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It also meant greater access to foreign products. Once the American consumer got the taste of the foreign products, the demand for these items exponentially increased. Ultimately, foreign imports allowed for economic growth based on consumption. The sustainability of such a system in questionable and even condemned, but fact remains that it was a real effect of globalization.
Another impact of lifting the trade barriers was felt by the American manufacturers. In this instance, much of the foreign production was sold at prices lower than those of the American manufactured items. Being then unable to compete with the significantly lower prices, some U.S. producers had to declare bankrupt. Consequently, the manufacturing sector of the American economy was damaged. What is even more surprising about this is the fact that the U.S. representatives signed international treaties to allow these negative effects to still occur. A most relevant in this instance is NAFTA, or the North American Free Trade Agreement, which saw lifting the barriers between the United States, Mexico and Canada. The agreement was supposed to sustain economic growth, but what it in fact did was to open the boundaries to free labor force in Mexico, repeating once again the situations in China and India.
Another way in which the American economy was affected by the economies of other states has a more fiscal nature. In this order of ideas, numerous economies pegged their currencies to the...
dollar. As the threats of an economic crisis became more obvious and as the dollar was loosing value, the countries detached their currencies form the U.S. dollar. The American currency became as such weaker and lost some of its purchase power.
The events had however dual effects and this is mostly felt today, through the economic recession threatening the American economy. With the hardships encountered in the United States, the multinationals begin to cut costs and close their foreign plants. They also try to economize by reducing it costs, renouncing as such the software outsourcing contracts. Ultimately, with reduced spending power, the American demand for foreign products is likely to decrease, negatively affecting the markets in the countries exporting to the United States.
References
Eckes, a.E., Zeiler, T.W., Globalization and the American Century, Cambridge University Press, 2003
Rodrik, D., Has Globalization Gone Too Far? Peterson Institute, 1997
Scheve, K.F., Slaughter, M.J., Globalization and the Perceptions of American Workers, Peterson Institute, 2001
Van Meter Fishback, P., Higgs, R., North, D.C., Libecap, G.D., Government and the American Economy: A New History, University of Chicago Press, 2007
The World Factbook, Central Intelligence Agency, 2008, https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.htmllast accessed on November 27, 2008
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