Vambery

Assignment – Krishnakant Shahani – ks11804n@pace.edu

MBA 674 – Professor Robert Vambery

1. Identify four reasons why the US became successful as a highly competitive economy in international trade and investments.

Answer:

The reasons why the US Economy became highly successful and competitive are as follows:

World War II: The United States dominated many export markets for much of the postwar period -- a result of its inherent economic strengths, the fact that its industrial machine was untouched by war, and American advances in technology and manufacturing techniques. After World War II, due to the fact that America possessed over 80% of the gold in the world, and due to the fact that virtually every other developed country in the world had been devastated from the war aside from America, the American dollar became adopted as an international reserve currency. Just as all American dollars were "backed by gold" at the time, meaning that a specific amount of gold was held by the Federal Reserve Bank to represent of all the paper money in circulation, the countries of the world were going to back their money with the US money.

Boosting Competition: When companies fiercely compete with one another, the result can be lower prices and more innovative products and services. Creating maximum competitive intensity forces companies to constantly innovate—whether through new technology or business models or management processes—to keep ahead of rivals. And key to competition is keeping government regulation as light as possible while also keeping products safe and preventing harmful monopolies. Starting in the 1970s, many American industries were deregulated, including airlines, trucking, railroads, banking, electricity, and communications. This bipartisan effort broke down concentrations of market power and unleashed innovation.

Decline in the value of the American Dollar: The decline in the dollar value has been costly in terms of the higher cost of...