Running Head: Impact of Globalization on U.S.

Economy

Impact of Globalization on U.S. Economy

Introduction

Globalization defines as the general integration of economies of different nations around

the globe. This sort of integration involves a number of factors such as the political and cultural

opinions of a country. This case study focuses mainly of globalization’s effects in the U.S.

Through globalization, there has been expansion of different aspects from countries such

as their means of interaction with various nations, as well as the ways through which commerce

carries out. Transaction of commerce between various nations has become better over the years

and more efficient, resulting from having different transportation modes and the rise of the

internet. With just a few keystrokes, people are now capable of undertaking business transactions

in other nations easily and fast, therefore having a huge impact on different markets and

contributing to globalization.

Background

The economy of the United States has been a huge influence on globalization because of

the currency used in business transactions, which is the most commonly used currency in the

world. In comparison to various nations, the influence of the United States currency (the dollar)

has benefitted the nation’s economy the most, since the rest of the nations have to conduct all

their trades by means of the U.S. dollar.

Since it is a globally used currency, the dollar offers considerable dialogue power for all

United States organizations that are parent organizations to other several international
Running Head: Impact of Globalization on U.S. Economy

organizations. There have been formations of associations, discussions and commerce that base

on utilizing the U.S. currency via partnerships by either threat or force. That is a situation that

lowers other states’ currencies. The same situation fashions more trading power and better value

for United States dollar. These conditions result to developing states heading towards poverty.

Fig 1: Globalization Index - 100 most globalized countries 2018

https://screenshots.firefox.com/dfJ0aRtXnjb2Gd7e/www.statista.com

Figure 1 above shows globalization index 2018 top 100 countries. The stat utilizes

information that was obtained 3 years before. United States’ index value 75.95 points as shown

in the table in economic globalization.

Running Head: Impact of Globalization on U.S. Economy

The Economic Impact to the Community

A few factors come with fast adoption of globalization the in United States. These factors

include exploitation of a labor force that is always growing, drops in wages for some people,

decrease in opportunities for the citizens while they increase for some, and the collapse of some

of the most thriving and prosperous cities around the country (Kuepper, 2018).

Globalization has its benefits and costs. Some of the benefits include the fact that U.S.

corporations and organizations get access to fresh markets (firms such as Gamble, Merck,

Procter and Coca Cola) and end up selling their products in almost all countries around the

globe. Such activities help in generating profits for all involved American shareholders.

Through globalization, companies in the U.S are also offered the chance to get access to fresh

sources of raw materials and intermediate inputs, as well as gaining access to lower-cost

locations for purposes of assembly operations that are meant to make used of unskilled labor.

Some of these operations include access to running shoes that are assembled in Malaysia,

liquefied natural gas that is obtained from the Arabian Gulf and Computer boards that are

obtained from Taiwan.

Most firms benefit from globalization in the United States. Globalization gives various

firms the capability to diversify even more broadly. For example, a United States firm that

operates in numerous countries experiences that booms and recessions in numerous markets

within its operations are possibly uncoordinated. The benefit that comes with that is it stabilizes

the company’s profits. With globalization, all affected firms have the opportunity to utilize the

available financial markets around the globe.

Running Head: Impact of Globalization on U.S. Economy

Figure 2 shows which countries benefit from globalization

Image source: https://www.weforum.org/agenda/2018/06/chart-of-the-week-distribution-

of-globalization-s-gains

Role of the Government

According to Dougstuber (2012), the government plays a huge role in globalization. The

government created fresh structural developments around the country and provision of various

amenities that are meant to fascinate foreign investors. All these amenities offered a hand I

enticing foreign investors into investing on the most basic facilities. The government’s capability

to stop or decrease monetary calamities also provides a huge impact on the development of
Running Head: Impact of Globalization on U.S. Economy

capital flow. Some measures that the government has taken are adept of addressing most of the

monetary calamities. Some of these steps include reduction of moral hazard risk, consolidation

of supervisions in the banking sector, provision of accountancy in all monetary dealings made

globally and guaranteeing enough observation as well as regulating all available markets.

Conclusion

Conclusively, globalization has had an impact an almost every single aspect of the

modern life and still continues to be a huge impact in the U.S economy. Even though there is a

little number of downsides that come with globalization, most people will agree that it has a huge

impact on not only the U.S economy, but also the global economy generally. In the past, there

have been cases of nationalism and protectionism, but globalization is a matter that still

continues to be globally accepted as a solution that ensures steady economic growth in the

United States.
Running Head: Impact of Globalization on U.S. Economy

References:

Dougstuber. (2012, March 27). The US Role in Globalization. Retrieved March 5, 2019, from

https://gicjournal.wordpress.com/2012/03/05/the-us-role-in-globalization/

Imf. (2018, June 1). This chart shows who gains from globalisation. Retrieved March 5, 2019,

from https://www.weforum.org/agenda/2018/06/chart-of-the-week-distribution-of-

globalization-s-gains

KOF Globalization Index 2018. (n.d.). Retrieved March 5, 2019, from

https://www.statista.com/statistics/268168/globalization-index-by-country/

Kuepper, J. (2018, November 19). How Globalization Impacts International Investors and

Economic Growth. Retrieved March 5, 2019, from https://www.thebalance.com/globalization-

and-its-impact-on-economic-growth-1978843