Group Efforts

By :-
Ankit Gakhar
Antil Sethi
Chetanya
Rajput
United States of America
Global Trade of United States
Economic/Political/Legal System, trade
Volume, Composition, Macro Economic
Challenges, BoP, GNP, GDP, Per-Capita
Income, Purchasing Power, Debt Problem
Objectives
To do brief Economic/Political/Legal System
analysis of USA
To study BoP, GNP and GDP
To identify various economic indicators
To identify Macroeconomic opportunities and
challenges
BRIEF HISTORY
The indigenous peoples of the U.S. mainland,
including Alaska Natives, are believed to have
migrated from Asia, beginning between 40,000
and 12,000 years ago
Britain's American colonies broke with the mother
country in 1776 and were recognized as the new
nation of the United States of America following
the Treaty of Paris in 1783.
Buoyed by victories in World Wars I and II and
the end of the Cold War in 1991, the US remains
the world's most powerful nation state.
They could cement their supremacy with
possession of Atomic Bombs and sending man to
moon
FLAG HISTORY


The flag consists of thirteen horizontal stripes, seven red
alternating with 6 white. The stripes represent the original
13 colonies, the stars represent the 50 states of the Union.

The colours of the flag are symbolic as well:
Red - Hardiness and Valour
White - Purity and Innocence
Blue - Vigilance, Perseverance and Justice

GEOGRAPHICAL
SIGNIFICANCE
North America, bordering both the North Atlantic
Ocean and the North Pacific Ocean, between Canada
and Mexico
Diverse - Vast central plain, mountains in west, hills
and low mountains in east; rugged mountains and
broad river valleys in Alaska; rugged, volcanic
topography in Hawaii
Resources - Coal, copper, lead, molybdenum,
phosphates, rare earth elements, uranium, bauxite,
gold, iron, mercury, nickel, potash, silver, tungsten,
zinc, petroleum, natural gas, timber
4th Largest country in terms of area (9,826,675 sq
km)
Lowest point: Death Valley (86 m)
Highest point: Mount McKinley (6,194m)
Arable land: 18.01%


QUICK FACTS
Number of States 50
Capital Washington D.C
Largest City New York
Independence Day 4
th
July 1776
3
rd
most populous country
National Language - English
National Bird Bald Eagle
Chief Justice - John Roberts
The country accounts for 41% of global military
spending

QUICK FACTS
White
72%
Black/African
American
13%
Asian
5%
American Indian
and Alaska Native
1%
Pacific Islander
0%
Other
6%
Two or more races
3%
DEMOGRAPHICS
Population - 313,847,465 (July 2012 est.)

Composition
0-14 years: 20.1% (male 32,107,900/female
30,781,823)
15-64 years: 66.8% (male 104,411,352/female
104,808,064)
65 years and over: 13.1% (male 17,745,363/female
23,377,542) (2011 est.)
Median Age
Total: 37.1 years
Male: 35.8 years
Female: 38.5 years (2012 est.)
Population Growth Rate - 0.899% (2012 est.)

POLITICAL SYSTEM
Federal presidential constitutional republic
Two-party system - Democratic Party (founded in
1824), and the Republican Party (founded in 1854)
President - Barack Obama (D)
Vice President - Joe Biden (D)
Speaker of the House - John Boehner (R)
First President - George Washington

INFLUENCERS
Environmentalists; business groups; labor unions;
churches; ethnic groups; political action committees or
PAC; health groups; education groups; civic groups;
youth groups; transportation groups; agricultural groups;
veterans groups; women's groups; reform lobbies

Federal Presidential Constitutional
Republic

Federal republic is a federation of states with a
republican form of government
Clear division of Power between federal
government and state government
Republic Not governed by Monarch but by
people
Presidential The head of country is president
Constitution is a set of fundamental principles or
established precedents according to which a
state or other organization is governed. It binds
the states.

Levels of US Government
Federal
Governs Country
State
50 States + District of Columbia + (in some areas) Puerto Rico
Governs States
Local
commonly split between county and municipal governments.
fire protection, sewer transit, manage school and service water
36000
Levels of US Government
BRANCHES OF FEDERAL
GOVT
Legislative
Bicameral
Congress
(Ruling +
Opposition)
Impeach
Makes
Federal law
Declares
war
Executive
President
Commander
in Chief
Appoints
Cabinet and
Judges
Judicial
Supreme
Court and
Federal
courts
Law keepers
POLITICAL SYSTEM
Permanent member of the United Nations Security
Council and has veto power.
It is a member of the G8, G20, WTO and NATO
Organization for Economic Co-operation and
Development.
Claimed superpower status after disintegration of
USSR, it is now challenged by China.
Centre of World
Major differences - Greater power in the upper house
of the legislature, a wider scope of power held by the
Supreme Court ,the separation of powers between
the legislature and the executive, and the dominance
of only two main parties. Third parties have less
political influence in the United States than in other
developed country democracies


CAMPAIGN FINANCE

Fundraising plays a large role in getting a
candidate elected to public office. Without large
sums money, a candidate has no chance of
achieving his goal.
Democrats depended on donations from
organized labour while the Republicans relied on
business donations
1 .Democratic Party
2. Republican Party
3. Constitution Party
4. Green Party
5. Libertarian Party
6.Independent party
7.Socialist party
















MAIN SECTORS OF THE
ECONOMY
RETAILING
ENERGY
AGRICULTURE
MANUFACTURING
FINANCE

RETAIL SECTOR
The retail industry is the second largest industry in the
U.S.
Responsible for approximately 12% of all US
employment
Over $3.8 trillion in sales annually ($4.2 trillion if food
sales are included).
Although the vast majority of all retail stores in the U.S.
(approximately 90%) are single-store businesses,
however these single-store businesses account for
substantially less than half of all retail sales.
Thus the majority of the revenue in the retail industry is
generated by companies that run retail "chains".
The biggest retailer in the world is Wal-Mart which
generated over $344 billion in revenue in its last fiscal
year.
Opportunity - India
As per reports, India is 5
th
most attractive retail market. Big
players like Wal-Mart couldnt resist and entered through
licensing route.
Market size and potential are sufficient inducers.
Huge Potential $580Billion (Source Retail Forum at
Amity University)
High youth potential with high disposable income.
OPPORTUNITY INDIA

FINANCE SECTOR
The New York Stock Exchange is more than three times
larger than any other stock exchange in the world. As of
October 2008, the combined capitalization of all domestic
NYSE listed companies was US$10.1 trillion.

New York City is the financial capital of the world
alongside London.
NASDAQ is another American stock exchange and the
world's 3rd largest exchange after the New York Stock
Exchange and Japan's Tokyo Stock Exchange. However
NASDAQ's trade value is larger than Japan's TSE.
NASDAQ is the largest electronic screen-based equity
securities trading market in the USA. With approximately
3,800 companies corporations, it has more trading
volume per hour than any other stock exchange

CHALLENGES IN FINANCE
SECTOR
It's hard to know just how big the financial sector is
because financial companies have created many
trillions dollars worth of various securities and
derivatives of securities.

Morgan Stanley Investment Bank for example has
$77 trillion in derivatives. Which is more than five
times the official US GDP

The financial sector cannot be more than 100% of the
US economy. But apparently their losses can be
many times more than the US GDP. They have
created an almost unlimited amount of debt and
financial obligations. Which must be honoured and
repaid. Or else the whole financial sector will go
bankrupt.


DOING BUSINESS IN USA
RANK-4
TOPIC
RANKINGS
DB 2012 DB 2011 CHANGE IN
RANK
1.Starting
business
13 11 - 2
2.Construction per 17 17 No change
3. Electricity 17 16 -1
4.Registering
property
16 11 -5
5. Getting credit 4 4 No change
6.Protecting
invest
5 5 No change
7.Paying taxes 72 70 -2
8.Trading across
border
20 20 No change
9.Enforcing
contracts
7 7 No change
10.Resolving
insolvency
15 14 -1
http://www.doingbusiness.org/data/exploreeconomies/united-
states/
BUSINESS MEETINGS - USA
Meetings include relevant & well-researched formal
presentations to demonstrating competence &
create an impression.
Frequent use of Management Jargon & humour
Value straight talking & 'getting to the point
Debate are direct & open.
Dress code vary from formal/dark business suit, shirt
and tie to literally T-shirt and shorts.
Giving gifts is unusual in US
Remember- Time is money
Early breakfast (7 am) & dinner (5:30-6 pm)
ECONOMIC SYSTEM
Laws and institution in a nation that determine
Who owns economic resources
How people buy and sell resources.
How the production process make use of
resources in providing goods and service
ECONOMIC SYSTEM OF USA
Market Economy
Individuals own and operate the buildings, machinery,
property of production
Production and distribution are price and profit
orientated
Standard of living is high
Prices depends on availability, demand and supply
All factors of production - Natural resources, Labor ,
Capital, Entrepreneurship are traded in markets. Also
called factor market
It is Government Role is nil in economic decision
However, USA isnt purely market economy as
government has its say.

ROLE OF GOVERNMENT
Defense
Assistance programs to lower income groups
Interstate highways and airports.
Provides incentive to encourage the production
and consumption of certain type of products and
vice versa too
It establishes safety guidelines that regulates
consumer products, working conditions and
environmental protection
QUICK FACTS
World's largest national economy
According to Reuters, approximately 23.7 million
American workers are either unemployed or
underemployed right now.
The U.S. debt to GDP ratio has now reached 101
percent.
LEGAL STRUCTURE
Law enforcement in the United States is primarily the
responsibility of local police and sheriff's departments,
with state police providing broader services

At the federal level and in almost every state,
jurisprudence operates on a common law system

State courts conduct most criminal trials; federal courts
handle certain designated crimes as well as certain
appeals from the state systems

Among developed nations, the United States has above-
average levels of violent crime and particularly high
levels of gun violence and homicide.



COMMON LAW SYSTEM
Legal system that gives great precedential weight
to common law on the principle that it is unfair to
treat similar facts differently on different
occasions
The body of precedent is called "common law"
and it binds future decisions
Developed by judges through decisions of courts
and similar tribunals (as opposed to statutes
adopted through the legislative process or
regulations issued by the executive branch)
QUICK FACTS ON LEGAL
CONDITIONS
In 2007, there were 5.6 murders per 100,000 persons
three times the rate in neighboring Canada
The U.S. homicide rate, which decreased by 42%
between 1991 and 1999, has been roughly steady since.
The United States has the highest documented
incarceration rate and total prison population in the world
At the start of 2008, more than 2.3 million people were
incarcerated, more than one in every 100 adults. The
current rate is about seven times the 1980 figure
African American males are jailed at about six times the
rate of white males and three times the rate of Hispanic
males



CURRENT SOCIAL ISSUES
AFFECTING LEGAL FACTORS
LEGAL BARRIERS FOR
BUSINESS
Zoning restrictions
Licensing and training requirements
Restrictions on the legality of the business
Protection of crucial business processes by
copyrights and patents
Special legal regulations, such as ingredient
labelling for food products

BALANCE OF PAYMENT
In the words of RBI, a statistical statement but systematically summa-
rises, for a specific time period, the economic transactions of an
economy wit the rest of the world.
The IMF publication Balance of Payments Manual describes the
concept as follows:-
The BOP is a statistical statement for a given period showing:
- Transaction in goods and services and income between an economy and
rest of the world.
- Changes of ownership and other changes in that countrys monetary
gold, SDRs and claims on and liabilities to rest of the world.
- Unrequited Transfers and counterpart entries that are needed to balance,
in the accounting sense, any entries for the forgoing transaction and
changes which are not mutually offsetting.

EXIM Figures
Exports:
$1.511 trillion (2011 est.)
Country comparison to the world: 4
$1.289 trillion (2010 est.)
Exports are increasing (Canada 19.4%, Mexico 12.8%, China 7.2%, Japan
4.7% (2010)
Exports partners:
Canada 19%, Mexico 13.3%, China 7%, Japan 4.5% (2011)
Imports:
$2.314 trillion (2011 est.)
Country comparison to the world: 1
$1.935 trillion (2010 est.)
Imports - partners
China 19.5%, Canada 14.2%, Mexico 11.8%, Japan 6.3%, Germany
4.3% (2010)





GNP:
Basically, GNP is the total value of all final goods and services produced
within a nation in a particular year, plus income earned by its citizens
(including income of those located abroad), minus income of non-residents
located in that country.
GNP measures the value of goods and services that the country's citizens
produced regardless of their location.
GNP is one measure of the economic condition of a country, under the
assumption that a higher GNP leads to a higher quality of living, all other
things being equal.

GNP = GDP + Net Income from abroad
GNP Measurement:
Current market prices (Nominal GNP): In this method, the prices of goods
and services are measured at prices prevailing in the current year.

Constant prices (Real GNP): Using this method, GNP is measured at a
fixed price of a particular base year.

Real GNP is an effective tool for making yearly comparisons of changes
in the physical output of a country, as it is not affected by changing prices.
This helps to reflect the economic growth of a country in a better manner.
GDP:
Developed by Simon Kuznets for a US Congress report in 1934, was brought in
use after the Bretton Woods conference in 1944, when it became the main tool
for measuring the country's economy.
The Gross Domestic Product is the market value of all final goods and
services produced within a geographical entity within a given period of time.
It is:

"Gross" because the depreciation of the value of capital used in the
production of goods and services has not been deducted from the total value of
GDP;
"Domestic" because it relates only to activities within a domestic economy
regardless of ownership (alternatively: "national" if based on nationality);
"Product" refers to what is being produced, i.e. the goods and services,
otherwise known as the output of the economy. This product/output is the end
result of the economic activities within an economy. The GDP is the value of
this output.
In order to avoid double-counting, it is important that GDP measures
each product or service only once, i.e. the final value.
Under expenditure method;-

GDP (Y) = C + I + G + (X-M)

US had the highest share of 32.24% of worlds GDP in 2001.
While its share has been declining each year since 1999 (23.78%), it is
still the highest in the world.
GROSS DOMESTIC PRODUCT (GDP)
The GDP is the broadest measure of a country's
economy, and it represents the total market value
of all goods and services produced in a country
during a given year.
Since the GDP figure itself is often considered a
lagging indicator, most traders focus on the two
reports that are issued in the months before the
final GDP figures: the advance report and the
preliminary report.
Significant revisions between these reports can
cause considerable volatility.

GDP FIGURES
GDP (purchasing power parity):
$15.04 trillion (2011 est.)
country comparison to the world: 2
$14.82 trillion (2010 est.)
$14.38 trillion (2009 est.)

GDP - real growth rate:
1.5% (2011 est.)
country comparison to the world: 171
3% (2010 est.)
-3.5% (2009 est.)

GDP - per capita (PPP):
$48,100 (2011 est.)
country comparison to the world: 11
$47,800 (2010 est.)
$46,800 (2009 est.)
Note: data are in 2011 US dollars

GDP FIGURES (Contd.)
GDP - composition by sector :
Agriculture: 1.2%
Industry: 22.1%
Services: 76.7% (2011 est.)

Labour force :
153.4 million
Country comparison to the world: 4
Farming, forestry, and fishing: 0.7%
Manufacturing, extraction, transportation, and crafts: 20.3%
Managerial, professional, and technical: 37.3%
Sales and office: 24.2%
Other services: 17.6%
Urban population: 82% of total population (2010)
GDP vs GNP
MACRO ECONOMIC CHALLENGES:
Macro economic indicators are statistics that indicate
the current status of the economy of a state
depending on a particular area of the economy
(industry, labor market, trade, etc).

Inflation Rate
Unemployment Rate (9.1% (2011 est.))
Infrastructure
GDP PER CAPITA INCOME
The value of all final goods and services
produced within a country in a given year divided
by the average (or mid-year) population for the
same year.

2011- $48,100
2010 - $47,800

THE STATES HAVING HIGHEST &
LOWEST PER CAPITA GDP
(1). Maryland ($69,271)
Delaware ($69,667)
Alaska ($65,143)

(2). South Carolina ($35,717)
West Virginia ($35,053)
Idaho ($34,250)
THE CONSUMER PRICE INDEX
(CPI)
The Consumer Price Index (CPI) is probably the
most crucial indicator of inflation.
It represents changes in the level of retail prices
for the basic consumer basket. Inflation is tied
directly to the purchasing power of a currency
within its borders and affects its standing on the
international markets.
If the economy develops in normal conditions, the
increase in CPI can lead to an increase in basic
interest rates. This, in turn, leads to an increase in
the attractiveness of a currency
CPI as of August - 230.379 i.e 130.379%
Unemployment Populati
on
Taxes Labour Force
District of
columbia
8.9 617,996 7%
Delaware 6.8 907,135 0%
Alaska 7.7 722,718 7%
South
Carolina
9.6 4,679,230 9%
West
Virginia
7.4 1,855,364 6%
Idaho 7.5 1,584,985 6%
PURCHASING POWER PARITY

This entry gives the gross domestic product
(GDP) or value of all final goods and services
produced within a nation in a given year. A
nation's GDP at purchasing power parity (PPP)
exchange rates is the sum value of all goods
and services produced in the country valued at
prices prevailing in the United States. This is
the measure most economists prefer when
looking at per-capita welfare and when
comparing living conditions or use of resources
across countries.
DEBT PROBLEM IN THE UNITED STATES
The United States public debt is the money borrowed by
the federal government of the United States through the
issue of securities by the Treasury and other federal
government agencies.

Historically, the US has incurred debt during wars and
recessions, but then debt subsequently declined
afterwards.

The level of government borrowing has risen sharply as a
% of GDP (95), and given current spending commitments
the forecast for borrowing is to continue to grow






EVOLUTION OF THE DEBT
PROBLEM


During the presidency of George W. Bush, debt held
by the public increased from $3,339 billion in
September 2001 to $6,369 billion by the end of
2008, In the aftermath of the Global Financial Crisis,
debt held by the public increased to $11.12 trillion by
the end of July 2012 under the presidency of Barack
Obama

On August 5, the credit-rating agency Standard &
Poor's downgraded the credit rating of US
government bond for the first time in the country's
history.




REASONS FOR DEBT PROBLEM IN THE
UNITED STATES
1. Cyclical Factors / Discretionary
spending Income decreased, Tax
revenue along with stamp duty
decreased
2. Unemployment spending Large rise in
unemployment led to paying of social
security
3. Pensions 13% of above 65yr
populations
4. Reluctance to Increase Taxes Due to
opposition from Republicans
5. Defense expenditure and war
6. Health Care Costs

HEALTH CARE COST
DEBT FIGURES
Debt external :
$14.71 trillion (30 June 2011)
Country comparison to the world: 2
$13.98 trillion (30 June 2010)