Describe the U.S. role in the world economy.

• The United States possesses the world’s largest economy, accounting for 21 percent of the world’s $69.9 trillion GDP in 2011

• It is the prime market for lower-income countries trying to raise their standards of living through export oriented economic development strategies. It is also the prime market for firms from higher-income countries trying to attract business from its large, well-educated middle class

• The U.S. dollar serves as the invoicing currency—the currency in which the sale of goods and services is denominated—for about half of all international transactions and is an important component of foreign-currency reserves worldwide

• Because of its political stability and military strength, the United States also attracts flight capital—money sent out of a politically or economically unstable country to one perceived as a safe haven

• The United States is an important recipient of long-term foreign investment. Foreigners have invested over $2.9 trillion in US factories, equipment, and property as of 2011

• Although international trade has become increasingly more important during the past decade, it is a relatively small component of the US economy. US exports of goods and services in 2012 totaled $2.2 trillion but were only 14 percent of its GDP. However, this figure is somewhat misleading. Because of the country’s large size, trade that might be counted as international in smaller countries is considered domestic in the United States

• In 2010, 27 percent of the world’s 500 largest corporations are headquartered in the United States, including 29 of the largest 100. Walmart is currently the world’s largest company, with sales of $469.2 billion in 2012

How do differences in income levels and income distribution among countries affect international businesses?

• One important source of income statistics is the World Bank,which divides the world’s countries into high-income, middle-income,and low-income categories.

• High-income countries are those that enjoy annual per capita incomes of at least $12,476. As Norway, Kuwait, Poland.

• Middle-income countries have per capita incomes of morethan $1,025 but less than $12,476.

• Lower-income countries, often called developing countries, haveper capita incomes of $1,025 or less. This category includes somecountries, such as Cambodia and Rwanda.

• Lower-income countries Officially labeled “underdeveloped” by theUnited Nations General Assembly in 1971, these countries have thepotential for above-average economic growth. Other countries, designated“undeveloped” and “least developed” by the United Nations,have low literacy rates, per capita incomes, and economic growth.They are less attractive to international businesses because they offerless consumer demand and lack the public infrastructure necessary forreliable production and distribution of goods and services. A primeexample of this latter category is Somalia, an East African countrywracked by drought, civil war, and starvation.

What is a keiretsu?

• Japanese industryis controlled by large families of interrelated companies, called keiretsu, that are typicallycentered on a major Japanese bank. The bank takes primary responsibility for meeting thekeiretsu’s financing needs. The members often act as suppliers to each other, thus making itmore difficult for outsiders to penetrate Japanese markets.

Discuss the role of natural resources and agriculture in Africa’s economy.

• Many experts believe South Africa will be the dominant economic power and the continent’s growth engine during the twenty-first century. South Africa possesses fertile farmland and rich deposits of gold, diamonds, chromium, and platinum.

• Many Multinational corporations used South Africa as the base for their African operations until the 1970s, when the United Nations imposed trade sanctions against the country because of the government’s apartheid policies.

• In 2011 South Africa’s exports—primarily minerals—accounted for 24 percent of its $408 billion GDP.

1. Describe the U.S. role in the world economy. 2. How do differences in income levels and income distribution among nations affect international businesses? 3. What is a keiretsu? 4. Discuss the role of natural resources and agriculture in Africa's economy

Public Answer

1. Describe the U.S. role in the world economy.

2. How do differences in income levels and income distribution among nations affect international businesses?

3. What is a keiretsu?

4. Discuss the role of natural resources and agriculture in Africa's economy