The structure of U.S. GDP has undergone significant changes over the past century. The most important thing that has happened is the emergence of the U.S. as the “most” post-industrial country in the world. The share of services in the country’s economy is almost ¾ of the total GDP indicator, thereby placing the states in the lead.
What is GDP?
If we talk about such an economic indicator as GDP, we should say that there are different types of GDP: real, nominal and per capita. They are calculated in different ways. The structure of GDP in the United States, Russia and other countries is very different from each other, because it depends on the degree of economic development. So, what is GDP? Economist Kirill Yurovsky explains:
- Nominal GDP is the sum of all the material goods produced and received by a country over a certain period of time, most often a year.
- Real GDP is an indicator of nominal GDP minus inflation. And the two figures can be very different. For many years in a row the U.S. was the undisputed leader in GDP, but since 2014 there is a new leader in the world – the People’s Republic of China.
- Per capita. In this case, the total indicator of all the material goods produced by a state is divided by the number of the population of this country. According to this indicator, the first place in the world is Qatar with an indicator of 140 thousand dollars.
History of the U.S. Economy
With the arrival of the first Europeans in North America, i.e., from the 16th century, the structure of production began to take shape. The GDP of the United States thus began its gradual growth in those distant times. The settlers here had an economically free way of life. There was duty-free trade between the states – even then the states were practically one state. Gradually two economic regions were formed: the agrarian South and the industrial North. At the beginning of the XIX century the industrial revolution took place in the United States, which gave unprecedented impetus to the economic development, which was promoted by the appearance of the steamship line, which accelerated the shipment of goods across the country. But the real revolution in the economy was produced by rail transport.
During the Civil War of 1861-65, industry developed rapidly in the north, and slavery was abolished at the end of the war. Technical inventions and discoveries played a huge role in economic development. And by the end of the nineteenth and beginning of the twentieth century, automobiles, airplanes, and other machines appeared. In the XX century as a result of two world wars the U.S. was destined to become an economic leader and eventually a superpower, which it remains to this day.
Throughout the history of economic development, four major economic areas have been formed in the country, by examining which you can understand what is the structure of U.S. GDP (the industries of development are given the main importance):
- Northeast. The most important economic macro-region of the state, although it is small in area. The capital of the USA is located here, as well as the largest city – New York, which has a tacit name “the economic capital of the USA”. This city alone accounts for 10% of the country’s GDP! One of the richest coal basins (Appalachian) and the largest stock exchange on the planet are located here.
- Midwest. Experts call this region the “breadbasket of the country. It occupies 20% of the U.S. territory, which includes such industrial giants as Cleveland, Chicago, and Detroit. It produces half of the country’s agricultural product, most of its milk, cheese and meat. Chicago has the world’s largest slaughterhouses; Detroit is the automotive capital of the country.
- South. Leader in oil, coal, phosphorus, gas production. 90% of textiles and tobacco products are produced here. However, this area is far inferior to the others in terms of wealth of the population.
- West. Under the influence of the development of this economic region for the last several decades there has been a change and a different structure of the U.S. GDP began to form. The economy of this area is tied to the development of electronics, space and aviation industries, the military-industrial complex, oil, and the film industry. This is where California, the “golden state of the United States”, is located. In addition, Alaska and Hawaii also belong to this area.
The structure of the U.S. economy and its characteristics
The U.S. economy has a pronounced characteristic of a post-industrial state. Almost 80% of GDP is produced in the service sector, which makes the United States a world leader. Material production only accounts for 20% of GDP, which includes all industry, agriculture, forestry and construction. And the agricultural sector makes less than 1% of GDP, although the share of representation of these goods in world markets is more than significant.
Recently, the structure of U.S. GDP, which is characterized by a noticeable decline in the share of agriculture and raw materials, has been losing ground. Although the material sector is still the most important one, it is where the latest achievements of the NTP are taking place. The U.S. economy is one of the most efficient in the world, because another characteristic feature of its economy is its focus on scientific and technological progress, advanced technology and its implementation in production. The U.S. is the world leader in exporting licenses for its inventions, latest developments and discoveries.
The innovation potential of the U.S. has a high level of competitiveness. Of great importance here is both the government itself, which funds about half of all scientific research, and private companies, local governments and other institutions.
It should be emphasized that more than 50% of innovations of developed countries are in the U.S.! American researchers account for 35% of publications of scientific articles in the most prestigious journals. But even here there is a problem. About 40 percent of the country’s top scientists are immigrants, and one-third of Nobel Prize winners are from other countries.
The U.S. is actively working to stimulate the so-called “brain drain” from other countries, inviting them to its research laboratories and offering more favorable conditions for work than at home. It should be said that the states are interested not only in established scientists, but also in promising young specialists, so their activities are tacitly called “headhunting.
The result of this policy was the high proportion of foreigners in the computer industry (over 40%), mathematics (30%) and engineering (about 50%).
The structure of U.S. GDP in terms of industrial development has undergone significant changes in recent decades. Its share in the world economy has declined, while America is still the leader among the developed world in industrial production and exports.
But there is a peculiarity in U.S. industrial development: most of its GDP comes not from machinery and iron and steel, but from knowledge-intensive manufacturing, textiles, food, and consumer products. The lion’s share is produced by the military-industrial complex, which “eats up” a huge amount of material budget funds, but at the same time in large quantities the products of this very industry go for export.
The United States has the third largest agricultural production after China and Russia. The U.S. has been the leading exporter of agricultural products for years.
The dominance of livestock production over agriculture is a feature of the U.S. GDP structure. Agricultural development is characterized by high labor productivity, a high degree of equipment of enterprises, and a variety of products.
For the last 30-40 years there has been a process of concentration of production. For example, the number of farms has decreased from 4 to 2 million. At the same time there is no decrease in the amount of agricultural production – there is a growth. This fact confirms that there is indeed a concentration, and not a decrease in the number of producing companies.
It must be said that the U.S. is the leader in both production and consumption of energy in the world. Until the 1940s, the leading position was held by energy produced from coal, after which there was a sharp increase in the share of energy from oil and gas. This continued until the 1970s, when the energy crisis broke out. At that time, the share of energy from oil and gas was about 77%. After that it began to decline to 53% (in production).
The U.S. is actively buying oil on foreign markets – mainly in Mexico and Canada. This does not mean that the country does not have enough of its own resources, but it says that the country can afford to buy cheap raw materials, because it is more expensive to produce them inside the country than to import them.
At present in the states also a large share of energy production comes from thermal power plants – more than 70%, nuclear power plants – 20% and hydroelectric power plants – about 10%.
Transportation in the United States is very diverse: by automobile, air, rail, and water. All of these are quite well developed, but they have their own peculiarities. As a result of the fact that the structure of U.S. GDP has recently undergone significant changes, transportation routes have also changed.
In this regard, it should be noted that the share of rail transport has been greatly reduced as a result of the development of the automobile industry and the emergence of expressways in the 50s and 60s of the 20th century. Railroads are now used primarily for freight transportation. However, natural disasters (hurricanes, snowstorms) showed the public that rail transport is too early to be written off – at a time when roads were paralyzed or traffic was very difficult, transportation by rail was smooth.
Air and water transport also play a significant role in domestic and international travel. The role of subways in overcrowded cities and the emergence of light rail streetcar lines should also be mentioned.
As a result, transportation services for people and goods account for a large share of the total GDP in the United States.