United States and Globalization

1. USA’s economic power remains
strong but is it still an hegemonic
power?
Nicolas FOUCRAS Phd
University TEC de Monterrey
nicolas.foucras@itesm.mx

2. • USA’s hegemony depends on in its economic, financial, political,
cultural and political power => they have developed world
structures/institutions to influence/interfere in all areas
• 1st economic power (from 2nd half of XIXth c. to present)
• It represents 33% of the global GDP with only 5% of the
population
• Crisis in 2008 has proven that economic and financial health
of the USA affects the entire planet => with an important
disposition of the G20 to rescue the economy of the USA
• USD is the 1st currency used in international trade and the one
with most confidence

3. • It is the biggest contributor to aid for development (specially in
the Middle East) = soft power with important capacity to interfere
in regional decisions
• Very high Index of Food and Energy Security; Important natural
resources  allows stability and industrial development. It has
easy and cheap access to raw materials (became 1st oil producer in
2014) => it does not depend on the decisions taken by
Organization of the Petroleum Exporting Countries
• 1st market consumer in the world => barometer for the
international economy
• In the financial market it enjoys a high level of confidence;
mainly because it is the hard core of the international economy =>
this results in an excellent mark granted by credit-rating agencies
Important access to the financial market: due to the confidence it
generates many actors are willing to lend money to all the
domestic actors: firms, authorities, households
They do not have any problem to access to financial capital (above
all from Tax havens) at a very low rate

4. World wealth per capita levels

5. Top 5 markets for US agricutural exports
(2000-2014)

6. Top 30 markets for US agricultural
exports (2012-2014 average)

7. Top 10 Markets for US Processed Food
Exports (2009 Vs 2013)
Source:www.fas.usda.gov
Rose by 40%

8. • Budget for R&D= engine of success and growth= 1/3 of the
global budget; it allowed to develop:
– Competitiveness (Silicon Valley), universities, research
centers
– Has developed innovative sectors with government
incentives (thanks to the debt): defense + aerospace +
technology information + communication
Regarding the global value-chains they specialized in high
value-added products => they obtain the greatest benefits
They relocated labor intensive and polluting activities to
other countries (Mexico thanks to NAFTA) to remain
competitive (purpose: to maintain low costs)
Homeland Invest Act adopted in 2004 by the Bush
Administration grants important tax advantages on profit
repatriation for US subsidies located abroad

9. • They have an important political power in the
international organizations (WTO, IMF, WB) with
veto power
• They have promoted and achieved to extend their
free-market rules as well as political rules, their
lifestyle, their currency and their language (using
hard and soft power). English is the 1st language
used in Irs
• 1st country to receive foreign students (21.5%) =>
capacity to draw skilled labor force

10. Share of all International students (2010):
EEUU = 21%
Source: Immigration Statistic os Students

11. USAs energy recovery: many predict that USA will recover
its energy independence (due to the exploitation of shale
gas) meanwhile other countries will lose independence

12. 2014: USA was the 1st oil producer
(mainly for own consumption)

13. Oil exporters in 2012
(Organization of the Petroleum Exporting
Countries leads)

14. World oil consumption: USA is 1st just
before EU-28 and China

15. Concentration of R&D in ICs

16. Military Power
• Defense budget:
– After 9/11 it was multiplied by 2 (between 2000-2010): war
against terrorism allowed to maintain a strong defense sector with
important investments in R&D (engine of the US competitiveness)
– It is now 3.3% GDP (2015 International Institute for Strategic
Studies) (China 1.2%; France 1.8%; UK 2.1%; Russia 3.7%; India:
2.2%; Japan: 1%)
– It is equivalent to almost half of the world’s military spending
Mainly financed by Treasury bonds (debt) (Herd 2012)
• Nuclear capacity 5 times the size of the other nuclear powers
• Ability to deploy military forces at the same time in different places:
They can send troops to any region in the world to contain conflicts
or to protect national interests

19. Concerns for USA
• Commercial deficit; they import more than they
export; financed by Asian banks
=> China owns many Treasury bonds issues by the
US Gvt  economic interdependence
• USA’s debt level: out of control
• Increase of competitiveness in emerging countries
(China and BRICS: they are affecting historical
influence for USA in LAC and Asia)

20. • The growing presence of counter-powers in all the
regions (Europe, Asia with a Chinese active role,
LAC with the new organizations mucho more
autonomous than during cold war…)
• There is growing cost of the globalization assumed
by the hegemon (to secure the proper functioning
of the global market => maintain peace)
=> Need to redistribute powers and to collaborate
with other regional powers (Europe, Japan,
Australia…)
• Deterioration of the national GINI index

21. Total public debt: around 78% belongs to
national actors and 22% to foreign
countries

22. Foreign holders of US Public debt

23. US GINI Index: worse and worse

24. Chinese growth since entrance in the WTO is more important than
US growth  USA focus more and more on relative gains and not
absolute gains in its relation with China

25. USA’s and China’s global exports participation: China
overtook USA in 2011

26. Increasing trade deficit with China (1986-
2012)

27. US-Chinese trade 1985-2010

28. In the mexican case it is
not a problem. Most of
the exports from Mexico
to USA come from US
subsidies located in
Mexico and are using US
inputs. It is the case for
tha automobile sector.

29. • The Gap between USA and its direct competitors
is vanishing
Threatens leadership
USA are getting more selfish
The US willingness to cooperate and to respect
international rules is less important (it is the
reason why they are taking protectionist
measures)
Il creates internationally distrust, uncertainty
and tensions (hegemon is sick)
¿Is it the beginning of the end of the US
hegemony?