIP

The US has a more developed financial system of equity finance than other countries. Angel investors are easily willing to finance entrepreneurial start-ups. The US also has a very active venture capital market that helps in financing the growth of these start-ups. The US also has a decentralized banking system including more than 8000 banks which provides a loan to the entrepreneurs.

WORLD-CLASS RESEARCH UNIVERSITIES

US universities teach and produce much of the basic researches that drive people to start high tech entrepreneurship.  Faculty members and graduates very often spend much time with nearby start-ups, and the culture of both the universities and the businesses encourage this overlap. Top research universities attract talented students from all over the world and many of them end up remaining in the United States proving as an asset to the US.

LABOUR MARKETS LINKING WORKERS AND JOBS

Not more than 7% of the private sector U.S. labor force is unionized, and there are no state-owned enterprises virtually. While the U.S. does regulate working conditions and hiring, the rules are much less approval based than in Europe. As a result, youth has a better chance of finding the right job, firms find it easier to innovate, and new firms find it easier to get started the business.

GROWING POPULATION

America’s growing population means a young generation and therefore more flexible workforce. Although there are restrictions on immigration to the United States, there are also special rules that provide access to the people to the US economy and a path for citizenship known as green cards, individual talent, and industrial sponsorship. A separate “green card lottery” provides a way for people to come to the US. The country’s ability to attract immigrants by using the green card has been an important reason for its prosperity.

CULTURE  THAT ENCOURAGES HARDWORK

The average employee in the US works 1,800 hours per year, significantly much more than the 1,500 hours worked in France and the 1,400 hours worked in Germany (though not as much as in Hong Kong, Singapore, and South Korea). In general, working longer means producing more goods which means higher real incomes.

A FAVOURABLE REGULATORY ENVIRONMENT

Although U.S. regulations are far from perfect, they are less burdensome on businesses than the regulations imposed by other countries.

A DECENTRALISED POLITICAL SYSTEM

Competition among states encourages entrepreneurship and work, and states compete with each other’s businesses with their legal rules and tax regimes. Some states have no income taxes and have labor laws that limit unionization. States provide high-quality universities with low tuition fees for in-state students. The legal systems attract and encourage both new entrepreneurs and large corporations. The US is perhaps unique among high-income nations in the degree of political decentralization.

Faiz & Mohtasham

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