The Development and Prospects of the Dollar-Pound Exchange Rate - Dissertation Example

the US had been more restrained and preferred to perfect its own brand of capitalism at home, receiving course rich inputs from multicultural contributions. The reasons for these two different brands of capitalism did not deter the two nations in forging important symbiotic economic, trade and political ties and be reckoned as one of the most effective socio-political and economic alignment of the present-day world. The two different brands of capitalism, followed by these two nations, were founded in the realities of these two nations-the UK was a small nation that had limited natural resources at its command and the USA was a vast land with a population that was not sufficient to exploit such large and rich natural resources.

Thus, while the UK went in search of territories that could be exploited for natural resources; the US established a liberal immigrant and employment policy that almost invited the rest of the world to come and contribute to the US economy. Both brands of capitalism were a resounding success if outcomes are to be seen and evaluated now. However, these outcomes and the recent emergence of new economic powers such as China, Poland, etc that are diluting these outcomes as a consequence of globalization are not the focus in this discussion.

The more important aspect is the fact that both brands of capitalism brought these two nations important trading ties with the rest of the world. The UK, while developing its protectorates, established trading ties with the protectorate and continued the trade much after it had set the protectorate free and finally the UK and the protectorate trade ties were determined by need-based comparative advantage. This had the important consequence of establishing the British pound as an international currency of trade.

On the other hand, The US became such a lucrative economic power and the land of opportunities that almost everyone wished to trade with the US. This made for establishing the US dollar as another important currency of international trade.