Political and Economic Developments - Essay Example

? Political and Economic Developments The United s of America is arguable the world’s most democratic Besides, it is an economic powerhouse. The strong American economy is as a result of several factors. However, the most important factor which leads to the success of the country is its political stability. The country represents an epitome of mature democracy. The United States is a federal constitutional republic in which the president is the head of government. This includes the congress as well as the judiciary. By default, the president is also the head of state. The American political scene has for a long time been dominated by two major political parties despite the constitution allowing the existence of as many parties as the citizens would deem fit. These two parties are the Democratic Party and the Republican Party. These two parties differ in policies and fundamental political ideologies. However, having only two political parties is a show of political maturity. This has contributed to the country’s economic prosperity. With the attainment of independence of most countries, the notion of self rule brought with it the possibilities of the countries liberating their citizenry from poverty and even bad governance. This new system of self governance took a myriad of forms with most of the colonies taking after their colonial masters (Michael & John, 2000). This made early European civilization receive much acknowledgement. Most of these types of governance were based on democracy which is a system that allows the populace the authority to elect their leaders. According to varying preferences, some countries opted for the presidential system in which the president would be directly elected by the populace. The United States is a classical example of this kind of governance. Others opted for a parliamentarian system in which the elected legislatures elect the president. An example of this kind of governance is England where the head of the government is the prime minister. With time, the power that came with such leadership corrupted the morals of the leaders. In most of the countries, the laws of the land are formulated by the legislative council which, in most cases, is referred to as the parliament. Factors that lead to the creations of these nations differ; these are such basic factors as the size of the country, the population size, the religious beliefs of the populace, and multiple others. These are responsible for the formulation of the laws that the legislators deem relevant. What is of relevance in one region is never relevant tin another. The relativity in legal relevance thus explains the difference in regional legislations. The economic growth of a country is determined by a number of factors. Most of these factors are politically instigated. A country that is politically stable like the United States attracts investors. With investors coming to such demography’s, the implication would imminent economic progress (Hill, 2010). The American currency The dollar is the most traded currency globally. This is a clear show of how strong the country’s economy is. The strong economy is sustained by fundamental economic concepts which suit its economy as well as populace. There are deliberate moves made by the American government to sustain its economy and safeguards its interests in the world market. These are highlighted in the proceeding part. The American economy has over the years projected manageable rates of inflation due to sound financial policies. This implies a strong economic prospect for the country. Furthermore, this also ensures that the currency retains a strong presence in the financial markets globally. The second factor that has led to the strong currency is the high interest rates that characterize the country’s banking and lending sector. When interest rates are high, the market becomes attractive to investors who would in turn take part in the investments in the securities such as bonds (Stefan, Christopher & Jochen, 2008). This increases demand for the American currency which increase the value of the term. This is a phenomenon referred to as “hot money flow”. It leads to increased foreign exchange as marketers move to invest in the market to take advantage of the high interest rates. The American market has also been full of speculations which have kept the market full of activities as well. When people begin to think that the exchange rate may increase in the near future, they thus move with agility to buy as much of the local currency as possible so as to make profits from it in the near future. The demands for the local currency cause an immediate appreciation of the currency. The lower inflation discussed earlier has some other roles to play in the appreciation of the exchange rate. With lowered inflation, the market attracts more investors and this result in increased competitiveness (Lane, 2005). This increased competitive is likely to lead to lowering of prices of the goods and services produced within the country. This, thus, implies that a similar amount of the currency can buy more than it could buy previously and, therefore, has more value currently than it had before the increased competitiveness. These are some of the economic concepts that could be attributed to the dollar’s strength. The country still attracts investors. The rate of inflation is still low too (Alexander & Jorissen, 2010). The above discussed activities in the American market are some of the fundamental economic concepts applied in the global financial markets. Every nation is normally trying to influence these market factors to its advantage in an attempt to boost economic status. In economics, however, a loss in one region results in a gain another. Consequently, the more politically stable counties thus benefit a lot from politically volatile economies. The developing countries need to shift to these forms of new market. Some of the countries in Africa or even Asia have high rates of inflation. These reduce investor confidence in such economies. This is not good for economic development and such countries face imminent economic crises. The markets should be liberated. However, this only comes after attaining political stability. Peace and security are key factors in attracting foreign investors. These two factors have led to the tremendous economic growth witnessed in emerging economies such as Brazil. References Alexander, Britton and Jorissen, L. (2010). International Financial Reporting and Analysis (5th edition). Oxford: Oxford University Press. Eicher, J.H. and Eicher,D .(2001). Civil war High commands. Stanford: Stanford University Press. Hill, C. W. L. (2010). International business: Competing in the global marketplace. New York: McGraw-Hill Irwin. Lane, M.J. (2005) Socially Responsible Investing: An Institutional Investoras Guide, Euromoney. London; Aspen. Michael, C and John, I. 2000. American democracy promotion: impulses, strategies and impacts. Oxford; Oxford University Press. Stefan, L, Christopher, W & Jochen, S. (2008). Designing E-Business systems markets, services and networks. 7th workshop on E-business. Springer; New York. Viddar,H . (2008). Democracy support; where now? New York; McGraw Hill . Read More