The Interconnectedness between the American Economy and the World Economy
It is often said that when America sneezes, the entire world catches a cold. This is because of the high degree of integration between the American economy and other economies of the world. Ever since World War 2 ended, America became a dominant economic power. This led to increased integration between the American economy and that of other major global economies. This increased integration is good as well as bad. It is good because it enables more trade and America benefits from the competitive advantage that it has. However, it is also bad because it created the risk of contagion. These increased inter-linkages are the reason that the subprime mortgage crisis of 2008 was not a local affair. Instead, its effects were felt all around the world.
This article focuses on the details of the integration between the American economy and the world economy.
How Integrated is the American Economy?
Statistics provide the best representation of the degree of integration between the American economy and the world economy. Some of the important statistics are as follows:
There are some statistics which are not very favourable. However, they too explain the importance of foreign trade in the American economy. Some of them are as follows:
Implications for the American Public
All the above statistics clearly show the integration between the American economy and the world economy. The above points make it clear that disintegrating from the world economy would be a difficult and tedious task for America. This is a wake-up call for the American population.
The bottom line is that the American economy cannot be analysed in isolation. It is so interconnected with the entire world that economic events in distant places also have a huge impact on the American economy.
Related Articles

Authorship/Referencing - About the Author(s)
The article is Written By Prachi Juneja and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.