In January, the sound of economic predictions for the coming year is deafening, in spite of the old dictum from the famous American economist, JK Galbraith, that the only function of economic forecasting is to make astrology look respectable. Undeterred, we carry on regardless.
So what should we expect in 2013? Let's skirt around the familiar problems in Europe, new ones in China and concern about America's budgetary politics, and shine a light on some good news, namely the gradual turnaround in America's global competitive position. Could America RIP in fact stand for 'renewal in progress'?
US exports of goods and services have risen by a third since 2007, and at 14 per cent of GDP, they are at the highest level in 50 years. President Obama's 'pivot to Asia' strategy promises bigger trade gains in the future. But stronger trade is only the start.
America's reputation for 'smart' technologies and superbly designed, 'must-have' products such as the iPhone and iPad, is well established. Indeed, Apple is the largest global company by far with a market capitalisation of more than $550bn. It is more than twice as big as any other company in the world top ten, except the runner-up, the oil giant, Exxon Mobil. And yet the transformative and productivity-enhancing impact of these products isn't that big. Something else is going on.
You can get a clue by looking at the identity of the top ten global companies. Four are US technology companies, four are energy companies, of which two are American, and the other two are a Chinese bank and telecommunications company. The four US tech companies represent the tip of a very important iceberg, which is America's commanding global lead in technology and innovation. It is well ahead of Europe, Japan, China and elsewhere in both the technological intensity of innovation-based sectors and the R&D intensity of company sales, especially more recently established companies.
The US also has strong advantages in the new manufacturing revolution, known as additive manufacturing or 3D printing, which has been much written about in recent issues of Business Life. The economic significance of 3D printing is a dramatically lower cost structure of production, which will tilt economic advantage to the 'Silicon Valley' model of smart, localised manufacturing.
Sticking with technology, the US also has a strong lead in new shale gas and oil extraction technologies, which are helping to boost domestic energy production and lower energy import dependency. According to the International Energy Agency, US oil production could exceed that of Saudi Arabia by 2020. Its oil imports have fallen from 60 per cent to 42 per cent of world consumption in the last seven years alone. Shale gas has risen from two per cent to 37 per cent of gas output, thanks to the technology known as 'fracking', or hydraulic fracturing, which allows the exploitation of previously inaccessible hydrocarbons. This overall energy 'shot in the arm' confers big competitive advantages for US companies.
If the US can find the political consensus to implement credible budgetary and healthcare cost control strategies in coming years, 2013 may turn out to be a bit of an economic watershed.
George Magnus is an independent, London-based economist and the author of Uprising: Will Emerging Markets Shape or Shake the World Economy?
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