What Type of Economy Does the United States Have?
The United States (US) is a country in North America and ranks as one of the largest countries in the world in terms of both population and area. Its economy is classified as a highly developed and mixed economy, and is one of the strongest economies in the world. In fact, the US has the world’s largest economy in terms of nominal gross domestic product (GDP), and the second largest based on purchasing power parity (PPP). Similarly, the country ranks highly in terms of per capita GDP and per capita PPP. Given the strong US economy, its currency, the US dollar ($), is one of the world's most widely used currencies for business transactions. The country currently has a GDP of approximately $20.66 trillion, and its economy is driven by the service (80%) and industrial (18.9%) sectors. Major trading partners of the US include the United Kingdom (UK), South Korea, China, India, France, and Taiwan.
US Currency
The United States dollar (USD) has served as the nation's currency since 1792. The currency is also used widely in international business transactions. In fact, some other countries use the USD as an official national currency, while others use it as a de facto currency. In order to limit inflation, the US government uses both monetary and fiscal policies. The Federal Reserve, which was established in 1913, is a central bank that regulates monetary policies and ensures the stability of the currency.
Economic Sectors
One of the most important economic sectors in the US is manufacturing, which had an output of approximately $2.4 trillion in 2013. That year, the US had the globe’s second largest production, ahead of the combined output of Germany, Brazil, India, and France. The primary industries in the US manufacturing sector include petroleum, construction machinery, food processing, mining, and agricultural machinery.
The country's financial sector is also significant, as the US boasts of a massive financial sector that is rivaled by few countries. For example, the New York Stock Exchange (NYSE) is the largest stock exchange in the world. Foreign investments in the US total about $2.4 trillion, while US investments in foreign markets are about $3.3 trillion. The US is also considered the world’s leader in venture capitalism and is among the leaders in the Global Competitiveness Report and the Ease of Doing Business Index.
Technology and Entrepreneurship
Historically, the US has experienced a culture that strongly supports entrepreneurialism and technological advancement. For example, technological innovations have been constant since the 19th century, including inventions like Alexander Graham Bell's telephone and Thomas Edison's lightbulb. More recently, this culture is closely linked to the idea of startup companies, which utilize technology in order to create new products and markets. According to experts in entrepreneurship, at least 50% of working men in the US are self-employed at some point before retirement. On average, this period is between one and two years. Additionally, business creation is now among the top drivers of economic growth in the US.
