Background

The United States has the largest and most technologically powerful economy in the world, with a per capita GDP of $37,800. In this market-oriented economy, private individuals and corporations make most of the decisions, and the federal and state governments buy needed goods and services predominantly in the private marketplace. U.S. business firms enjoy considerably greater flexibility than their counterparts in Western Europe and Japan in decisions to expand capital plant, to lay off surplus workers, and to develop new products. At the same time, they face higher barriers to entry in their rivals' home markets than the barriers to entry of foreign firms in U.S. markets.

U.S. firms are at or near the forefront in technological advances, especially in computers and in medical, aerospace, and military equipment; their advantage has narrowed, however, since the end of World War II. The onrush of technology largely explains the gradual development of a "two-tier labor market" in which those at the bottom lack the education and the professional/technical skills of those at the top and, more and more, fail to get comparable pay raises, health insurance coverage, and other benefits.

Since 1975, practically all the gains in household income have gone to the top 20 percent of households. The years 1994-2000 witnessed solid increases in real output, low Inflation rates, and a drop in unemployment to below 5 percent. The year 2001 saw the end of boom psychology and performance, with output increasing only 0.3 percent and unemployment and business failures rising substantially. That said, the response to the terrorist attacks of 2001 showed the remarkable resilience of the economy. Moderate recovery took place in 2002 with the GDP growth rate rising to 2.4 percent. A major short-term problem in first half 2002 was a sharp decline in the stock market, fueled in part by the exposure of dubious accounting practices in some major corporations. The war in March/April 2003 between a U.S.-led coalition and Iraq shifted resources to the military. In 2003, growth in output and productivity and the recovery of the stock market to above 10,000 for the Dow Jones Industrial Average were promising signs. Unemployment stayed at the 6% level, however, and began to decline only at the end of the year.

Long-term problems include inadequate investment in economic infrastructure, rapidly rising medical and pension costs of an aging population, sizable trade and budget deficits, and stagnation of family income in the lower economic groups.
 
 
Foreign Investment Assessment

With a strong legacy of democracy, free market policies, political stability, and economic fortitude, the United States (U.S.) is considered to be a desirable site for foreign investment, both by individual and corporate entities. Most industries are open to foreign investors, and the overall foreign investment climate of the U.S. is progressive, with a liberal trade regime and a transparent regulatory framework. Moreover, at an operational level, the U.S. has a singular currency, no internal trade barriers, advanced communications and telecommunications networks, highly modernized infrastructure, in addition to an efficacious marketing and distribution system.  With no unitary foreign investment code in existence, almost all proposals for inward investment in the U.S. are permitted, generally without review. Regardless of the type of sector or industry a foreign entity wishes to enter, however, proposals for foreign direct investment must be registered in accordance with the International Investment and Trade in Services Survey Act (ITSSA), which operates under the jurisdiction of the Commerce Department.   Some areas of investment are more subject to review that others.  For example, the Exon-Floria Amendment  -- a modification of law within the Defense Production Act --  compels the review of any foreign acquisitions of domestic companies engaged in defense related enterprises.

For foreign investment statistics, see:  United States Bureau of Economic Analysis, Survey of Current Business, U.S. International Transactions, at URL: <http://www.bea.doc.gov/bea>

 
Labor Force

Labor force:    147.4 million (includes unemployed)
Labor force - by occupation:   managerial, professional, and technical 34.9%, sales and office 25.5%, manufacturing, extraction, transportation, and crafts 22.7%, other services 16.3%, farming, forestry, and fishing 0.7%  (figures exclude the unemployed)

Note: The history of American labor involves a tension between these two sets of values -- flexibility and long-term commitment. Since the mid-1980s, employers have put more emphasis on flexibility and as a result, the ties between employers and employees have become weaker. Still, a wide range of state and federal laws protect the rights of workers.


Agriculture and Industry

Agriculture - products:   wheat, corn, other grains, fruits, vegetables, cotton; beef, pork, poultry, dairy products; forest products; fish 
Industries:   leading industrial power in the world, highly diversified and technologically advanced; petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals, electronics, food processing, consumer goods, lumber, mining 


Import Commodities and Import Partners

Imports - commodities:   crude oil and refined petroleum products, machinery, automobiles, consumer goods, industrial raw materials, food and beverages 
Imports - partners:   Canada 17.4%, China 12.5%, Mexico 10.7%, Japan 9.3%, Germany 5.3%


Export Commodities and Export Partners

Exports - commodities:   capital goods, automobiles, industrial supplies and raw materials, consumer goods, agricultural products 
Exports - partners:   Canada 23.4%, Mexico 13.5%, Japan 7.2%, UK 4.7%, Germany 4%


Telephone System

Telephones - main lines in use:    181,599,900
Telephones - mobile cellular:    158.722 million  

general assessment: a large, technologically advanced, multipurpose communications system

domestic: a large system of fiber-optic cable, microwave radio relay, coaxial cable, and domestic satellites carries every form of telephone traffic; a rapidly growing cellular system carries mobile telephone traffic throughout the country

international: country code - 1
satellite earth stations - 61 Intelsat (45 Atlantic Ocean and 16 Pacific Ocean), 5 Intersputnik (Atlantic Ocean region), and 4 Inmarsat (Pacific and Atlantic Ocean regions)


Internet Users

Internet hosts:    115,311,958 
Internet users:    159 million  -- extensive and on the rise


Roads, Airports, Ports and Harbors

Railways:    total: 228,464 km
Highways:    total: 6,406,296 km
Ports and harbors:   Anchorage, Baltimore, Boston, Charleston, Chicago, Duluth, Hampton Roads, Honolulu, Houston, Jacksonville, Los Angeles, New Orleans, New York, Philadelphia, Port Canaveral, Portland (Oregon), Prudhoe Bay, San Francisco, Savannah, Seattle, Tampa, Toledo 
Airports:   14,807; with paved runways:   total: 5,128 


Legal System and Considerations

The legal system is based on English common law with judicial review of legislative acts.  In the realm of business, the United States has a long history of transparent legal process within its judicial system. The U.S. legal system includes commercial and Bankruptcy laws and provides for sufficient protection of secured interests in property.  In terms of dispute settlement, the U.S. is a member of the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. The U.S. government is a signatory of the International Center for the Settlement of Investment Disputes (ICSID). The U.S. accepts binding international arbitration between foreign investors and the state.


Corruption Perception Ranking

As reported by Transparency International, from least to most corrupt (scale of 1 - 163), the United States ranks 20.
 

Cultural Considerations

Western norms dominate with Americanized elements.  The standard American conversation starter is "What do you do?" which means "What kind of work do you do, and for whom?" This is not considered rude or boring as it may be in other cultures. Indeed, work is an important aspect of the American lifestyle, making discussions of work fairly standard fare.  Another American feature is the fact that compliments are exchanged very often and are sometimes used as conversation starters.


For further information see:

The U.S. Business Advisor, the U.S. State Department, the U.S. Import Administration, the U.S. Treasury, the U.S. Department of Commerce,  the World Bank