The 4 Forces of Globalization: U.S. moves to new horizons:Issue 04

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When Traditional markets are captured , normally the effort by the original owner is to try wrest back those markets. However businesses have come to realise their global limitations and hence at times the attempt to win back old markets are simply not made or are made only segmentally.

In the seventies the U.S. started to loose many of its strongholds to global competition. Japan, Germany , France , Korea and Taiwan made significant inroads into the automobile markets, steel, textiles, electronics, semi-conductors, and nuclear power and it was increasingly becoming clear that more and more traditional markets will come under siege.

The Reagan era of the eighties took concrete counter measures to give back the inititaive to the United States without directly fighting back. The economists who took charge during the Reagen era, correctly analysed that any fightback to regain the traditional markets would only result in price-cutting and bloodbath besides reduced margins which American companies could ill afford.Except in the field of semi-conducters where Intel succesfully lead the fightback to route the Japanese
challengers, America conceeded large market shares in most areas, without a fightback. However it was during this era that new horizons were discovered, which ultimately lead to robust U.S. economic growth and the birth of "Reaganomics or supply side economics."

Reaganomics consisted of 2 principal policy measures , which actually resulted in 3 distinctive different policy initiatives.

1) "Prime pumping" or the Goverment's large scale purchasing U.S. made goods.

2) "Trickle down economics" which amounted to empowering rich Americans, by enabling them to retain more wealth by reducing taxes significantly and giving fiscal incentives for investment . During this period the creation of a large number of financial Institutions and Instruments also took plcase whose effects were phenomenal then.

3) Financial Innovation : The deregulation of mortgages, easy securitization and development of the innovative financial products market that took America several notches above the other economies had its roots during the Reagan era causing a unprecedented economic boom for ther U.S. economy for a period of thirty years before its eventual crash in September 2009.