As apposed to a century ago
As apposed to a century ago, United States economy is much more integrated with the world today due to being involved in a number of activities, namely world trade, and several factors, such as increased financial investment and capital flows along with international migration. Globalization is also a main factor that leads to the integration because it reduces the trade barriers among countries.
Considering how the country is less integrated, it can be explained by the fact that the number of citizens that were born abroad declined so that there are fewer opportunities to communicate with other countries. Additionally, higher price of a product in American market makes other countries less willing to consume from U.S.
The trade-to-GDP ratio measures whether the country’s trade with foreign countries plays an active and important role in its economy. At the same time, with a reference to the ration, it is not possible to state that a low value of the trade-to-GDP ratio indicates that a country is closed or open to trade with the outside world.
For leading industrial economies, such as the Netherlands, the United Kingdom, Japan, and the United States, the pattern over the last century shown by the trade-to-GDP ration appears to be similar: namely, the ratio decreased for all the four countries initially and then increased in the four countries correspondingly to a higher value than the initial one.
The absolute terms are used to compare the trade and capital flows today with that in the past without considering the different conditions of countries. For example, some countries are capital intense while some other countries are not. By measuring in the absolute terms, the trade and capital flows are increasing apparently. However, by taking the whole economic background and country conditions into consideration, if they are measured in relative terms, the capital flows may not increase that more than before. Therefore, relative terms are more valid to use and can gain a full image.
Historical examples of countries describe the development and events of a country’s relationship with outside world in the history.
Statistical comparisons of countries indicate how a country is benefited or hurt by relationship with outside world statistically.
Economic models and deductive reasoning uses models and logic to indicate the faster growth of economies open to the world economy