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USinfluenceandtheglobaleconomyAfteratumultuousdecadetheworldisnowenteringthe2nddecadeofthe21stcentury,carryingforwardwithitquiteafewbleakpredictionsontheglobaleconomy.Accordingtosomeinternationaleconomicandbusinessexperts,theyear2010couldbetougherthentheconcludingyearof2009,especially,forthethirdworldcountriesinAsiaandAfrica.Thesignsofensuinghardshiparequitevisibleforthepoorinthesub-continentduetoprolongeddroughtcondition,continuingenergycrisis,increasingsecurityrisksandrisingpricelevel.Inthesecondhalfofthe20thcentury,theunderprivilegedcountriesusedtolooktowardstheWestingeneralandtowardstheUSAinparticular,withsomanyhopesincludingheftyeconomicassistance,easymarketaccess,increasingtradepartnership,jobopportunities,admissionsintheirmodernuniversitiesandcollegesandattractiveexcursiontrips.Now,theseopportunitiesarerapidlyshrinkingwiththepassageoftime.Eventslike9/11in2001,financialmeltdownin2007,continuedwaronterrorandunabatedfearofterroristattacksarehavingadverseconsequencesfortheglobaleconomyingeneralandthepoornationsinparticular.Duetoitsfullengagementincostlywarsonterroronmanyfronts,theabilityoftheUStoleadtheglobaleconomyisweakening.UShastransformedfromabiglenderinthe20thcenturytoabigborrowerinthebeginningofthe21stcentury.ThewarinMarch-April2003betweenaUS-ledcoalitioninIraq,andthesubsequentoccupationofIraqrequiredmajorshiftsinitsnationalresourcestothemilitary.HurricaneKatrinacausedextensivedamageintheGulfCoastregioninAugust2005,buthadasmallimpactonoverallGDPgrowthfortheyear.Soaringoilpricesbetween2005andthefirsthalfof2008wereatreattotheeconomyintheshapeofinflationandunemployment,ashighergasolinepricesinterferedintheconsumers’budgets.Importedoilaccountsforabouttwo-thirdofUSconsumption.Itslong-termproblemsincludeinadequateinvestmentineconomicinfrastructure,rapidlyrisingmedicalandpensioncostsofanageingpopulation,sizabletradeandbudgetdeficits,andstagnationoffamilyincomesinthelowereconomicgroups.AllthesefactorshavecompelledtheUStobecomeanetborrower.Theglobaleconomicdownturn,thesub-primemortgagecrisis,investmentbanks’failures,fallinghomeprices,andtightcreditpushedtheUSintoarecessionbymid-2008.TheunemploymentrateintheUSsoaredtoa26-yearhighof10percentinDecember2009.Reflectingtheseverityoftheongoingfinancialturmoil,millionsofjobswerelostduringthelasttwoandhalfyears,pushingtheunemploymentratehigher.In1975,UStradesurpluswasabout$12billion,butthatwouldbethelasttimeinthe20thcenturythattheUShadatradesurplus.Themerchandisetradedeficitreachedarecord$819billionin2007and$821billionin2008.ThehealthofUSfinancialsectorcontinuedtogivebadsignalsasmorethan120bankshavealreadygonebankruptanddollarcontinuedtosheditsvalueascomparedtoEuroandothermajorcurrencies.The1950sonwardssawthereconstructionofanewglobaleconomy.Between1950and1973theannualrealGDPgrowthofdevelopedmarketeconomiesaveragedaround5percent.Thisgrowthwassmooth,withnoneofthemajorrecessionsseenintheinterwaryears.WorldWarIIlefttheUnitedStatesinauniquelypowerfulposition.WhileEuropeandAsiahadexperiencedextensivedestructionandlossoflife,nobattlehadbeenfoughtonthesoiloftheUnitedStates.TheUSdollarbecametheworldÕsmajorreservecurrency.UScorporationsassumedleadingpositionsinmanyindustries.EuropeandJapanhadtospendtheimmediatepostwardecadeundergoingextensivereconstruction,heavilydependentonofficialaidfromtheUS,yetovertimeEuropeandJapanclosedthetechnologicalandproductivitygapswiththeUnitedStates.TheemergenceoftheUSbalanceoftradedeficitinthe1960s,thedollar’sdevaluationandtheendofitsconvertibilityintogoldin1971,providedsignsoftheendofagoldenerafortheUS.Duringthe1940sandearly1950sonlytheUSdollarwasavailableasamajorconvertiblecurrency.Elsewhereexchangecontrolsregulatedcapitalmovements.TheywereoftentheinstrumentsusedbygovernmentstoscreenormonitorFDIflows.Theworld-widecontrolsovercapitalmovementswererelatedtobalanceofpaymentsconcernsandthesystemoffixedexchangeratesestablishedatBrettonWoods.Itwasnotuntil1958thatmostEuropeancountriesadoptednon-residentconvertibility,whichpermittedforeignerstomovefundsforcurrentaccountpurposesfreelyfromonecountrytoanother.Thiswasthekeydevelopmentintheestablishmentofaliberalandopeninternationaleconomy.IthadanimmediateimpactonFDIflows,withanincreaseofUSFDIintoEurope.However,mostdevelopingcountriescontinuedtoexercisetightcontrolsovercapitalmovements.Mostdevelopedcountriesretainedsomeexchangecontrols.TheexpansionoftheworldeconomypromptedarecoveryinthegrowthrateofworldFDI.Thesystemofinternationalcartelswasdismantled.By1960,theworldstockofFDIhadreached$560billion.By1980itwasover$500billion.Thesewerethedecadeswhentheterm‘multinational’wasinvented,andwheneconomictheoriststurnedtheirattentiontoexplainingtheirexistence.Between1945andthemid-1960s,theUnitedStatesmayhaveaccountedfor85percentofallFDIflows.InthetwentyyearsaftertheendofWorldWarII,bothGermanandJapaneseFDIremainedlow,butgrowthduringthe1970sgavethetwocountriesanoverallshareofworldFDIof8percentand7percentrespectively.By1980almosttwo-thirdofworldFDIwaslocatedinWesternEuropeandNorthAmerica.TheFDIsplayedleadingroleforrapi