U.S. ECONOMY

US Economy is the world's largest national economy. Thanks to: His important role since the First World War The abundance of natural resources The availability of full extended territory Immigration

US ECONOMY IS CHANGED In the past: FREE COMPETITION AND PRIVATES INDUSTRIES Consequence: Birth of “TRUST”: groups of companies that controll all the areas of the market and impose their prices

Strong increase in production Low wages for workers People don’t buy and don’t consume Supply exceeds demand GREAT DEPRESSION of ’29 collapsed on Wall Street

To exit from the Great Depression of 1929… The president Franklin Delano Roosevelt made the “NEW DEAL” Construction of public works Intervention of the state in the economy Minimum social assistance for workers The replacement of the olds industrials with the managers Support of the banks

U.S Economy today LIBERALISM= economic theory that provides for free enterprise, free markets and scarce intervention of the state CAPITALISM= ability to accumulate and concentrate wealth in a convertible form and re-investable

Like all the countries economy is based on the three sectors: Primary Secondary Tertiary

AGRICULTURE AND BREEDING Favored by: Good natural resources Large fertiles plots Temperate climates

Primary sector PRODUCTION FOR EXPORT: Territory divided into areas called “BELT” Each area is qualified in specific production PRODUCTION FOR DOMESTIC MARKET: Based on small family business that do part-time farming Few products for own consumption

Territory is divided into areas called “BELT”

INDUSTRY Favored by: Abundant capital Advanced capital Spread around technology

Joint venture: Agreements whereby the two companies collaborate in the production of individual products in order to divide risks or gains

SERVICE INDUSTRY Communications networks: efficient but with an unevenly spread Rail networks : used only for the transport of goods Air transport: well organized

TRADE Import: raw materials, agricultural products and oil Export: high technology goods Good relations above all with Japan, U.E, Canada and Mexico. Member of NAFTA, a common market with Canada and Mexico

ACTUAL CRISIS Causes: 1)“Subprime” 2) Sale of 3) High price of Mortgages “derivatives” raw materials Failure of “Lehman Brothers”

Consequences: 1.High global inflation 2.Crisis of banking system (includes ECB, FED) 3.Wall street stock exchange 4.Global food crisis 5.Risk of default for the PIIGS (Portugal, Ireland, Italy, Greece and Spain)

The plan of the current president Obama is similar with the plan adopted by Roosevelt to overcome the crisis of the ’29. He proposes: Increase in wages Public investments Reduction of discount rates Financial liquidity to support the banking system

Credits: Natale Garrè e Giovanna Merlo,Il mondo extraeuropeo,B. Ed.Bompiani per la scuola di-roosevelt