IMF Study: Global Impact of U.S. Economic Performance
January 31, 2002
Growth in the U.S. economy in the 1990s precipitated growth in Asia and Europe. And when the U.S. economic contraction began in 2000, it quickly led to a contraction in other regions. The global effect was especially visible in manufacturing, economists have concluded.
Based on two decades of data from 170 countries, International Monetary Fund economists Vivek B. Arora and Athanasios Vamvakidis found that:
- An increase of 1 percentage point in the growth of U.S. output per capita was associated with an increase of 0.8 to 1.0 percentage point in the average growth of other countries.
- Decreases in U.S. output likewise lowered growth elsewhere -- particularly in developing countries.
- The impact on global growth of the U.S. economy outweighs that of the European Union -- and has far more impact than Japan.
A major reason for the effect, say the researchers, is the size of the U.S. economy-- its output accounted for 20 percent of the world's total output in 2000 (valued at its purchasing power parity). Furthermore, the United States was the largest trading partner of 49 countries.
Source: Michael J. Mandel, "Economic Trends: From America: Boom -- and Bust," Business Week, January 28, 2002; based on Vivek B. Arora and Athanasios Vamvakidis, "The Impact of U.S. Economic Growth on the Rest of the World: How Much Does it Matter?" Working Paper No. 01/119, September 1, 2001, International Monetary Fund.
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