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Business in USA

Several Factors Has Helped Business Growth in the USA

Business has prospered in the USA owing to availability of plentiful natural resources, an entrepreneurial population and helpful government policies. As a result, USA has the highest GDP - Gross Domestic Product - and the largest market in the world.

USA is the country with the highest GDP at an estimated 13.8 trillion dollars in 2007. GDP includes the total consumption of goods and services by the people plus non-consumption expenditure such as industrial goods, education & on-the-job training plus government spending plus exports net of imports. It is an estimate of the total goods and services produced in a country.

How has the USA become the top producer of the world? We look at the major factors in a little more detail.

Plentiful Natural Resources

Fertile Farmland

Vast areas of fertile farmland have allowed the development of different kinds of agricultural and agriculture-related businesses. These include grains, oilseeds, fruits and vegetables, animals and animal/poultry/diary products, cotton, wool, sugar, rubber and spices. US agricultural products such as almonds, sunflower oil, cattle hides, walnuts, wheat and rice are exported in large quantities to overseas markets. US agricultural exports exceeded $61 billion in 2004. Agricultural imports amounted to $54 billion during the same year.

Forests

The availability of forested land has created the industry of forestry - timber, scenic tourism, wildlife parks and other recreational businesses. Timber felling can destroy forests, and need to be compensated through replanting and management in an environmentally sustainable manner. Forest nurseries and growing trees for reforestation has developed into an industry.

Forest produce help development of industries such as plywood, paper, fuel wood and ornamental plants. Produce such as seeds, berries, ferns and wildflowers can also be gathered and sold.

Waterways

An extensive coastline consisting of Atlantic and Pacific coasts, large rivers flowing inland and several large lakes have helped development of shipping and fishing industries. Ships carry merchandise not only for imports and exports but also for domestic trade. Use of ships in trade has given rise to businesses like freight forwarding, shipping container building and container transport, shipyards, cargo handling at dockyards and so on.

Fishing had developed with the use of large trawlers, floating processors and other large-scale fishing facilities. These intensive practices lead to over fishing and heavy pollution and the emphasis now is on smaller fishing vessels and traditional fisheries. These smaller scale operations help sustainable fishing instead of depleting fish stocks dangerously.

Minerals

Many kinds of minerals are mined in the fifty plus states of USA and its offshore oilfields, with different states producing different mixes of minerals. Oil, coal, crushed & broken stone, cement, sand & gravel, gold, silver, nickel, magnesium, clays, phosphate rock, potash and sulphur are examples of minerals mined in different states. These minerals have helped development of industries such as petroleum, electricity generation, construction and fertilizers among numerous others.

An Entrepreneurial Population and Business Friendly Governments

USA is a land of immigrants, originally from Europe and later from all parts of the world. Immigrants tend to be enterprising fortune-seekers, able and willing to take risks and work hard. USA has been a land of entrepreneurs from early gold-rush days to present day globe-spanning corporations.

Immigration also meant availability of labor for business enterprises. Many of these immigrants were highly skilled persons whose skills and knowledge helped industrial development.

Adoption of a democratic form of government meant that people had the freedom to pursue their dreams. In turn, this meant that the talents of the people were utilized productively. Innovators found an environment conducive to success and were not hindered by a huge weight of tradition.

In modern days, governments have helped business through developing infrastructure and supporting research. Space and defense research, for example, have spun off many new technologies and led to the establishment of numerous industries. The Internet, for example, started as a defense project, the ARPANET (Advanced Research Projects Agency Network).

Result: An Explosion of Manufacturing and Service Industries

Availability of natural resources and immigrant labor, a large entrepreneurial group, infrastructure development, research spin-offs and supportive government policies led to a business explosion in the USA.

The manufacturing sector produces a huge variety of products satisfying all human needs in increasingly innovative ways. From Edison's light bulb and Ford's assembly line to IBM's computers and Intel's silicon chips the range is mind-boggling.

Infrastructure development projects, the requirements of residential and commercial accommodation and the smaller local government maintenance works provided a continuing flow of business to the construction industry. The industry also benefited from the plentiful availability of construction materials in USA.

Industries need a wide range of services like logistics, financial, insurance, communication, information technology, distribution, wholesale, retail, legal and so on. With industrial expansion, these services also found a huge market. The rising income of the people led to increasing demand for other services such as entertainment, travel, medical, education and so on. Services sector has become the dominant sector in the economy now with a turnover exceeding $11 trillion excluding wholesale and retail.

Small Business in USA

Traditionally, businesses were small. Grocers, restaurants, repair shops, barbers, painters and others were all local. Even now, despite the dominance of franchises, retail chains and ready-to-assemble DIY kits, local businesses manage to survive. Small businesses are also free from the bureaucratic tendencies that can creep into huge enterprises, and can bring out innovative products and services. Even otherwise, where a personal touch is essential, small businesses could provide it better.

Small businesses also provide a living to people. This is particularly important in an environment where jobs are disappearing owing to automation, consolidation and outsourcing to low cost countries. Recognizing this fact, US government has a strong program to support small businesses. The government agency, Small Business Administration, provides a range of services to develop and support small business in USA. We discuss these in a separate article Starting a Small Business in USA. Through its advocacy, the agency has also been able to encourage farming out government contract work to small businesses.