Superpowers - Economic Power & Size

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Superpowers - Economic Power

Superpowers can have extraordinary economic power. Economic power refers to the size of a country’s economy and whether it has influence over the global economy.

Economic superpowers

America is the world's largest economy with a GDP of $20 trillion. China is second with a GDP of $14 trillion and Japan has the 3rd largest economy in the world.
The world’s 10 largest economies earn 65% of the global GDP.
As well as earning the greatest income, these countries also spend the most. The world’s five largest consumer markets are the USA, China, Japan, Germany and the UK.

Currencies

These economies have the world’s most powerful currencies.
When investing, people, companies or governments want to invest their money in a currency that is considered ‘safe’ with minimal risk.
The dollar is considered the most powerful currency at the moment.
Some nations have to borrow in US Dollars because investors do not trust their currencies.
- Turkey had problems in 2018 because they had lots of debts in dollars and their currency kept depreciating vs the US Dollar, so they could not repay their debts.

FDI and TNCs

The world’s largest economies are economic superpowers because they control investment.
Most Foreign Direct Investment is directed towards these ten countries because a TNC investing here is likely to make more profit. This is because the consumer market is so large.
Most of the world's biggest companies are from the USA or China. Apple, Microsoft, Amazon and Google are from America and Tencent (own part of Fortnite) and Alibaba are from China.

Superpowers - Size and Geographical Position

Historically this was a very important factor in superpower status because the larger the country, the larger the area that it directly influences. Also, larger countries usually have more physical resources.

British Empire

Arguably, the size element of superpower status has decreased over time.
The British Empire is an example of gaining superpower status without physical size. Britain exerted global influence despite being a small island. But the Empire included large territories like India and had lots of strategic locations.
So the importance of size depends if you define a superpower as Britain or the British Empire.

Russia

Russia is an example of a country where size has been a key characteristic to superpower status.
Russia is the world’s largest country and controls significant resources as a result of its size.
The size of Russia may also prove important in the future with the Arctic region. As climate change makes it possible to exploit some of the previously untapped natural resources. The Arctic is mainly under Russian & Canadian control.
- The state-controlled oil company Rosneft has spent $1.74 billion in Arctic exploration since 2012 and will invest another $4.35 billion between 2017-2021.
Russia contains 11% of the world's landmass, and has 145 million inhabitants.

USA

The USA is very large and is the 3rd largest country in the world by area.
It is very rich in natural resources (in steel and oil).
Having a large country and large population size means that US companies have a very large domestic market. They can sell to lots of consumers and this can let these TNCs benefit from economies of scale.