American businesses are back on top, but is this good for the American economy? For the first time in a decade the United States once again accounts for nine out of the top ten highest valued companies in the world as new American giants rise and state-backed firms around the world begin to be devalued. This can easily be argued as a win for western capitalism, as the U.S. has begun to come back from the global financial crisis and is looking competitive once again. However, when American firms are looked at more closely we soon see that market evaluations don’t tell all, and that the American recovery still has a long way to go.
In the early 2000s, the U.S. was the uncontested global leader in business, with 90% of the top ten valued firms and over 60% of the top fifty firms. However, beginning in the middle of the decade and speeding up during the recession of 2008 America slipped into a position of far weaker dominance, and in 2009 only three of the ten highest valued firms were American (as well as just above 40% of the top fifty coming from the U.S.). The later half of the decade saw the rise of state-backed firms on the global scale, with many of the most valuable companies in the world being directly government run companies like Petrobras, China Mobile, or PetroChina – the only state-back firm remaining amongst the top ten.
There are a number of reasons for the return of American businesses to the top of the food chain, the first being the resilience and diversity of American business. U.S. firms have an incredible ability to stay competitive, this can easily be seen by looking at the list of American companies now dominating global markets. Yes, ExxonMobil and Microsoft have remained strong firms throughout the past decade, but new giants like Apple and Google have risen to the top tiers, and while Pfizer has fallen in the ranks, Johnson & Johnson has taken its place as top pharmaceutical firm. Despite all this praise for American industry, it is still important to realize that there are deeper forces at work on the global scale. The Eurozone crisis left many firms crippled, and state-backed firmed have certainly slipped in market value, perhaps due to investor’s lack of interest in government’s dictating business.
While it might look like things are going pretty well for the United States right now, there are several deeper-seeded issues that should be examined. Firstly, though American firms are the highest valued in the world, they have fallen in comparative global size and in many cases lack the revenue to compete if these foreign firms step up investor incentive. Also, it should be noted that large firms are by no means needed to have a stable and healthily growing economy. Look at Germany, whose success is in its middle-sized companies, or right here in Canada, where our standards of living is high and our economy healthy, despite any global business giants.
In addition, the U.S. recovery has relied on underemployment to a surprising degree, with many employed at lower wages than before the recession. Even fast-food workers have gone on strike across the country demanding higher wages. So while it may be a good sign that American firms are still the most valued in the world, the U.S. should tread carefully in assuming that the entire economy has followed suit.
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