The U.S.'s Role in Global Economics & Politics

Instructor: Nate Sullivan

Nate Sullivan holds a M.A. in History and a M.Ed. He is an adjunct history professor, middle school history teacher, and freelance writer.

In this lesson, we will learn about the role of the United States in global economics and politics. We will explore political and economic interactions between the United States and other foreign countries within the context of recent history.

From Isolationism to World Superpower

When President George Washington left office in 1796, he drafted a farewell address. In this address, he warned the young American republic of becoming too involved in foreign affairs. He believed there was wisdom in America focusing mainly on its ''own business'' rather than being a powerful global force. Throughout American history, isolationism (the belief that a country should basically ''mind its own business'' and isolate itself from world affairs) has been popular. This view was especially popular before World War I (1914-1918). However, after World War II (1939-1945), the U.S. became a global superpower and increasingly intervened in world affairs. In this lesson we will learn about America's role in global economics and politics. Let's go!

The U.S. and the Global Economy

Since World War II, the world has become increasingly interconnected. After the war, the United States played a leading role in rebuilding Europe's economic infrastructure through the Marshall Plan. Named after Secretary of State George C. Marshall, the Marshall Plan was basically a large-scale economic aid package to numerous European countries that had been ravaged by war. In the form of food, machinery, medicine, and other supplies, the United States gave away roughly $13 billion to countries like West Germany, France, Great Britain, Italy, and others.

Through the Marshall Plan, the U.S. helped rebuild war-torn Europe.

In the postwar era, advances in transportation, computer technology, manufacturing, and industry have fueled global trade and the exchange of currencies. In many respects, the global economy has become interdependent: This means that, to a degree, what happens economically in one country impacts the economies of other countries. Today the U.S. dollar is the most widely used currency in the world, and countries look to the U.S. economy as an indicator of economic health. The United States has the world's largest economy and makes up approximately one-quarter of the world's GDP (gross domestic product).

A mixed economy that relies heavily on capitalism, the U.S. economy is highly influential. The New York Stock Exchange is the world's largest stock exchange and exerts a powerful influence over global markets. Additionally, many countries invest in the United States. Foreign investments in the United States total $4.2 trillion, according to the CIA. Because the U.S. economy is so interconnected with the global economy, the United States also is impacted by global economic developments.

The U.S. and Global Politics

Just as was the case with economics, we can't really understand global politics without going back to World War II. Immediately after World War II ended, the United States and the Soviet Union emerged as the world's two superpowers and became embroiled in the Cold War, an almost 50-year period of rivalry. Global politics since 1945 literally cannot be understood outside of the context of the Cold War.

Concerned over the spread of communism in the aftermath of WWII, the United States and its democratic allies founded NATO, or the North Atlantic Treaty Alliance in 1949. This was basically a collective security organization. It was designed to demonstrate a united front against Soviet expansion. In response, the Soviet Union and its allies formed the Warsaw Pact, an alliance of pro-Soviet communist countries. Thus, Europe was divided into two main systems of alliances: NATO led by the United States, and the Warsaw Pact led by the Soviet Union. NATO was involved in the Korean War during the 1950s and the Balkan War in the 1990s.

A NATO stamp from 1952

In addition to leading NATO, the United States also led another international organization called the United Nations (U.N.). Formed in 1945, the U.N. was established as a peace-keeping organization designed to resolve international disputes. In addition to peace-keeping, the U.N. also promotes global human rights and leads humanitarian ventures. With almost 200 member states, the United States is the largest funder of the U.N., contributing 22 percent of its total budget. By comparison, Japan is the second largest funder, contributing almost 10 percent.

A member of a U.N. peace-keeping force stands guard.

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