Over the past 150 years, the United States and Japan have developed one of the United States’ most significant international relationships, marked by a potent mix of cooperation and rivalry. After a devastating war, these two states built a lasting alliance that stands at the center of US diplomacy, security, and economic policy in the Pacific and beyond. Yet this relationship is not simply the product of economic or strategic calculations. Japan has repeatedly shaped American understandings of empire, hegemony, race, democracy, and globalization, because these two states have often developed in remarkable parallel with one another. From the edges of the international order in the 1850s and 1860s, both entered a period of intense state-building at home and imperial expansion abroad in the late 19th and early 20th centuries. These imperial ambitions violently collided in the 1940s in an epic contest to determine the Pacific geopolitical order. After its victory in World War II, the United States embarked on an unprecedented occupation designed to transform Japan into a stable and internationally cooperative democracy. The two countries also forged a diplomatic and security alliance that offered crucial logistical, political, and economic support to the United States’ Cold War quest to prevent the spread of communism. In the 1970s and 1980s, Japan’s rise as the globe’s second-largest economy caused significant tension in this relationship and forced Americans to confront the changing nature of national power and economic growth in a globalizing world. However, in recent decades, rising tensions in the Asia-Pacific have served to focus this alliance on the construction of a stable trans-Pacific economic and geopolitical order.
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Japan-US Relations
Jennifer M. Miller
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The Multinational Corporation
Paula De la Cruz-Fernandez
A multinational corporation is a multiple unit business enterprise, vertically managed, that operates in various countries, called host economies. Operations beyond national borders are controlled and managed from one location or headquarters, called the home economy. The units or business activities such as manufacturing, distribution, and marketing are, in the modern multinational as opposed to other forms of international business, all structured under a single organization. The location of the headquarters of the multinational corporation, where the business is registered, defines the “nationality” of the company. While United Kingdom held ownership of over half of the world’s foreign direct investment (FDI), defined not as acquisition but as a managed, controlled investment that an organization does beyond its national border, at the beginning of the 20th century, the United States grew to first place throughout the 20th century—in 2002, 22 percent of the world’s FDI came from the United States, which was also home to ten of the fifty largest corporations in the world.
The US-based, large, modern corporation, operated by salaried managers with branches and operations in many nations, emerged in the mid-19th century and has since been a key player and driver in both economic and cultural globalization. The development of corporate capitalism in the United States is closely related with the growth of US-driven business abroad and has unique features that place the US multinational model apart from other business organizations operating internationally such as family multinational businesses which are more common in Europe and Latin America. The range and diversity of US-headquartered multinationals changed over time as well, and different countries and cultures made the nature of managing business overseas more complex. Asia came strong into the picture in the last third of the 20th century as regulations and deindustrialization grew in Europe. Global expansion also meant that societies around the world were connecting transnationally through new channels. Consumers and producers globally are also part of the history of multinational corporations—cultural values, socially constructed perceptions of gender and race, different understandings of work, and the everyday lives and experiences of peoples worldwide are integral to the operations and forms of multinationals.
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Foreign Economic Policy
Daniel Sargent
Foreign economic policy involves the mediation and management of economic flows across borders. Over two and a half centuries, the context for U.S. foreign economic policy has transformed. Once a fledgling republic on the periphery of the world economy, the United States has become the world’s largest economy, the arbiter of international economic order, and a predominant influence on the global economy. Throughout this transformation, the making of foreign economic policy has entailed delicate tradeoffs between diverse interests—political and material, foreign and domestic, sectional and sectoral, and so on. Ideas and beliefs have also shaped U.S. foreign economic policy—from Enlightenment-era convictions about the pacifying effects of international commerce to late 20th-century convictions about the efficacy of free markets.
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The Economy Since 1970
Judge Glock
Despite almost three decades of strong and stable growth after World War II, the US economy, like the economies of many developed nations, faced new headwinds and challenges after 1970. Although the United States eventually overcame many of them, and continues to be one of the most dynamic in the world, it could not recover its mid-century economic miracle of rapid and broad-based economic growth.
There are three major ways the US economy changed in this period. First, the US economy endured and eventually conquered the problem of high inflation, even as it instituted new policies that prioritized price stability over the so-called “Keynesian” goal of full employment. Although these new policies led to over two decades of moderate inflation and stable growth, the 2008 financial crisis challenged the post-Keynesian consensus and led to new demands for government intervention in downturns.
Second, the government’s overall influence on the economy increased dramatically. Although the government deregulated several sectors in the 1970s and 1980s, such as transportation and banking, it also created new types of social and environmental regulation that were more pervasive. And although it occasionally cut spending, on the whole government spending increased substantially in this period, until it reached about 35 percent of the economy.
Third, the US economy became more open to the world, and it imported more manufactured goods, even as it became more based on “intangible” products and on services rather than on manufacturing. These shifts created new economic winners and losers. Some institutions that thrived in the older economy, such as unions, which once compromised over a third of the workforce, became shadows of their former selves. The new service economy also created more gains for highly educated workers and for investors in quickly growing businesses, while blue-collar workers’ wages stagnated, at least in relative terms.
Most of the trends that affected the US economy in this period were long-standing and continued over decades. Major national and international crises in this period, from the end of the Cold War, to the first Gulf War in 1991, to the September 11 attacks of 2001, seemed to have only a mild or transient impact on the economy. Two events that were of lasting importance were, first, the United States leaving the gold standard in 1971, which led to high inflation in the short term and more stable monetary policy over the long term; and second, the 2008 financial crisis, which seemed to permanently decrease American economic output even while it increased political battles about the involvement of government in the economy.
The US economy at the beginning of the third decade of the 21st century was richer than it had ever been, and remained in many respects the envy of the world. But widening income gaps meant many Americans felt left behind in this new economy, and led some to worry that the stability and predictability of the old economy had been lost.
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Los Angeles
Jessica M. Kim
Since the founding of Los Angeles in the 18th century, the region has been a “global city,” defined by links between the region and the broader world. Los Angeles grew into the nation’s second-largest city and one of the world’s “megacities” or “global cities” as a direct result of European imperialism, global capitalism, and national and international patterns of migration. The 1781 founding of the city by Spanish settler colonists and later annexation by the United States were driven by global forces of colonization, conquest, and resource exploitation. Subsequent regional economic development and ties to global markets created economic growth in Los Angeles while drawing global migrations to Southern California from the late 19th century and into the 21st. Global migrations included the movement of millions of people to greater Los Angeles from Asia, Latin America, and around the world. These migrations transformed Los Angeles into one of the most diverse regions of the world by the first decades of the 20th century. The city’s phenomenal economic growth across the 20th century was also extensively tied to global economic links and the expansion of global capitalism. Global patterns of deindustrialization and economic restructuring at the end of the 20th century intersected with a significant rise of post-1965 immigration and settlement in Los Angeles in the final decades of the 20th century. At the start of the 21st century, it is the city’s diverse global communities that are reimagining and remaking the city in the face of deep urban economic and racial inequalities.
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Globalization and the American City
B. Alex Beasley
American cities have been transnational in nature since the first urban spaces emerged during the colonial period. Yet the specific shape of the relationship between American cities and the rest of the world has changed dramatically in the intervening years. In the mid-20th century, the increasing integration of the global economy within the American economy began to reshape US cities. In the Northeast and Midwest, the once robust manufacturing centers and factories that had sustained their residents—and their tax bases—left, first for the South and West, and then for cities and towns outside the United States, as capital grew more mobile and businesses sought lower wages and tax incentives elsewhere. That same global capital, combined with federal subsidies, created boomtowns in the once-rural South and West. Nationwide, city boosters began to pursue alternatives to heavy industry, once understood to be the undisputed guarantor of a healthy urban economy. Increasingly, US cities organized themselves around the service economy, both in high-end, white-collar sectors like finance, consulting, and education, and in low-end pink-collar and no-collar sectors like food service, hospitality, and health care. A new legal infrastructure related to immigration made US cities more racially, ethnically, and linguistically diverse than ever before.
At the same time, some US cities were agents of economic globalization themselves. Dubbed “global cities” by celebrants and critics of the new economy alike, these cities achieved power and prestige in the late 20th century not only because they had survived the ruptures of globalization but because they helped to determine its shape. By the end of the 20th century, cities that are not routinely listed among the “global city” elite jockeyed to claim “world-class” status, investing in high-end art, entertainment, technology, education, and health care amenities to attract and retain the high-income white-collar workers understood to be the last hope for cities hollowed out by deindustrialization and global competition. Today, the extreme differences between “global cities” and the rest of US cities, and the extreme socioeconomic stratification seen in cities of all stripes, is a key concern of urbanists.