United States

The economy of the United States is the largest of any country in the world, and was estimated to be worth $13.81 trillion in 2007. This has been generated with a relatively low rate of unemployment and high levels of research and development, funded both by government and by the private sector. The result has been that the U.S. economy has been able to maintain a very high level of output per person, a situation it still maintained in spite of the economic downturn in 2008–09. The main problem, however, is that the United States has managed to generate the largest external debt of any country in the world.

A Brief History

The first Europeans who arrived in North America recognized the economic potential of the continent, and the abundant resources. As a result, the British attempted to establish colonies, such as Roanoke and Jamestown, but they were unsuccessful. They did manage some trade with the Native Americans, but there were not sufficient migrants there to generate their own internal demand. This came about during the 17th century, and especially from the early 18th century when the pioneers opened up farmland—often after wars with the Native American inhabit-ants—and there was an emergence of towns across what is now called the United States.

Certainly the early settlements in North America imported most of their goods from Britain, but gradually a manufacturing industry began to emerge, especially after the American War of Independence (1775 − 83), after which the United States started cutting its ties with Britain—although there was still some [Page 1651]trade through Canada and the Caribbean. The United States also began trading more with France and the Netherlands, both allies in the War of Independence.

This period of breaking trade links with Britain coincided with the Industrial Revolution, which saw the emergence of machinery and factories capable of producing cloth and later many other items at far cheaper rates than had henceforth been the case. The British had always been protective of their industrial designs, and when the capitalist Samuel Slater (17681835) left Britain for New York in 1789, before he departed, he memorized the information needed to set up a mill—knowing that any such plans concealed in his luggage would get him into trouble—and built his own mill in Rhode Island, earning him the title of the “Father of the American Industrial Revolution.”

Economic Growth

The U.S. economy was transformed soon afterward with the invention of the cotton gin by Eli Whitney, which led to the creation of a large slave plantation society—there were many slaves up to that point, but slavery was rapidly becoming unprofitable in many parts of the United States. And during the War of 1812, Francis Cabot Lowell was able to take designs for a cotton mill to the United States, and was able to build a mill in northern Massachusetts, capable of turning raw cotton into cloth.

This in turn led to the growth of the cotton industry, which soon became one of the main sources of wealth in the southern states, leading to the emergence of very large plantations and exporting cotton to Europe and elsewhere in the world. The result of the building of U.S. factories was that many items were no longer imported to the United States, and indeed the United States became an exporter of some of them. It had transformed from being a source of furs, timber, and tobacco to being a viable economic unit with its own large and wealthy home market.

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