Impact of American Economic Dominance on the Growth of the World Economy

"American economic dominance led to the growth of the international economy." How far is this true in the period 1945 to 2000? (CJC 2009)

At the end of World War II, the economies around the world were devastated. The rebuilding and growth of the global economy was primarily attributed to American economic dominance for the period after WWII. While this is true, it is important to appreciate America's political will, the role of the Bretton Woods System, the role played by the Multi-National Corporations (MNCs) as well as the role of the Third World Countries. Nonetheless, it is true to argue that American dominance played a primary role in leading to the growth of the international economy.

American economic dominance led to the growth of the international economy because its position of economic power allowed it to offer economic aid to other countries whose economies have been devastated by WWII. America became the leading power in 1945, accounting for a third of world industrial production in 1971. America's agricultural productivity was half of the world's total in 1946 and it accounted for 53% of the world's mercantile marine tonnage in 1947. All of these highlight her strong position in the world economy, which allowed her to have the economic capacity to offer economic aid to countries like Japan, whereby protectionist policies pursued by the Japanese Ministry of International Trade and Industry were tolerated. The Eisenhower administration also allowed for Japanese goods like textiles to enter the US domestic market. USA also granted Japan the 'most favored nation status' which granted her all trade advantages, such as low tariffs. During the Korean War, the Japanese economy was aided by USA's need for trucks, clothing, bedding and other goods for its armed forces, which allowed her exports to enter the American markets. It was exactly due to America's economic dominance and large productive capacity, that allowed them to withstand such strong, symbiotic trading ties that they had with Japan, providing aid to the Japanese to such a large extent in order to secure Japan's economic growth.

After WWII, the post-war world was divided into two hostile camps - the Western capitalist and largely democratic states led by the USA and the eastern 'socialist' states led by the Soviet Union. America's political will also indirectly played a part in the growth of the global economy due to the fact that it prompted America to promote international trade and economic development in capitalist countries in order to cause the global economy to grow, to prevent communist infiltration, as the communist tended to build upon the economic grievances of the lower castes of society. The Marshall Plan implemented by the USA in 1948 was intended to grant temporary aid from the US resources to European countries as well as to consolidate the West against the influence of socialist and communist parties propagating economic planning and the widening of the welfare state in Western Europe. $3176 million dollars went to the British while the French received $2706 million dollars. Similarly, in South Korea and Taiwan, the USA saw them to be vital buffers to the expansion of the communist bloc. This prompted the US to provide extensive economic and military aid of $6 billion to South Korea between 1946 till 1978 and giving them preferential access to the US market in the 1960s. Such policies had the positive impact of allowing the nations to strengthen themselves to cope with external threat and invest heavily in economic growth, despite being caught in a Cold War 'hotspot'. America's political will to ensure that communism does not spread to other countries led the USA to embark upon the lending of economic aid to other countries to revitalize their broken economies. However, it can be said that without the productive capacity that USA had which came along with their economic dominance, the extent to which their political will can be manifested into concrete action and economic aid to other countries will be