Economic Factor #9: International Growth

  • May 10, 2017

    International WealthIt is said that a rising tide carries all ships, and there is no doubt that a generally strong and rising world economy is helpful to the economic growth of the U.S. In the years following the financial crisis of 2007-2009 the increasing U.S. and Chinese economies have tended to help other economies. In the same way, a return to healthy European economies could help the U.S. economy to continue to grow.

    Viewed across nations and through decades, free market economies have been shown to be substantially outperform countries with economies that are subject to high degrees of government control. The Heritage Foundation provides an interesting source of data on the degrees to which various nations allow economic freedom through its Index of Economic Freedom. Studies based on those data tend to indicate that economic freedom plays a significant role in enhancing long term economic growth rates.

    In the past several decades economic freedom has actually tended to expand throughout the world led by the collapses of communism in China and the former Soviet Union. Nations such as Ireland and New Zealand have tinkered with expanded economic freedoms only to retrench those liberties when the resulting increases in wealth were viewed as increasing wealth inequality. I believe that the general long term prospect is for mixed but generally increased economic freedom throughout the world and I believe that this will tend to increase global prosperity with a spillover effect of enhancing the U.S. economy.

    Importance of factor in general:  B-

    Prospective influence of this factor on the U.S. economy: B+

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