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The Economies of the Western Hemisphere

Instructor: James Walsh

M.B.A. Veteran Business and Economics teacher at a number of community colleges and in the for profit sector.

In this lesson, we will explore the varied economies of the Western Hemisphere; from the advanced economies of the United States and Canada to the less-developed economies in Central and South America.

The United States

The United States, along with China, is one of the world's largest economies. The U.S. has a per capita GDP of $57,300, the largest in the world. Its economy has undergone major transformations from agriculture to manufacturing. and then from manufacturing to services. Some experts say it has been moving from a services-based economy to an information-based one where knowledge is the main source of value.

Currently, 42% of Americans work in sales and services occupations, 37% of Americans work in managerial, professional and technical occupations, and only 20% work in manufacturing and extraction industries. Agriculture was once the dominant economic activity in the United States, today the percentage of Americans working in agriculture is less than 5%. The U.S. economy today is truly based on white collar work, a complete transformation from 100 years ago.

Lady Liberty is a worldwide symbol for the United States of America
Lady Liberty

Jim and Nicole live in the suburbs of a major U.S. city. He teaches online university classes from home, and she works as a marketing rep for a major cellphone carrier. Neither of their jobs existed 20 years ago! Jim's grandfather came to the U.S. as an immigrant and worked for 50 years in a steel mill. Technology has since transformed the U.S. economy. The internet makes Jim's job possible, it was invented in the U.S. as were the cellphones that make Nicole's job possible. Technology also created the hydraulic fracking revolution in oil extraction, which has allowed the United States to create its own oil reserves rather than importing them.

Jim and Nicole wonder where their children will work in the future and what the world they will live in will be like. Jim says they will probably work in jobs that don't even exist today and ride around in self-driving vehicles!

Canada

Drew emerged from his pre fab temporary housing into brutal cold. When manufacturing left his hometown in Ontario, he moved to northern Alberta to operate heavy equipment in the tar sands oil fields. He is making money he never dreamed of, and when he heads back south in a few years he will have enough saved up to buy a home. Technology is a driving force behind Canada's economy too! The oil boom has transformed the undeveloped wastelands of the north into an economic engine. Oil is only one of Canada's many resources. It is blessed with abundant timber and other minerals, many of which are exported along with the tar sands oil to the US.

Thanks to the abundance of resources and the technology to harvest them, Canada enjoys a per capita GDP of $46,200, one of the world's highest. Like the U.S. it is services-based, with 70% of jobs in the services sector, but its industrial employment is 28% which is greater than in the U.S., partially due to the explosion of investment in oil extraction in the North.

Mexico and Central America

Jose's life is so different from his parents. While they toiled in corn fields for most of their lives in a rural part of the country, Jose works for a U.S.-owned car company on an assembly line attaching doors to frames. He makes more money than his parents ever did, and he even gets to visit them when he takes his paid vacation.

Mexico's economy has also transformed in the last 30 years, going from agriculture to manufacturing. Thanks to NAFTA and other trade treaties, Mexico is one of the freest and most open economies in the world. U.S. automakers have invested billions in assembly lines there, thus making manufacturing a significant part of the country's economy. The transition, though, is slow. Mexico has only a mid-size per capita GDP of $18,900 as many of Jose's fellow citizens still toil in the fields growing corn, soybeans, and wheat. Mexico has abundant supplies of silver and is also a major oil producer, with a government-owned monopoly controlling production and the income from it.

The rest of Central America is not a happy story. The most populous country is Guatemala, and it only has a per capita GDP of $7,900, a fraction of the U.S.'s or Canada's. These economies are only partially developed, focusing on agricultural products like bananas, sugar, cane, and coffee. These products can't be grown in many parts of the world making them a good source of exports. The Central American nations have been plagued with civil strife, drug cartels, and legendary government corruption, all of which have hindered their development.

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