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Role of the United States in Contemporary World Economy The United States plays a central role in all dimensions of contemporary globalization, which at its core refers to worldwide networks of interdependence. A network is simply a series of connections of points in a system. But networks can take a surprising number of shapes and architectures and vary enormously in centralization and complexity of connections: a spider web, an electricity grid, a metropolitan bus system, and the Internet, for example. Theorists of networks argue that under most conditions, centrality in networks conveys power- that is, the hub controls the spokes. Some see globalism as a network with an American hub and spokes reaching out to the rest of the world. There is some truth in this picture, as the United States is central to four forms of globalization: economic (the United States has the largest capital market), military (it is the only country with global reach), social (it is the heart of pop culture), and environmental (the United States is the biggest polluter, and its political support is necessary for effective action on environmental issues).
Those who advocate a hegemonic or unilateralist foreign policy are attracted to this image of global networks. Yet there are at least four reasons it would be a mistake to envisage contemporary networks of globalism simply as the hub and spokes of an American empire that creates dependency for smaller countries. First, the architecture of networks of interdependence varies according to the different dimensions of globalization. The hub-and-spokes metaphor fits military globalism more closely than economic, environmental, or social globalism because U. S.
dominance is so much greater in that domain. Even in the military area, most states are more concerned about threats from neighbors than from the United States, a fact that leads many to call in U. S. global power to redress local imbalances. For instance, a U.
S. presence is welcome in most of East Asia as a balance to rising Chinese power. At the same time, in economic networks a hub-and-spokes image is inaccurate. In trade, for example, Europe and Japan are significant alternative nodes in the global network. Environmental globalization- the future of endangered species in Africa or the Amazonian rain forest in Brazil- is also less centered on the United States.
And where the United States is viewed as a major ecological threat, as in the production of carbon dioxide, there is often resistance to U. S. policies. Second, the hub-and-spokes image may be misleading in that it fails to take into account reciprocity or two-way vulnerability. Even militarily, the ability of the United States to strike any place in the world does not make it invulnerable, as Americans learned at high cost on September 11, 2001. And while the United States has the largest economy, it is both sensitive and potentially defenseless to the spread of contagions in global capital markets, as Americans discovered in the 1997 financial crises.
In the social dimension, the United States may export more popular culture than any other country, but it also imports more ideas and immigrants than most countries. Finally, the United States is environmentally sensitive to actions abroad that it cannot control. Even if the United States took costly measures to reduce emissions of carbon dioxide at home, it would still be vulnerable to climate change induced by coal-fired power plants in China. A third problem with the simple hub-and-spokes dependency image is that it fails to identify other important connections and nodes in global networks. New York City is important in the flows of capital to emerging markets but so are London, Frankfurt, and Tokyo. In social and political globalization, Paris is more important to Gabon than Washington, D.
C. ; Moscow is still more important in Central Asia. Maldives, only a few feet above sea level in the Indian Ocean, is particularly sensitive to the potential effects of carbon dioxide produced in the rest of the world. It is also completely vulnerable, since its sensitivity has to do with geography, not policy. At some time in the future, Beijing will become more relevant to Maldives than Washington, because China will eventually outstrip the United States in the production of greenhouse gases. For many countries, the United States will not be the center of the world. Finally, as the prior example suggests, the hub-and-spokes model may fail to take into account changes that are taking place in the architecture of global networks.
Network theorists argue that central players gain power most when there are structural holes -- gaps in communications- between other participants. When the spokes cannot communicate with each other without going through the hub, the central position of the hub provides power. When the spokes can communicate and coordinate directly with each other, the hub becomes less powerful. The growth of the Internet provides these inexpensive alternative connections that fill the gaps. As the architecture of global networks evolves from a hub-and-spokes model to a widely distributed form like that of the Internet, the structural holes shrink and the power of the central state is reduced. It is true, for now, that Americans are central to the Internet; at the start of the 21 st century, they composed by far the largest contingent of all Internet users.
But by 20 03, projections suggest that the United States will have 180 million Internet users and that there will be 240 million abroad. This gap will be even more pronounced two decades hence, as Internet usage continues to spread. English is the most prevalent language on the Internet today, but by 2010, Chinese Internet users are likely to outnumber American users. Chinese Web sites will be read primarily by ethnic Chinese nationals and expatriates, and Chinese will not dethrone English as the Webs lingua franca. However, Chinese power in Asia will increase because Beijing will be able, in the words of Harvard China scholar Tony Search, to shape a Chinese political culture that stretches well beyond its physical boundaries.
And China will not be alone. With the inevitable spread of technological capabilities, more widely distributed network architectures will evolve. At some time in the future, when there are a billion Internet users in Asia and 250 million in the United States, more Web sites, capital, entrepreneurs, and advertisers will be attracted to the Asian market. The United States has been described as bestriding the world like a colossus. Looking more closely, we see that U. S.
dominance varies across realms and that many relationships of interdependence go both ways. Large states such as the United States-or, to a lesser extent, China-have more freedom than do small states, but they are rarely exempt from the effects of globalization. And states are not alone. For better and worse, technology is putting capabilities within the reach of individuals that were solely the preserve of government in the past.
Falling costs are increasing the thickness and complexity of global networks of interdependence. The United States promotes and benefits from economic globalization. But over the longer term, we can expect globalization itself to spread technological and economic capabilities and thus reduce the extent of U. S. dominance.
International political economy is a growth industry. Beginning its boom after the oil crises in the 1970 s shook both world markets and states, the field now encompasses not only a great deal of political economy but of comparative and international politics as well. The end of the Cold War also helped shift attention to the field's main focus: how markets and states affect one another. Scholars in the field have tried to explain at least four aspects of the international political economy. First, many of its pioneers thought that economics was too narrow to explain central aspects of the international economy. Consider one of the more visible theoretical gaps: Although economic theory showed that free trade was optimal, in reality, protectionism characterized most states trade policies for years.
Seeking to explain such paradoxes created by economic theory, scholars have proposed explanations that are more political. In particular, they have emphasized how politics determines the stability and openness of the international economy, a focus inspired by the trauma of the Great Depression in the 1930 s and the desire to avoid repeating any such experience. Second, scholars have focused on explaining states foreign economic policy choices. In part, many believe that these choices are the most important factor shaping the nature of the international economy. For example, explaining why states choose to protect their economies, or how they set their exchange rates, or why they give foreign aid have been central preoccupations for the field.
These explanations, however, have sought to interpret such choices by adducing domestic and international factors as well as economic and political ones. Third, the field has paid attention to why certain states grow rapidly and develop over time, while others fail to do so or decline. This interest in the changing positions of states in the world economy has also been approached eclectically. Economic causes for such changes are usually supplemented by political ones, while domestic causes of the rise and decline of states are paired with international factors.
Finally, scholars have been interested in the impact of the international economy on domestic politics, an issue often explored under the rubric of the globalization of national economies. Researchers in this field have generally sought answers to these kinds of questions by looking into four categories of explanatory factors: 1) the distribution of world power, especially the role of a hegemonic state; 2) the structure, function, and consequences of international institutions; 3) the impact of non materialist factors such as ideas and beliefs; and 4) the effect of domestic politics. Concerns about U. S. power arose in the late 1960 s and early 1970 s. Americas economic advantages over the rest of the world seemed to be rapidly dissipating, while other countries were catching up.
In response, protectionist sentiment within the United States grew, leading to many domestic challenges to the traditional policy of freer trade. The stability of international currency markets was also disrupted by American behavior. The simultaneous pursuit of the Vietnam War and the Great Society program helped fuel inflation in the United States, which...
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