Through the Looking Glass : Connecting the Dots Between U.S. Hegemony and Its Trade and Investment Policies

Abstract

Many aspects of the hegemony status of the United States of America are hidden behind a veil of secrecy. It is however well established in scholarly literature that the U.S. emerged from the Second World War as the absolute dominant military and economic power in the world. With this newfound hegemony status, the U.S. built an interconnected rules-based system that relied on shared norms and values of economic and political liberalism. While this liberal world order has indeed been largely beneficial to the countries subscribed to it, it has been argued that the U.S. has benefitted from it the most, using the key financial institutions of this order to shape the international economic playing field to its liking to further its own hegemonic interests. This study therefore aims to connect the dots between the U.S. hegemony and its key economic manifestations. Building on existing work on the United States Hegemony, it asks: How are the trade and investment policies of the United States of America related to its role as the world hegemon?

Based on a literature review and a theoretical framework on the hegemony status of the U.S., its connection to globalization, and its hypothetical decline, a secondary data analysis was conducted to find out the correlation between the trade and investment policies of the U.S. and its hegemony status. Analysis of the gathered data show that through the decades since the Second World War until the present day, the trade and investment policies of the U.S. have grown to be so interconnected with the country’s hegemon status, that one is merely a continuation of the other. The main argument of this paper is that a phenomenon known as the “dollar hegemony” is the core and the enabler of the U.S. hegemony at large, as it enables the country to live beyond its means, maintain its global military presence, and impose its will internationally through the international banking system. Many of its trade and investment policies have been designed to further and maintain that status and access of the dollar, especially by linking conditions of structural readjustments to its trade deals and loans programs.