How Globalised is the USA?

Last week I wrote about the potential for business risk coming from potential changes in US trade policy.

Given the political rhetoric coming from the US of late, it may seem like the United States is one of the world’s most globalised countries- and its economy is being held to ransom by overseas countries.

If you ask Americans how globalised the world is as a whole, and how Globalised the US is, the answer you get may not surprise. When1,720 U.S. adults were surveyed in 2012 before the recent election bluster about how the world is punishing the US, research found that the US thought, on average that the world was about five times more globalised than it really is. Respondents guessed that eight times more people live outside the countries where they were born than actually do, and they overestimated the proportion of trade across national borders by about 50 percent. They also had exaggerated perceptions of the international proportion of telephone calls (actually 5 percent), fixed investment (10 percent), and even connections on Facebook (14 percent) and Twitter (25 percent).

If you look at actual facts- not what certain news or political pundits wish were factual to back up their own agendas, based on how much goods, services, capital, people and information flow across the nation’s borders compared with how much stays inside the country, the United States ranks 100th out of 140 countries, according to the 2016 “DHL Global Connectedness Index,” which was released November 2016.

Why do people get it so wrong? People tend to believe whatever they desire or fear the most. And their misperceptions about globalization are fed both by political rhetoric and by popular accounts — by critics of globalization, like Trump, and by those who embrace it. If you look at all the alternate-facts spouted about the US over the last one year election cycle thats why the US people have no idea about the real world.

On trade (and immigration) — two of the big issues in U.S. politics right now — the contrast between rhetoric and reality is especially striking.

(C) WSJ Feb 2017
(C) WSJ Feb 2017

The United States imported goods and services worth 15 percent of its gross domestic product in 2015. That makes America less reliant on imports than almost every other country in the world. Just five nations imported less relative to the size of their economies: Sudan, Argentina, Nigeria, Brazil and Iran. And despite the American cliche that everything is made in China, less than 3 percent of money spent in the United States goes to Chinese imports — and a good portion of the price of Chinese products sold here actually goes to U.S. companies transporting, selling and marketing those goods.

So in a world of fake news and alternate-facts, what should businesses do? A great questions for which I don’t have a full answer now.