Comparison of the economies of United States and Australia
The periods of the recent past has witnessed significant development of the global economies and this has resulted in the enhancement of international development. The development of the attributes of globalization has been of immense benefits to the global nations because it has the consideration of enhancing the attribute of regional integration. Regional integration has been of immense benefit and it further resulted in the consideration of increasing the performance of the economy because it encourages the aspect of international trade. Over the period, the performance of various economies has been identified to be influenced by the factors that are dominant in the economy and this establishment has ensured that the global economies have different attributes of developments (Horiguchi, 2012). In reality, United States of America and Australia has emerged as some of the big economies of the world because of the measures they have employed in their economies. The choice of the economic structures and the institutional aspects is also an aspect that has continued to enhance development of these economies because the institutional aspects have the impact of ensuring that the developmental polices are enacted and enhanced by the economic structures. The World Bank has the role of ensuring that the economic performance of the global economies are enhanced and as such has devised ideal measures of comparing the performance of various economies. This aspect of comparison is crucial because it forms the basis of resource allocation from the World Bank and other global financial organizations generally known as the Brentwood institutions. The consideration of economic performance is therefore crucial incentive for ascertaining the influence of the economic structures and other attributes of economic development.
Economy of the United States
Over the period, the economy of the United States has been identified as the largest national economy across the globe and this has been enhanced because of the measures employed by the economy and that are responsible for the attributes of development. The consideration of economic performance can realized through the analysis of certain crucial aspects that have been identified as the indicators of economic development. The usage of these indicators is crucial because they help in the enhancement of economic performance indication and also provides the basis for comparison with other nations. Some of the leading aspect of measuring the performance of the economy is the consideration of the interest rates, the gross domestic product (GDP) and the national product. The prevailing unemployment rates and the rates of inflation also provide crucial insights into the performance of the economy. In the view of these realities, the performance and state of the economy of the United States is shown the following attributes. GDP of $15.676 trillion with a GDP growth rate of 2.3%, unemployment rate measured in January 2013 is 7.9%; the inflation rates measured in 2012 was 1.7% (Horiguchi, 2012). The economy of the United States has been identified as the leading economy of the world and as such the development in the currency has been established as the most stable currency across the global nations and this aspect has enhanced adoption of this currency as preferred global currency. In this regard, the adoption of the American currency has resulted in significant changes into the aspects that result in the fluctuating interest rates. The table below shows the various fluctuation of the interests rates and exchange rates of the economy of the united sates
Source (John Nieuwenhuysen, 2001).
Additionally, the economy of the United States has established average interest rates of 6.81% and the government has enacted measures to ensure that the alteration of this rates leads to the stabilization of the economic agents. Finally, the consideration of balance of payment is another critical incentive of ascertaining the performance of the economy because it has the consideration of enhancing development and this consideration is influential for the aspects of trade in the nation. Positive balance of payments shows that the economy exports more than it imports and this incentive is ideal for economic performance (Mankiw, 2008). Based on this incentive, analysis of the trade statistics from economy of the United States shows that the economy has a trade deficit of $540.4 billion and this is broken down in the following graph.
Source (Sullivan, 2012).
The Australian economy
Over the period, significant analysis has been conducted on the performance of the Australian economy and it has been identified that it is one of the richest in the world and it is highly developed. According to the information collected from the World Bank, Australian economy is one of the largest capitalist economies in the world and this measurement has been conducted through the usage of the ideal features for measuring the performance of the economy. The usage of GDP is extremely crucial for ascertaining the performance of the global economies because it forms an ideal comparison incentive for enhancing the analysis of the global economies. Certainly, the development of the economy is extremely beneficial because it has the capacity of enhancing the increase in the living standards of the citizens. Analysis of the Australian economy has shown that it is dominated by the service sector that comprises 68% of the gross domestic product. Additionally, the mining sector has also taken significant attribute of the economy and it comprises the aspects of 19% of the GDP (Peter J. Brain, 2012). In reality, the revelations highlights are the attributes of development of the Australian economy.
More specifically, the indicators of economic performance have indicated the following about the status and performance of the economy of Australia. The GDP is calculated during the period of January 2013 totaled to $1.372 trillion with a GDP growth of 3.3% in 2012. The inflation rate for the economy is g9iven as 1.6% while the unemployment rate is given as 5.4%. The economy of Australia enjoys a positive trade deficit that has is beneficial for the aspects of development and it is shown as 84.68%. This aspect is conducive for the performance and enhancement of business in the economy. The economic planners of the Australian economy have realized the importance of interest rates in the economy as they have enhanced measures to ensure that the rates of interest stagnates at 3% as shown in the following table.
Source (Peter J. Brain, 2012).
The development of the variables above is ideal because it provides n incentive for comparing the performance of the two economies. The consideration of using the GDP for example t analyze the performance of the two nations is crucial because it shows that Australian economy is performed better then the American economy. This depiction is supported by the consideration of the attributes stating that the Australian economy continues to experience growth while the American economy is on the decline. In this regard, the usage of the GDP aspect of the economy reveals the disparities facing the American economy. Australia derives growth from minerals awhile America’s growth is impaired because of the involvement in war expenditure. Another incentive of comparing the performance of the two economies is the attributes of trade deficit and this is ideal because it provides the activities of the two nations in terms of trade. This consideration is deal and it is influenced by the consideration of both internal and international trade. In this category, Australian economy emerges the best because it has the rate of 84.68% which is conducive for development. On the other hand, the economies of the United States has experienced significant decline from the previous period to land at $540 billion. This depiction is indicative of the future development of the economies and it shows that the economy of the United States has fluctuating trade deficit while Australian economy has a stable trade deficit and this reflects the attributes of development for the economies (Horiguchi, 2012). With regard to the issues of unemployment and inflation rates, both nations have employed measures to ensure that the unemployment and inflation rates are significantly controlled to manageable levels because they are detrimental for the performance of the economy. High inflation rates are not ideal for the development of the economy because the derail the activities of trade in the economy. On the same note, high unemployment rates are also not ideal for the establishment of economic performance because they result in the consideration of adverse measures in the economy. This establishment is ideal and the survey conducted across the two nation’s shows that they are almost identical in the representation of inflation and unemployment rates.
Strengths and weaknesses of the economies
Despite the attributes of development that the Australian economy has received in the recent past, the economy is faced with significant potential challenges because the mineral resources are running out and this has the attribute of reducing the economic performance because the GDP will be significantly reduced. Ideally, this will also have the effect of reducing the attributes of international trade because this forms one of the leading exchange products with the external markets like those of China and India. On the other hand, the American economy has continued to experience advanced challenges and reduction in the GDP because f the involvement of the activities of war. These advents of war have resulted in the significant decline in the attributes of foreign exchange there by leading to the reduction in the foreign exchange figures. Finally, both economies have significant strengths in the regulation to their unemployment rates and inflation rates because these have formed the basis for development of the nation’s economies. High inflation rates in the economy are very detrimental and they lead to the aspect of disparities in the performance of business. Inflation also has adverse effects on the level of savings (Sullivan, 2012). On the same note, high unemployment rates are detrimental to the economy because it has the attribute of lowering the performance of the economy. This is true because it lowers the GDP by a significant margin. Therefore, these two economies have significant strength in enhancing regulation of the both inflation and interest rates.
The attribute f globalization has been extremely beneficial because it has enhanced those aspects of economic development. With the realization of globalization, the comparison of the performance of various economies has become an incentive that is crucial for the trade partners and the World Bank has enabled provision of files and data necessary for the attribute of comparison. According to he information collected form economists around the globe, the performance of the economies is illustrate through the use of GDP, unemployment rates, inflation rates, trade deficit and the interest rates. In this regard, the comparison of the performance of various economies is based on the consideration of the above factors.
Base don the above consideration, the comparison of the economies of United States and Australia in enhanced through the conduction of the analysis of the above indicators of economic performance. According to the above factors, the economy of the United States is listed as the leading national economy across the globe because it has higher GDP. Analysis of data received from the two economies reveals that manageable aspect of inflation and unemployment rates. This aspect is crucial because they have the attribute of increasing the performance of the economies by a significant margin. In view of these developments, the economic planners have ensured that the disparities facing the economies are eliminated to ensure continued growth and development of the economies. The attribute of mineral depletion and aspects of war have characterized as some of the attributes responsible for the decrease in the performance of the economy and the establishment of the corrective measures has ensured that these attributes are regulated. Regulation of these adverse measures leads to the enhancement of the development of the economies.
Horiguchi, Y. (2012). The United States Economy: Performance and Issues. New York:
International Monetary Fund.
John Nieuwenhuysen, P. L. (2001). Reshaping Australia's Economy: Growth with Equity and
Sustainability. United States: Cambridge University Press.
Mankiw, G. (2008). Principles of Macroeconomics, 5th ed. Mason, Ohio: ISBN-13: 978-0-324-
Peter J. Brain, R. L. (2012). Population, Immigration, and the Australian Economy. Australia:
Taylor & Francis.
Sullivan, J. (2012). The World Economy. United States: Webster's Digital Services.