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How big is the U.S. economy?
- World’s largest economy
- Produces about 25% of world GDP with less than 5% of world population
- Highest of near-highest per capita income
Why are U.S. companies globalizing?
- Search for profits- companies looking for cheaper production costs and want to be close to their customers. Most of world’s population lives outside of US
- Technology improvement has meant decreasing transportation and communication costs
- More free trade treaties- most negotiations are US initiated and lead
What else has caused manufacturing jobs to decrease, besides globalization?
- Globalization- the movement to developing countries of some labor-intensive industries
- Productivity increases from automation- don't need many workers to produce same output
Why does America create so many service jobs?
- Income growth
- Hard to automate
- Few regulations
- Service companies have pursued global opportunities
- Competition among service businesses is intense
What are some explanations for growing income
- Production technology vs. US education system (most important reason)
- Globalization (secondary cause)
- Change in social and political environment