The United States is one of those countries having a developed market economy. The US economy is the world’s best economy that has the highest nominal GDP. Moreover, the wealth of this country is the second-largest according to the purchasing power parity (PPP), the first being China. Such a highly developed economy of this state is due to the use of innovative technology.
Everything is based on all these facts about the US economy. Its dollar is the world’s most popular and most frequently used currency at an international level. But what is the economic system of the United States? It’s a debatable question that can be justified with strong arguments.
An economic analyst, in particular, must know all the facts about the economic structure of the relevant country or state. Mostly, market economic structure, mixed economy, and command economy structures are followed. However, it’s important to learn what economic structure is being followed in the US.
Moreover, that is resulting in such marvelous growth in the country’s GDP. In the later section, we’ll break down all the facts about the query ‘what is the economic system in the united states’. So, let’s move on to explore this beneficial guide.
Economic System in US & Types
A simple answer to the question “What is the economic system in the united states?” is a mixed economy. In the United States, a mixed economic structure exists where rules of both capitalism and socialism exist. So, the economic system of this country has the features of a socialist economy. As well as that of a capitalist economy. Within such a system, government authorities have control over some economic activities. It helps to protect the economic rights of the citizens.
In addition to the government institutions, some private authorities also play their roles. They protect the rights of private properties. Both the government and private authorities work together to protect the public goals. It is to maintain the overall output of all the combined efforts.
What is a Mixed Economy?
Before diving deep into the illustration of the query ‘what is the economic system in the united states’, let’s understand what is a mixed economy. According to economists, the mixed economy is an economic structure where the elements of the planned economic structure and market economy exist. The market economy has a government intervention while the planned economic system has control by the private authorities. A lot of people wonder that does the US have a mixed economy. It is true and that makes it impact everyone.
Features of US Mixed Economy
As the mixed economy combines the features of both the socialist economy and capitalist economy, the benefits of both these systems are incorporated in such a system. In this system, the public and private sectors play their roles in economic growth. Here are the different features of a mixed economy. To learn ‘what is the economic system in the united states’, one should learn these features.
1- Co-Existence of Governmental and Private Economy
A mixed economy combines the features of both the public or planned as well as private-public economic structure. So, both public and private organizations work together to increase economic growth.
2- Joint Economic Structure
The mixed economy combines the socialist and capitalist economic structure. So, these structures contribute a lot to the necessary capital.
3- A Regulated Economic Structure
As government plays its role in the mixed economic structure, this system runs very smoothly under strict rules and regulations. This brings great financial benefits.
Besides the above features, here are some other important characteristics of the mixed economy.
- It has a preplanned economic structure.
- The institutions following such an economic structure have the right to own private properties.
- It’s a great motif for business.
- There are least chances of inequalities and losses.
How Strong is the Economic System in the US?
Though the US mixed economy faced a decline after the recession in 2009, it has recovered a lot and is recovering even more day by day. Due to the high GDP and overall growth rate, the economy of this state has been on the top for the last two decades. One can guess the importance of the worth of this country’s economy by the fact that the US dollar is the most popular and most frequently used currency on an international level.
Since 2020, the whole world’s economy is suffering due to the pandemic situations that Covid-19 has created, the US is not an exception. However, most of the countries have controlled the pandemic that resulted in a positive growth of the economic structure. The same is in the case of the US. Covid-19 gave a blow to the capital of this country, however, economists claim that the economy has recovered a lot and is being recovered more gradually.
Global Impact of the US Economy
The mixed economy of the US has a great effect on the world’s economy. According to the economists’ report of 2015, this country’s economy contributed about 25% to the global economy. However, Covid-19 has given a negative spell to this proportion. Now, the estimated contribution of the US economy to the world’s economy is about 15.83%, according to the gross report of 2020.
The US economy has a contribution to all kinds of the economy like trade, banking, and all others. According to the gross report of 2015, the US contributed about 12% to foreign banks, 11% to global trade, and about 25% to global stock capital. After the 1980s, the US economy remained stable for a long time. However, the pandemic that gave a spell to the whole world’s economy affects the US too.
Though the progressive countries that were dependent on the progressed countries for the growth suffered more, however, the developed countries also underwent a negative economic spell during the Covid-19. The US economy also suffered during this period, however, it has recovered a lot now.
In the United States, a mixed economic structure is followed. However, to learn ‘what is the economic system in the united states’, one should have an understanding of all the features of the mixed economy. We have discussed all the essential aspects of this kind of economic plan in the above section. Go through it to learn why is the economic growth of the United States so strong.