Economic management and development Essay
The economic issues of free enterprise, competition at the market-place combined with views of some of the foremost mercantile economic thinkers has led to a situation where the United States is the world’s most foremost economy. There are however, other issues which have contributed to this situation, and there are indeed other views to suggest that the United States is not actually the most foremost economy in the world anymore.
Usually a free enterprise society or economy has a few key features that are intrinsically linked together in economic theory, those of free enterprise, and that of a free market economy. People can trade in whatever they want and can buy whatever they want whenever they want it, as long as they can afford it. Therefore money becomes an important part of this economic system. Therefore because money becomes such an integral part of this system, people are forced to do or sell any commodity they can in order to maximize the amount of money they have. As a consequence of this, profit becomes the primary desire for business operations. As the economy becomes more focused on profit and the production of wealth, individuals are controlled by their salaries and working
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The United States dollar has held a very strong position in the global financial marketplace for many years and the reasons for this position become clear when investigating how and why this has happened. The United States is the world’s largest economy, and has been in this position for the past 70 years, since the outbreak of the Second World War, therefore its currency has been able to dominate the financial markets through economic dominance over much smaller nations. The economy of the United States has benefitted enormously from the period after the Second World War, and through such agreements as the Bretton-Woods system, the agreement that set up the monetary system for the western world at the time, the creation of the International Monetary Fund and the World Bank, the dollar was used as the primary currency throughout all these systems and institutions. However times are changing and the position of the dollar as the premier world trading currency may be at an end.
Over the past 20 years there have been many emerging threats to the US dollar, and some of these have changed into actual present day threats. There are many challenges that have emerged as successors to the green back as king of the world financial system, currencies from other economic powerhouses such as the Middle East and Europe, which are now in a position to fight economically for this position of global leader in world currency markets. The system that led to the creation of the current economic situation has in part led to the emergence of other currencies. Post 1945, the United States was the strongest nation on Earth and as such could dictate monetary order, however today, other economic unions are able to claim they are just as powerful, if not more so than the dollar. In 1999 twelve European countries including Germany France Italy and Holland gave up their own currencies and adopted a new currency unit, the Euro. The European Economic Community wanted to create an alternative global monetary unit, which saw the emergence of this new currency. As well as a threat from Europe the emergence of China as an economic powerhouse with big markets and industrial vigor is a current threat to the dominance of the US dollar.
There are some economic theories which need to be analyzed in order to understand how the economy of the United States works and how it has developed. The invisible hand and mercantilism are forms of economic thinking, pioneered by economists such as Adam Smith which promotes minimal economic interference in national economic development and which promotes exports over imports to facilitate the development and prosperity of the national economy. The government of the United States has attempted to adopt such policies to curb the rising amount of imports and falling number of exports into the region. This policy tries to generate wealth and capital for an economy, which is seen as essential in developing the theory of increasing exports and acquiring more of the global wealth and currencies whilst limiting the imports that prevent the national currency from being exported.
These factors can have both advantages and disadvantages when dealing with the supply and demand elements of economic management and development. Among the advantages are competition between suppliers and vendors, motivation for people to work well and become rich, as well as causing development of technologies, decreased costs and more variety of products and services offered to the market. However the market society also suffers from some big disadvantages. The fact that the economy is now driven by making profits means that money gets spend in areas that will produce the biggest profit for the organization or government. Workers will be exploited, made to work harder and for longer to maximize this need for bigger profits. This in turn causes overproduction of goods, unused capacity due to the overproduction of certain goods, more unemployment due to resource allocation for areas that maximize the need for big profits. This can result in a gap between the poorest and the richest, along with the corruption that brings and the kinds of financial exploitation we see in corporate organizations.
Therefore in conclusion, these issues are the primary reasons why the United States is now the world’s most powerful economy. Developing and maintaining a sustainable economic development and management plan is essential to the achievement of economic expansion and sustainability. The goals of the United States government are to continue operating based on these factors over a long time period. Therefore any economic decision making needs to be done to help support these aims of being sustainable and profitable.