At 250, sustaining America’s competitive edge

At a glance

• At 250 years old, the United States is the world’s most competitive economy. It generates 26 percent of global GDP and is home to 59 of the world’s top 100 firms. In the past several years, accelerating US productivity growth and announced foreign direct investment inflows have sharpened its edge over other advanced economies.
• It’s a new world. AI is unveiling an ever-expanding realm of possibilities, just as geopolitical contention is growing and fertility rates are falling. The United States is a global technology leader today and spends 27 percent of the world’s research and development dollars—but will that be enough to sustain its current 59 percent share of top firms?
• Some US historical competitive advantages are becoming liabilities. Current generations owe it to future ones to address deteriorating fiscal health, eroding infrastructure, declining educational achievement, fading manufacturing know-how, and sustained disparities in income and wealth.
• Safeguarding an economic edge requires evolving, as America has before. The United States has repeatedly adapted its economic model to meet, and then shape, new technologies and geopolitical realities. Since the country’s founding, American competitiveness has shifted but sustained across four historical chapters: agricultural, industrial, scientific, and digital. A new one is coming.
• A culture of innovation and natural abundance are abiding strengths on which to draw. By our count, Americans created or supported 76 of the 100 most important inventions since 1776, from steamboats to smartphones, from the electrical grid to generative AI. Over its history, the country has profited from twice as much agricultural land per capita as any other large economy, and it was largely self-sufficient in energy for 200 years, including since 2019. These are just a few examples of its resource wealth.
• We the people will write the coming chapter. Collective effort from American individuals, business, and government can ensure energy abundance, an infrastructure backbone, education that builds minds and skills to match new technology, and the financial strength to pay for it all. The prize is continued growth, national economic security, and economic opportunity for everyone.

It began with a startling act of rebellion. In July 1776, delegates from 13 British colonies declared their independence, dissolved their bonds with England, threatened war, and pledged “our Lives, our Fortunes and our sacred Honor” to each other and their newly united states.

One delegate described the mood in the room as a “pensive, awful silence.” The new nation’s leaders harbored grave reservations. All were acutely aware of the potential consequences of their choice: ruin, prison, war, and death. At a remove of 250 years, it’s hard to conceive of the courage that the founders summoned as each walked to the desk and picked up the quill.

Their courage paid off. Over two and a half centuries, the country has transformed from a collection of agrarian colonies into the world’s largest and most influential economy. American firms shape global markets, accounting for more than half of the world’s market capitalization. US innovation ecosystems define the frontier of science and technology; 76 of the 100 most influential innovations of the past 250 years came at least in part from American minds and hands. Average living standards have exceeded those of any other large nation for the past 100 years, even as affordability remains an issue. By these and many other measures, the United States today is the most economically competitive country in the world.

America’s enduring economic edge was never inevitable. The United States, like most every nation, has been shaped by extraordinary difficulties—wars, recessions, depressions, and pandemics. But America has consistently come through in ways that others have not. In large measure, that’s thanks to two foundations of American economic competitiveness that it has relied on again and again: a culture of ambition and individual achievement, and a bountiful natural endowment.

Through every chapter of the past 250 years, the United States has harnessed these foundations, not in a fixed economic model but through flexible institutions that have made the next adaptation possible. And it has done so collectively. “We the people”—farmers in the fields, tinkerers in backyard workshops, teachers in schoolrooms, machinists at forges, seamstresses at machines, developers pulling all-nighters to invent world-changing code—have built an American economic powerhouse.

Today, the United States possesses immense economic strengths anchored in its twin foundations. But if history is any guide, these will carry the country only so far. The challenges are clear and present: a mounting national debt, eroding infrastructure, slipping test scores, fading manufacturing know-how, and sustained disparities in income and wealth. The question America confronts today is not how to celebrate its past but whether it can once again find a new alignment of its resources, ambitions, institutions, and policies to secure competitiveness in the next chapter of its story.

Much is at stake: individuals’ access to productive employment and affordable essential goods, businesses’ ability to scale and take risks, and government’s capacity to raise funds and ensure national economic security.

This report examines the arc of US competitiveness, past, present, and future. America’s history of reinvention holds compelling lessons as the nation confronts a future of immense if uncertain opportunity.

Over the course of 250 years, the United States has transformed from a small agrarian economy to the world’s leading economic power, a position it has enjoyed for more than a century. Today it has the highest income of any populous country (Exhibit 1).¹We define a “populous” country as one with at least ten million people.

American firms have undergone a spectacular evolution, from small textile mills in New England to world-leading industrial powerhouses to platform technology companies that shape everyday lives around the globe. American innovation, once a matter of adapting tools developed elsewhere to local settings, has gone on to set the global technology frontier. Over time, rising productivity has steadily lifted household living standards and created economic opportunities for millions.

The combination of leadership in global markets, powerful innovation ecosystems, and individual economic opportunity and prosperity can be summed up in one phrase: economic competitiveness (see sidebar ”Defining—and measuring—competitiveness”).

Today, the United States has 4 percent of the global population but generates 26 percent of GDP, and it accounts for more than 50 percent of market capitalization (Exhibit 2). It has exceeded many of its rich-country peers in labor productivity and growth, especially in recent years, when productivity has accelerated at levels unseen in other major economies.²US productivity growth since 2019 has been twice as fast as in the previous decade (2010–19). Based on data from the US Bureau of Labor Statistics and The Conference Board, US productivity growth from 2019 to 2024 was higher than in the rest of the G7. While Mainland China’s productivity growth was lower in 2019–24 relative to 2010–19, it was still higher than US productivity growth over the period (5.7 percent versus 2.1 percent). This recent productivity uplift can be attributed to many factors, such as pandemic-era labor market disruptions. For one set of explanations, see Christopher J. Waller, There’s still no rush, speech at the Economic Club of New York, March 27, 2024. Leadership in technology also continues to underpin US competitiveness: The country is home to a plurality of the world’s top-cited scientists and has the most notable AI models.³John P.A. Ioannidis, “August 2024 data-update for ‘Updated science-wide author databases of standardized citation indicators,’” Version 7, Elsevier Data Repository, September 2024; The AI index 2025 annual report, Stanford Institute for Human-Centered Artificial Intelligence (Stanford HAI), April 2025. Announced annual inflows of greenfield foreign direct investment (FDI) have roughly doubled from the prepandemic period.⁴Announced greenfield FDI into the United States more than doubled from 2015–19 to 2022–25 and stands at more than $200 billion annually; the United States captured about 30 percent of global investment in automotive assembly and batteries. See “The FDI shake-up: How foreign direct investment today may shape industry and trade tomorrow,” McKinsey Global Institute, September 22, 2025. And today, as it has since roughly 1900, GDP per capita exceeds that of other major economies.

These are cause for celebration. But there are also reasons for reflection. The United States is no longer the global leader in manufacturing and trade. Its lead on technology is narrowing amid greater competition with China.⁵Throughout this report, “China” refers to Mainland China unless otherwise specified. And the picture of household well-being is mixed: Although aggregate measures show high levels of income, many households feel they can no longer keep up economically, contributing to low levels of public trust.⁶Public trust in government: 1958–2025, Pew Research Center, December 4, 2025. See also “In a moment of tariffs, can the world find balance and trust to thrive?,” McKinsey, May 2, 2025.

Here we examine the hallmarks of economic competitiveness: globally leading firms, leadership in technology and innovation, and economic opportunity.

US firms lead global markets

American companies make up more than half of the top 100 firms globally by market capitalization and revenue (Exhibit 3). From start-ups to large corporations, they attract an outsize share of capital from global markets. US firms hold more than half of global public equity funding and receive more than 50 percent of global venture capital (VC) investment.⁷The United States accounted for 57 percent of worldwide deal value in 2024 and was home to half of the world’s unicorns, including nearly $2.1 trillion in valuation concentrated in California alone. National Venture Capital Association (NVCA), NVCA 2025 yearbook, March 2025; Hurun Research Institute, Global Unicorn Index 2025, July 2025. These valuations are supported, at least in part, by the fact that US firms have the highest levels of productivity, and rates of productivity growth, among firms in G20 economies.⁸Based on data from The Conference Board. Valuations are also supported by economic profits, higher in the United States than in other regions. Recent McKinsey research found that economic profit pools in the United States and Canada were 1.7 times higher in the last five years than they were from 2005 to 2009 but down slightly in Europe. “Global economic profit bounces back to an all-time high,” McKinsey, September 4, 2025. Large US firms excel on a range of other corporate performance metrics; compared to European peers, they have 30 percent higher returns on invested capital and 50 percent faster top-line growth.⁹Refers to all firms with at least $1 billion in revenue in the United States and the European Union, United Kingdom, Norway, and Switzerland. “Accelerating Europe: Competitiveness for a new era,” McKinsey Global Institute, January 16, 2024.

To be sure, a sizable share of US market capitalization is connected to the technology sector. Yet US firms lead across a range of sectors and are present in the upper echelons of all of them.¹⁰In eight out of 11 industries in the Global Industry Classification Standard, spanning the entire economy, US companies made up five or more of the top ten publicly traded companies by market capitalization as of December 31, 2025. The three industries in which the United States did not make up the majority are energy, utilities, and materials.

US market leadership is not a recent development: The United States has been the preeminent home to the world’s top companies for more than a century, even as these companies have themselves turned over (Exhibit 4). Over the past 25 years, for example, only Microsoft has remained in the top ten global firms by market capitalization. The sectoral composition has also shifted, from industrials and energy through the 1980s to almost entirely technology today.

Fundamentally, US firms’ outperformance is rooted in greater dynamism: They exhibit higher rates of labor reallocation, market entry and exit, and growth of young firms.¹¹US top-performing “young” firms—those less than five years old and in the top decile for sales growth—make up six times the share of total employment of their European counterparts. Oyun Erdene Adilbish et al., Europe’s productivity weakness: Firm-level roots and remedies, International Monetary Fund, February 2025. Relatedly, among G7 countries, the United States has one of the highest rates of scaled-up companies—those that were small businesses at some point since 2000. Seventeen percent of US companies are scale-ups, second among the G7 to the United Kingdom, with 18 percent. “A microscope on small businesses: Spotting opportunities to boost productivity,” McKinsey Global Institute, May 2, 2024. That dynamism translates to higher national productivity growth (Exhibit 5).¹²Over the past 30 years, the United States has averaged productivity growth close to 2 percent, while other G7 countries have averaged 0.2 percent to just over 1.0 percent, based on data from The Conference Board. The productivity figures in Exhibit 5 refer to aggregates across a national sample of companies.

US manufacturing leadership has receded

Notably, one major sector in which the United States no longer has a leading global market share is manufacturing. China began expanding its industrial capacity in the 1980s, then ramped it up on a large scale in the 2000s, surpassing the United States in share of global manufacturing output in 2010. Today, China produces nearly half of global manufacturing output, compared to 11 percent for the United States.¹³Based on data from IHS Markit.

US manufacturing has also lost ground domestically as the economy has shifted toward services. Over the past 50 years, manufacturing’s share of both GDP and employment has declined from more than 20 percent to less than 10 percent today.¹⁴According to the US Bureau of Economic Analysis, manufacturing’s share of GDP was 21 percent in 1979 and just under 10 percent in 2025. According to the US Bureau of Labor Statistics, manufacturing’s share of employment was 22 percent in the late 1970s and 8 percent in 2025. This halving of manufacturing employment is equal to about 19 million jobs today. These were mostly middle-class jobs, and they have been offset by growth in high-skill jobs in the knowledge economy—for example in technology software and finance—along with lower-skill services jobs, such as home cleaning.¹⁵David H. Autor, Lawrence F. Katz, and Melissa S. Kearney, “The polarization of the U.S. labor market,” American Economic Review, May 2006, Volume 96, Number 2; Daron Acemoglu and David Autor, “Skills, tasks and technologies: Implications for employment and earnings,” Handbook of Labor Economics, Volume 4b, Orley Ashenfelter and David Card, eds., North Holland, 2010. Between 2000 and 2018, for example, the share of all US jobs with wages in the middle of the income distribution fell six percentage points.¹⁶“The social contract in the 21st century,” McKinsey Global Institute, February 5, 2020.

The shift to services has had additional economic implications. For one, as the United States began to import the goods it consumed, it tilted from trade surplus to trade deficit. Before 1976, the United States was a net exporter; it then became a net importer, with a trade deficit hovering around 3 percent of GDP over the past decade.¹⁷Based on data from the US Bureau of Economic Analysis. And over time, the United States has lost some of its capacity to produce a wide range of products—from sports shoes to smartphones, dysprosium to data processors, ships to chips—presenting questions about future resiliency.¹⁸In semiconductors, for example, the United States retains more than 50 percent of global revenues but saw its share of manufacturing capacity fall from 37 percent in 1990 to just 10 percent by 2022, with near-zero presence in advanced logic and high-bandwidth memory chips. State of the U.S. semiconductor industry, Semiconductor Industry Association, July 2025. Of course, some of these products matter more for national security and future economic competitiveness than others. Today, 40 percent of US imports, worth more than $1 trillion, are considered critical, or “central to resilient, diverse, and secure supply chains to ensure economic prosperity and national security.”¹⁹“Executive order 14017 – America’s supply chains,” Administration of Joseph R. Biden, Jr., February 24, 2021. A specific list of products appears in “Draft list of critical supply chains,” US International Trade Administration, accessed February 16, 2026.

Nevertheless, the United States remains the second-largest manufacturer and trading partner for the world, accounting for 10 percent of the world's total exports. With an output of $7.3 trillion, including in many of the same products or categories where it imports large volumes, and a workforce of almost 13 million, the United States retains a strong manufacturing base on which it might build capacity in industries that will become increasingly important in the future, including semiconductors, electrification, and next-era hardware such as robotics and autonomous systems.²⁰Manufacturing output data from the US Bureau of Economic Analysis. Manufacturing employment data from the US Bureau of Labor Statistics. Future industries are based on “The next big arenas of competition,” McKinsey Global Institute, October 23, 2024.

New manufacturing capacity is more than just factories. Also needed are an educated and skilled workforce that can fill shortages in fields such as engineering; a strong national balance sheet to support the needed financing; and restored investment in infrastructure, especially for energy.

US leadership in innovation and tech continues as new pressures emerge

Continued high valuations hinge on whether recent accelerations of productivity will indeed translate to higher economic (and earnings) growth over the long term.²¹Olivia White, Rebecca J. Anderson, and Jan Mischke, “The economy is walking a tight rope. What could trip it up,” Barron’s, October 9, 2025. Higher productivity growth rates, especially in recent years, have been accompanied by higher rates of business investment and R&D spending, a positive sign for long-term growth potential. The United States leads the world on R&D spending in absolute terms, and, among major economies, as a share of GDP. Large US firms (those with at least $1 billion in annual revenue) have expanded their investment and R&D spending more rapidly than peers in other major economies. Compared to European peers, for example, they have 60 percent greater investment and 80 percent greater R&D intensity, and they have increased their investment and R&D at more than triple the European rate (Exhibit 6).²²R&D intensity refers to R&D spending as a share of revenue; refers to all firms with at least $1 billion in revenue in the United States and the European Union, United Kingdom, Norway, and Switzerland; “Accelerating Europe: Competitiveness for a new era,” McKinsey Global Institute, January 16, 2024. Big tech firms drive much of this disparity.

Private-sector investment in frontier technologies exceeded $1 trillion between 2021 and 2024, complemented by more than $50 billion in federal R&D funding.²³Heather Boushey, “The Biden-⁠Harris administration has catalyzed $1 trillion in new U.S. private sector clean energy, semiconductor, and other advanced manufacturing investment,” The White House, November 26, 2024; Christopher V. Pece, “Reclassification of federally funded research and development centers as federal intramural performers of R&D,” National Center for Science and Engineering Statistics, National Science Foundation, January 4, 2024. The return on investment is striking: America has outperformed in intellectual property and critical technologies. The World Intellectual Property Organization ranks the United States near the top of its Global Innovation Index.²⁴The United States is ranked third, after Switzerland and Sweden. Global innovation index 2025, World Intellectual Property Organization, 2024. And compared with other major economies, the United States has more than a tenfold lead in private investment in AI. Today, the nation leads the world in the number of notable AI models, accounting for more than half of the world’s total.²⁵The AI index 2025 annual report, Stanford HAI, April 2025.

Another effect: Flourishing US knowledge ecosystems of universities and venture capital–backed start-ups attract and develop many of the greatest minds from all over the world, paving the way for ongoing success in science and technology. Today, nearly 40 percent of the world’s leading scientists, or those in the top 200,000 globally by citations, are based in the United States; no other country has more than 10 percent.²⁶John P.A. Ioannidis, “August 2024 data-update for ‘Updated science-wide author databases of standardized citation indicators,’” Version 7, Elsevier Data Repository, September 2024. Half of the scientific Nobel Prize winners over the past decade call America home.²⁷McKinsey Global Institute analysis of Nobel Prize recipients; Nobel Foundation; Britannica.

Competition in critical technologies is heating up

Past success does not guarantee future results, of course, and the US lead in technology is narrowing as China becomes more competitive. Some are now warning of a second “China shock,” should China displace American leadership in critical technologies.²⁸The first “China shock” refers to the loss of employment in manufacturing in the United States following China’s rapid expansion of manufacturing capacity; David H. Autor, David Dorn, and Gordon H. Hanson, “The China shock: Learning from labor-market adjustment to large changes in trade,” Annual Review of Economics, October 2016, Volume 8, Number 1; David Autor and Gordon Hanson, “We warned about the first China shock. The next one will be worse.” The New York Times, July 14, 2025; see also Jonathan E. Hillman, U.S. economic security: Winning the race for tomorrow’s technologies, Council on Foreign Relations, Task Force on Economic Security report number 83, November 13, 2025.

Beyond simply focusing on the gaps of the past, the United States needs to prepare for leadership in the industries that will be most important in the coming decades. Future competitiveness increasingly hinges on leadership in critical technologies, such as AI, robotics, biotechnology, quantum computing, high-performance batteries, and space-based technology.²⁹See Jonathan E. Hillman, U.S. economic security: Winning the race for tomorrow’s technologies, Council on Foreign Relations, Task Force on Economic Security report number 83, November 13, 2025; Emily Harding and Harshana Ghoorhoo, “Seven critical technologies for winning the next war,” Center for Strategic and International Studies, April 2023.

Economically, these technologies promise great gains for profits and wages. Geopolitically, they will be critical for protecting national security; their dual-use (military and civilian) nature means firms that develop them will be on both frontiers. In all these areas, China has made rapid progress and, in some cases, has taken the lead.

In remarkably short order, China has moved from producing low-cost goods to leading the world in complex, capital-intensive industries such as electric vehicles and photovoltaics.³⁰Amy Harder, “China blowing past world on renewables and EVs,” Axios, December 3, 2025. This shift is now extending beyond manufacturing into research-intensive domains once dominated by advanced economies. In biotechnology, for example, China’s output in drug discovery has grown more than tenfold since 2013.³¹Michael Kinch and Kevin Gardner, “We crunched the numbers on drug discovery in the U.S. vs. China. The results were alarming,” STAT News, December 16, 2025. As of 2024, China surpassed the United States in number of clinical trials and in the count of clinical-stage molecules.³²Meghan Ostertag, “Fact of the week: China has surpassed the US in the number of drug clinical trials, with 1,100 more trials listed,” Information Technology & Innovation Foundation, June 9, 2025; Silvia Crescioli and Janice M. Reichert, “Innovative antibody therapeutic development in China compared with the USA and Europe,” Nature Reviews Drug Discovery, November 7, 2025. Altogether, China’s life sciences industry is no longer confined to generic biologics or follow-on products, and it is now playing a leading role in generating sophisticated novel biologics.³³See also Todd Young, “How America can win the biotech race,” Foreign Affairs, October 2025.

In the domain of AI, while America still has the most sophisticated AI models, China has more robots than the rest of the world combined.³⁴Meaghan Tobin and Keith Bradsher, “There are more robots working in China than the rest of the world combined,” The New York Times, September 25, 2025. The United States has approached AI as a product unto itself, focusing on screen-based text and images. China’s approach, however, has emphasized AI’s deployment in the physical world, with intelligent machines that can see, decide, and act in real time.³⁵Michael Froman, “China, the United States, and the AI race,” Council on Foreign Relations, October 10, 2025. For example, Chinese firms are integrating AI into industrial robots that learn from their environments, drones that analyze visual data onboard while in flight, and autonomous vehicles whose core intelligence runs directly inside the vehicle rather than in the cloud.³⁶See, for example, “DJI Matrice 4 series brings intelligence to aerial operations,” DJI, January 8, 2025; Pavlo Zvenyhorodskyi and Scott Singer, Embodied AI: China’s big bet on smart robots, Carnegie Endowment for International Peace, November 24, 2025.

Recently, China has also established a strong presence in the realm of fundamental scientific research, advancing the frontiers of knowledge.³⁷See, for example, Mikko Packalen, “Edge factors: Scientific frontier positions of nations,” Scientometrics, Volume 118, February 2019. Niccolò Pisani et al.; “China’s rise as global scientific powerhouse: A trajectory of international collaboration and specialization in high-impact research,” Research Policy, October 2025, Volume 54, Number 8; Renli Wu, Christopher Esposito, and James Evans, “Shifting power asymmetries in scientific teams reveal China’s rising leadership in global science,” Proceedings of the National Academy of Sciences of the United States of America, October 2025, Volume 122, Number 44. From 2017 to 2023, China overtook the United States in most cited research in fields including machine learning, quantum sensors, advanced integrated circuit design and fabrication, adversarial AI, natural language processing, and high-performance computing (it already led in other fields, including electric batteries and advanced magnets).³⁸Australian Strategic Policy Institute, 2025. Others have pointed out that China is now the world’s global leader in uncrewed aerial vehicles, solar panels, graphene, high-speed rail, electric vehicles, and lithium batteries; see Malcolm Scott, “The US is failing to contain China’s push for tech supremacy,” Bloomberg, October 30, 2024. In some instances, China is deploying this research in practical uses with tangible output; for example, China developed the world’s first quantum satellite.³⁹See Jonathan E. Hillman, U.S. economic security: Winning the race for tomorrow’s technologies, Council on Foreign Relations, Task Force on Economic Security report number 83, November 13, 2025; Sam Howell, The quest for qubits: Assessing US–China competition in quantum computing, Center for a New American Security, May 2024. Although most cities with dense populations of highly cited researchers are American, Beijing saw the largest absolute inflow from 2019 to 2023.⁴⁰Andrés Rodríguez-Pose, Leiboyu Xiang, and Neil Lee, “Finding stars: Mapping the geography of the world’s scientific elites,” Transactions of the Institute of British Geographers, November 2025.

To lead in critical technologies in the decades to come, the United States will need not only to establish an edge in today’s emerging technologies but also to make the discoveries that uncover tomorrow’s. The nation will need to support innovation ecosystems and continue to attract—and build—talent. Currently the United States graduates fewer engineers than China, both in absolute terms and relative to population size.⁴¹While the United States has a quarter of Mainland China’s population, it has just one-tenth of the engineering graduates; Paul Eremenko and Ashish Srivastava, “China graduates 1.3 million engineers per year, versus just 130,000 in the U.S. We need AI to bridge the gap,” Fortune, January 14, 2026. Even more fundamentally, in K-12 education, the United States lags behind both its own historical record and other major economies. The 2024 National Assessment of Educational Progress showed a downward trajectory in math, science, and reading; only about a third of eighth-grade students were proficient.⁴²Only 22 percent of 12th-graders performed at or above “proficient” levels in math, and 35 percent at reading; only 31 percent of eighth graders performed at or above “proficient” levels in science. The Programme for International Student Assessment found that American 15-year-olds score lower on average in math than their peers in all other G7 economies.⁴³“Average performance of 15-year-old students in mathematics,” in Hannah Ritchie et al., “Global education,” Our World in Data, September 9, 2025; data adapted from OECD. A robust public education system rooted in general knowledge and problem solving has been a historical strength of the United States.⁴⁴For a discussion of general education as a historical source of strength for the United States, see Claudia Goldin and Lawrence F. Katz, The Race Between Education and Technology, Harvard University Press, 2008. The question today is how to restore that advantage.

Average incomes are high, but prosperity is uneven

Beyond scale of firms and leadership in technology, a final component of competitiveness is economic opportunity, or the extent to which growth translates to household prosperity in the form of higher incomes. Economic opportunity drives a virtuous cycle with innovation, as the potential for high incomes (and access to resources, such as start-up capital) attracts and retains top talent. Higher broad-based wages fuel thriving consumer markets, a longtime driver of American growth. More broadly, when individuals have higher living standards, they tend to be more productive, fostering further growth.⁴⁵“From poverty to empowerment: Raising the bar for sustainable and inclusive growth,” McKinsey Global Institute, September 18, 2023.

Today, the United States remains a place of immense economic upside, producing high average incomes; no other country of ten million or more people has a higher GDP per capita (even in purchasing power parity terms). The story is particularly pronounced for Americans in high income brackets: The paychecks of the top decile of American earners are 10 to 50 percent higher than those of peers in major European economies and Canada. Perhaps less well known, Americans in the top 40 percent of income earn more than their counterparts in major European economies, and the top 20 percent earn more than their peers in Canada.

The story changes for the bottom half of the income distribution, with American incomes lagging behind those of major European economies and Canada (Exhibit 7).⁴⁶This refers to market income, or income before taxes and redistribution. When cash transfers are included, this fact does not materially change. See Xavier Timbeau, “Is Europe falling behind the United States?” OFCE (Sciences Po Paris), May 21, 2025. Note that there is ongoing debate about the impact of in-kind transfers, especially regarding how to account for public expenditure on healthcare and how transfers shift relative incomes for lower income quintiles. For a range of perspectives on this argument, see Gerald Auten and David Splinter, “Income inequality in the United States: Using tax data to measure long-term trends,” Journal of Political Economy, July 2024, Volume 132, Number 7; Richard V. Burkhauser, James Elwell, and Kevin Corinth, Income growth and its distribution from Eisenhower to Obama: The growing importance of in-kind transfers, AEI Economics working paper number 2019-21, American Enterprise Institute, November 2019; Emmanuel Saez and Gabriel Zucman, Trends in US income and wealth inequality: Revising after the revisionists, National Bureau of Economic Research working paper number 27921, September 2020; and Emmanuel Saez and Gabriel Zucman, Letter to House of Representatives Committee on Ways and Means, May 11, 2021. The bottom quintile of American incomes has been gaining ground recently, but the gap remains wide. Among major economies, the United States has one of the widest gaps in income levels between the top 10 percent and bottom 50 percent.⁴⁷Measured before taxes and redistribution. Based on data from the World Inequality Database.

This gap in income levels has grown over the past 50 years. Although all income segments have seen real growth, market incomes (wages and asset flows) have grown the most for the top two quintiles. For the bottom 60 percent of the population, more income growth has come in the form of government benefits than from wages, and the middle quintile has seen the lowest overall growth.⁴⁸Luke Pardue and Ella Grant, “Current evidence on household financial well-being,” in Advancing America’s Prosperity, Melissa S. Kearney and Luke Pardue, eds., Aspen Institute, 2025. Government benefits in this case refers to cash payments as well as in-kind services, such as Medicaid.

This disparity in wage growth has many well-researched causes. For example, as discussed, technological change and deindustrialization have reduced the availability of middle-wage jobs while expanding demand for both highly educated and low-wage workers.⁴⁹Jobs with wages in the middle of the income distribution have increasingly disappeared (their share of total employment in the United States fell six percentage points between 2000 and 2018). “The social contract in the 21st century,” McKinsey Global Institute, February 5, 2020. High returns from financial assets, meanwhile, have produced very high levels of wealth for high-income households, which tend to own more assets: The top 1 percent of wealth holders have more than $16 million in wealth per capita and collectively own 5 percent of global wealth.⁵⁰“Out of balance: What’s next for growth, wealth, and debt?,” McKinsey Global Institute, October 9, 2025. Others include insufficient human-capital development for many American workers and pressures from expanding global trade.⁵¹Economic historians point to several contributing factors, though the precise nature and relative magnitude of each are matters of debate. One often-mentioned factor is rapid technological advancement. Some scholars argue that educational advancement of the workforce did not keep up; the result was increased automation of some jobs formerly done by humans. Another factor is growing productivity and industrial expansion in emerging markets, resulting in greater import competition. Relatedly, deindustrialization has shifted the distribution of jobs toward both high- and low-wage services jobs, increasing wage polarization. Labor unions also declined in strength and numbers. Deregulation in the financial sector and rising financial asset returns raised the rewards for higher (financial) skills and benefited asset owners. Some have argued that monetary policies in the wake of the global financial crisis have contributed to macroeconomic distortions, including contributing to growing asset values relative to economic output. For a range of research on this subject, see Peter H. Lindert and Jeffrey G. Williamson, Unequal Gains: American Growth and Inequality since 1700, Princeton University Press, 2016; Daron Acemoglu and David Autor, “Skills, tasks and technologies: Implications for employment and earnings,” in Handbook of Labor Economics, Volume 4b, Orley Ashenfelter and David Card, eds., North Holland, 2010; Anna Stansbury and Lawrence H. Summers, The declining worker power hypothesis: An explanation for the recent evolution of the American economy, National Bureau of Economic Research working paper number 27193, May 2020; David H. Autor, Lawrence F. Katz, and Melissa S. Kearney, “The polarization of the U.S. labor market.” American Economic Review, May 2006, Volume 96, Number 2; Atif Mian, Kamalesh Rao, and Amir Sufi, “Household balance sheets, consumption, and the economic slump,” The Quarterly Journal of Economics, November 2013, Volume 128, Number 4; Thomas Piketty and Emmanuel Saez, “Top incomes and the Great Recession,” IMF Economic Review, August 2013, Volume 61, Number 3.

Sustained disparities in real wage growth and levels, wealth accumulation, and intergenerational income mobility have contributed to a growing sense among more Americans that they will not be able to reach their economic goals. As this sentiment takes hold, it raises the question of whether Americans’ support for public policies that promote innovation and dynamism will continue.

Structural shifts, including the movement from a manufacturing-based to a services-based economy, have also led to a growing geographic dispersion of productivity levels, seen strikingly across major US cities (Exhibit 8). Over the past several decades, some have seen relatively modest productivity growth, including those in the historical Rust Belt. On the other end of the spectrum, cities with deep knowledge ecosystems have seen extraordinary gains and continue to offer high income possibilities. For example, in San Jose, California, GDP per capita has more than tripled since 2000 (see sidebar “What makes some cities more productive than others?”).⁵²“Total real gross domestic product for San Jose–Sunnyvale–Santa Clara, CA,” last updated December 4, 2024, and “Resident population in San Jose–Sunnyvale–Santa Clara, CA,” last updated March 14, 2025, FRED, Federal Reserve Bank of St. Louis. Real GDP per capita rose from $66,000 to almost $200,000. Notably, however, the cost of living also varies by city; housing in particular tends to be more expensive in cities with higher levels of productivity and income.⁵³Based on data from the OECD, 48 percent of low-income (bottom-quintile) households in the United States spend at least 40 percent of their income on housing. Among the G7, the next highest was Canada at 35 percent. Data from the US Bureau of Labor Statistics show that an average of 40 percent of spending by the bottom quintile of earners is directed toward housing, compared to about a third on average across the population.

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The United States remains the most competitive economy in the world on a multitude of fronts. Getting to this point has not been a straight path. There were twists and turns, transformations and reinventions. Before contemplating the future, we first turn to what can be learned from the past 250 years, telling the story of four chapters of US competitiveness.

As we have seen, the United States has been the world’s largest economy for more than a century. The rise of American competitiveness did not follow a linear or clear trajectory. Growth and innovation often happened in bursts, after moments of disruption and reinvention.

Taking stock of the past 250 years of US economic history, four chapters emerge (Exhibit 9). In each, the United States led global markets in at least one major area while working on new strains of innovation that planted the seeds for the following chapter of competitiveness, first in agriculture, then in industry, science, and knowledge. Major geopolitical events roughly mark the transition between chapters—the Civil War, World War II, and the end of the Cold War. Heralding the end of each chapter, disruptions tested the country, and reinventions at these turning points ultimately strengthened the US economy and its position in the world.

The United States has taken an incredible journey of economic development over the past 250 years. But it was not a straight path; it required reinvention along the way. In the next chapter, we turn to some of the constants: the foundations of competitiveness throughout US history.

While the nature of US competitiveness has shifted over time, a pair of distinctive foundations has remained constant—natural abundance, and a culture of creativity, innovation, ambition, and individual achievement; in a word, entrepreneurialism. These foundations provided the United States with unique advantages at pivotal moments in history. They also encouraged the development of strong institutions and infrastructure, which in turn have reinforced the foundations over time. That reinforcement can make it difficult to untangle cause and effect; indeed, each has shaped the other. What matters is that the United States has undoubtedly benefited from its twin foundations.

Favored by nature

In 1767, Benjamin Franklin wrote: “America, an immense Territory, favour’d by Nature with all Advantages of Climate, Soil, great navigable Rivers and Lakes, &c. must become a great Country, populous and mighty.”⁵⁴“Benjamin Franklin to Lord Kames, 25 February 1767,” National Archives. He was prescient. Over time, the country’s natural abundance and geographic positioning have provided plentiful energy and mineral resources, vast stretches of arable land, and access to internal and international trade routes. The depth and diversity of these resources set the United States apart (Exhibit 10).

The importance of various natural resources evolved across time. In the first historical chapter, arable land and navigable waterways were essential for agriculture and transportation of products across the country.⁵⁵Frederick Jackson Turner, “The significance of the frontier in American history,” Proceedings of the American Historical Association for the Year 1893, January 1893. See also A. Paul David and Gavin Wright, “Increasing returns and the genesis of American resource abundance,” Industrial and Corporate Change, March 1997, Volume 6, Number 2. An expanding frontier brought forth increasing access to minerals, energy, and land. In Europe, such expansion and ensuing infrastructure development typically required compensating landowners, which did not always occur in the United States.⁵⁶The development of US railroads, for example, was supported and partially financed through extensive federal land grants; the US government provided land to railroad companies, which in turn sold the land to settlers, using proceeds to fund railroad development. In Europe, by contrast, infrastructure firms had to purchase land from private holders, with financing through equity, bonds, and state subsidies. In other words, in Europe, land acquisition was a cost center, not a financing source. See Paul W. Gates, History of public land law development, US Government Printing Office, 1968; Lloyd J. Mercer, Railroads and Land Grant Policy: A Study in Government Intervention, Academic Press, 1982; Richard White, Railroaded: The Transcontinentals and the Making of Modern America, W. W. Norton & Company, 2011; Colleen A. Dunlavy, Politics and Industrialization: Early Railroads in the United States and Prussia, Princeton University Press, 1994. In the second chapter, fossil fuels such as coal and oil, along with minerals such as iron ore, powered industry and provided raw materials. In the third chapter, as science and technology took off, mineral access was a source of strategic advantage; deposits of copper, bauxite (aluminum-containing ore), and uranium supported electrification, aerospace, and nuclear power. In the fourth chapter, the United States was more connected than ever before through global trade, but even then, domestic minerals still provided an advantage. The internet backbone depended on fiber optics and its components (copper, gold, and aluminum) and plentiful energy.

Reliable and affordable energy has been an enduring source of strategic advantage for the United States (Exhibit 11). Access to plentiful energy has lowered input costs for businesses, improving productivity, enabling scale, and improving household well-being. At independence, Americans consumed twice as much energy per person as Britons, given abundant firewood.⁵⁷Paul Warde, Energy Consumption in England & Wales, 1560–2000, Consiglio Nazionale delle Ricerche, 2007. Per capita energy consumption in England and Wales was about 40 million to 45 million BTU in 1781, versus approximately 100 million in the United States. As discussed, ready access to coal ignited the American industrial revolution of the second chapter. In the third chapter, the United States became a net energy importer as its energy consumption began to outpace domestic production. The resulting exposure to the oil crises of the 1970s led to energy squeezes, contributing to a slump in productivity.⁵⁸Dale W. Jorgenson, “Energy prices and productivity growth,” in The Impact of Rising Oil Prices on the World Economy, Lars Matthiessen, ed., The Scandinavian Journal of Economics, 1982. The country regained energy independence in the fourth chapter through the shale revolution, which began in the mid-2000s. In 2019, energy imports dropped below exports for the first time in half a century.⁵⁹Energy statistics data browser, International Energy Agency, June 10, 2025. This ultimately helped shield the United States from major energy price fluctuations brought about by Russia’s 2022 invasion of Ukraine.⁶⁰In 2022, wholesale gas prices in the euro area were on average 13.0 times higher than in 2020, while those in the United States and Asia were 3.5 and 9.0 times higher than their respective 2020 levels. Based on data from the European Central Bank. Lorenz Emter, Vanessa Gunnella and Tobias Schuler, “The energy shock, price competitiveness and euro area export performance,” ECB Economic Bulletin, March 2023. Today, 64 percent of US crude oil production and 79 percent of dry natural gas production is from shale and tight formations.⁶¹“How much shale (tight) oil is produced in the United States?” US Energy Information Administration, March 28, 2024; “U.S. shale natural gas production has declined so far in 2024,” US Energy Information Administration, October 24, 2024.

Geography has also mattered. Relative geographic isolation meant the United States saw minimal damage during the World Wars. Natural deep harbors and warm-water ports on two oceans provided access to plentiful trade routes throughout history. Relatively friendly relations with neighbors also provided a layer of security.⁶²Tim Marshall, Prisoners of Geography: Ten Maps That Explain Everything About the World, Elliott & Thompson, 2015. Periods of conflict within Europe also motivated the United States to develop its own industry; the Napoleonic Wars, for example, helped launch early US manufacturing.⁶³Joshua L. Rosenbloom, The Industrial Revolution in the United States: 1790–1870, National Bureau of Economic Research working paper number 34225, September 2025.

America’s ‘can-do’ spirit

From its inception to this day, the United States has had an entrepreneurial culture that has served as an ongoing foundation for competitiveness. By some accounts, entrepreneurs and inventors have been “cultural heroes” throughout US history.⁶⁴J. Bradford DeLong, Slouching Towards Utopia: An Economic History of the Twentieth Century, Basic Books, 2022. Entrepreneurship in America —often supported by wealth earned from its resources—has meant a willingness to take risks, an embrace of new ideas and people, and a drive for economic progress.⁶⁵For more on the US culture of entrepreneurship and how it contributed to economic development, see Joseph Schumpeter, The Theory of Economic Development, 1911 (English Translation 1934). As Alexis de Tocqueville wrote in 1840: “America is a land of wonders, in which everything is in constant motion and every change seems an improvement. No natural boundary seems to be set to the efforts of man; and in his eyes what is not yet done is only what he has not yet attempted to do.”⁶⁶Alexis de Tocqueville, Democracy in America, Volume II, 1840.

The culture of entrepreneurship stems at least in part from the absence of Europe’s entrenched societal structures and systems; the United States was able to start fresh. Perceived openness and economic opportunity have attracted many of the world’s best minds over the country’s history. In the second chapter, for example, immigrants brought new ideas and had an outsize impact on innovation; migrants from this era were more than 1.5 times likelier to file a patent than their US-born peers.⁶⁷Pew Research Center; Maddison Project; Dario Diodato, Andrea Morrison, and Sergio Petralia, “Migration and invention in the age of mass migration,” Journal of Economic Geography, March 2022, Volume 22, Number 2. Andrew Carnegie, an immigrant from Scotland, famously started a steel empire that became the world’s largest corporation. This phenomenon has endured. In 2024, 46 percent of Fortune 500 firms had at least one founder who was a first- or second-generation immigrant, according to a recent study.⁶⁸New American Fortune 500 in 2024: The largest American companies and their immigrant roots, American Immigration Council, September 2024.

From steamboats in the first chapter to smartphones in the fourth, the United States has been a leader in invention. Americans came up with or collaborated on the vast majority of the most important inventions of the past 250 years (Exhibit 12).⁶⁹

While the precise inventions included in such a list are of course a matter of debate, the finding of significant US involvement stands even with reasonable changes in the list of inventions. This representative list of the top 100 inventions of the past 250 years was determined using two sources of insight. First, a list was created by generating rankings of the top 100 inventions of the past 250 years from the “deep research” functions of four LLMs (ChatGPT, Claude, Gemini, and Grok) in October 2025. The prompt requested that the top 100 be based on four criteria: 1) scale of impact as measured by number of people affected; 2) level of improvement versus previously available alternatives; 3) direct effects on economic growth or productivity; 4) direct effects on individual quality of life or standard of living. Responses were averaged across the different outputs. Second, the list was cross-checked against academic and journalistic sources released since the year 2000 that attempted to answer a similar question. They considered a 100-plus-year period with an explicitly global lens rather than focusing on the United States. The sources included Larry Gormley and Lee Radford, “The Greatest Inventions In the Past 1000 Years,” Ohio State University, 2000 (revised 2024), and Daniel Stone, "The 10 inventions that changed the world," National Geographic, 2017. Nine items that appeared on two or more of these lists (but not in the top 100 from the LLMs) were added, and the nine lowest-ranking inventions from the LLM output were removed, to arrive at the top 100. Of the nine inventions removed, five were US-led (automatic transmission, semiconductor laser, quantum processing unit, human genome sequence, and modern suspension bridge), one was US-involved (the blue LED), and three did not include significant US involvement (iron puddling, pneumatic tires, and high-speed rail).

The nature of invention changed over time, as did who funded it.⁷⁰The changing nature and origins of invention in the United States has also been discussed in Ezra Klein and Derek Thompson, Abundance, Avid Reader Press, 2025. In the first chapter, self-taught tinkerers and artisans such as Eli Whitney led the charge. In the second, the industrial research lab took center stage, providing capital to inventors such as Thomas Edison and Nikola Tesla. In the third, collaborations between government, universities, and businesses mobilized teams such as a group at Bell Labs led by William Shockley, John Bardeen, and Walter Brattain, co-inventors of the first transistor. During this chapter, funding for R&D primarily came from government, with strong incentives rooted in Cold War–era geopolitical competition. In the fourth, business once again played a larger role in funding R&D. Knowledge ecosystems, including universities and venture capital–backed start-ups, became the centers of invention, with figures such as Steve Jobs envisioning products and ways of interacting with technology such as smartphones, backed by teams that turned those ideas into reality.

The entrepreneurial spirit of the United States was not limited to tech visionaries. It was also embedded in the American people and business community, who have long had the appetite (and means) to adopt and scale new technologies, including those invented elsewhere, such as the automobile, first developed in Germany in 1885. Over time, inventions such as railroads, telephones, and personal computers were adopted more quickly in the United States than elsewhere (Exhibit 13). The effects on the economy and the fabric of life were manifold: better connections, greater economies of scale, and faster transportation, communication, and learning. While these examples are historical, the same can be said of some more recent technologies; for example, the United States has been at the forefront of scaling cloud computing services.⁷¹More than two-thirds of US businesses run most operations on the cloud, making the United States a global leader in cloud adoption. Sofia Ramirez, “Cloud adoption statistics 2026: Growth, migration drivers & ROI highlight,” SQ Magazine, July 2025.

Americans have adopted generative AI even faster than earlier transformative technologies.⁷²In the United States, current generative AI adoption rates exceed those of the PC and the internet in the same number of years after they were first mass marketed. On the Economy, “The rapid adoption of generative AI,” blog entry by Alexander Bick, Adam Blandin, and David Deming, Federal Reserve Bank of St. Louis, September 23, 2024. That said, however, other countries have been faster; a recent ranking puts the United States in 24th place for adoption rates, behind many other G7 economies.⁷³Globally, the United States is not currently an overall leader in AI—it ranks 24th on overall adoption. Global AI adoption in 2025—a widening digital divide, AI Economy Institute, Microsoft, January 8, 2026. As discussed, Chinese companies are embedding AI at a rapid clip. This raises the crucial questions of whether the United States can maintain this foundation of competitiveness, and, if lost, what reclaiming it might take.

Institutions and infrastructure reinforce the foundations

Over the past 250 years, institutions have embodied and supported the country’s entrepreneurial culture, and infrastructure has helped the United States harness the power of its natural resources. A virtuous cycle animates both. Entrepreneurial culture encouraged the development of new forms of governance, and the resulting institutions in turn encouraged higher ambitions and risk-taking. Resource discovery demanded infrastructure investment, while better infrastructure enabled and encouraged more resource discovery.

American institutions have, throughout history, incorporated the nation’s ideals, especially its entrepreneurial culture. To an unusual degree among modern economies, they have supported and strengthened the spirit of taking risks, protecting intellectual property, and promoting markets and individual freedom.⁷⁴A central work arguing the importance of institutions is Daron Acemoglu and James A. Robinson, Why Nations Fail: The Origins of Power, Prosperity, and Poverty, Crown Publishers, 2012. See also Douglass C. North, Institutions, Institutional Change and Economic Performance, Cambridge University Press, 1990. The US Constitution is the oldest in the world, having survived a Civil War, the Great Depression, and two World Wars. This stability has been balanced with regulatory adaptability amid economic expansion, shifting geopolitical circumstances, and technological advancements. Federalism, which supports policy experimentation at the state and local levels, has been critical in the development and refinement of institutions. As just one example, in the realm of corporate law, several states moved early to codify limited liability and enact general incorporation laws, starting with New York in 1811. The approach ultimately spread and has been central to the development of modern corporations.⁷⁵Before general incorporation laws, firms could incorporate only via state legislation. Eric Hilt, “Corporation law and the shift toward open access in the antebellum United States,” in Organizations, Civil Society, and the Roots of Development, Naomi R. Lamoreaux and John Joseph Wallis, eds., The University of Chicago Press, 2017. Institutions such as comparatively generous bankruptcy laws also have encouraged entrepreneurship and risk-taking.⁷⁶See, for example, David M. Primo and Wm Scott Green, “Bankruptcy law and entrepreneurship,” Entrepreneurship Research Journal, March 2011, Volume 1, Number 2.

The American educational system, another critical and evolving institution, has produced a well-educated, dynamic labor force, installing an ethos of constant improvement in the entrepreneurial foundation.⁷⁷To provide a recent example, the share of the US workforce that underwent “occupational shifts” was 2.7 times higher than the share in Europe from 2016 to 2019, and 1.3 times higher from 2019 to 2022. “A new future of work: The race to deploy AI and raise skills in Europe and beyond,” McKinsey Global Institute, May 21, 2024. The expansion of public education, especially in the early 20th century, created a workforce with a baseline of general knowledge. By the end of the second historical chapter, the United States had one of the highest rates of education in the world. Importantly, American education emphasized problem solving and flexibility over specialization, creating a more adaptable workforce and lowering switching costs for workers.⁷⁸These concepts have been discussed in Claudia Goldin and Lawrence F. Katz, The Race Between Education and Technology, Harvard University Press, 2008. Developments in tertiary education, such as the Morrill Land-Grant Act in the first historical chapter and the GI Bill in the third, also expanded knowledge and skills development in technical fields. Lower regulation in labor markets than seen elsewhere complemented an educated and adaptable workforce to lift competitiveness.⁷⁹These concepts have been discussed in Robert E. Hall, “The importance of lifetime jobs in the U.S. economy,” American Economic Review, September 1982, Volume 72, Number 4; Edward P. Lazear, “Job security provisions and employment,” The Quarterly Journal of Economics, August 1990, Volume 105, Number 3; and The OECD jobs study: Facts, analysis, strategies, OECD, 1994.

The US financial system, meanwhile, emerged as both a product and an enabler of the American entrepreneurial culture. Beginning in the early years of the republic, the United States developed deep capital markets and innovative financial institutions. Beyond positioning the country as a global financial leader as early as the 1830s, early finance provided funding for major infrastructure projects, including canals and railroads, as well as industry.⁸⁰Peter L. Rousseau and Richard Sylla, Emerging financial markets and early U.S. growth, National Bureau of Economic Research, working paper number 7448, December 1999. Over time, financial institutions made it easier for firms to form, scale, and fail without permanently deterring future experimentation.

Infrastructure has also contributed to America’s competitiveness. Infrastructure moved minerals, energy resources, water, and agricultural goods to ports or places of consumption and adapted over time as the country’s context and needs shifted. Americans built their earliest railroads to transport coal to factories, specialized piers to ship iron ore across the Great Lakes, and vast aqueducts to divert water to arid mining claims. Then, too, natural resources were integral to infrastructure construction, especially minerals such as copper for electrical equipment and iron ore for steel in bridges, buildings, and pipes, among numerous other fixtures. US infrastructure today supports the second-largest domestic freight system in the world, including the longest freight railroad network and the second-longest highway system.⁸¹The US freight system spans roughly 67,000 miles of controlled-access highways (second globally), 140,000 miles of freight railway (first globally), and 12,000 miles of navigable waterways (fourth globally). “Public road length – 2023,” Federal Highway Administration, US Department of Transportation, 2023; “China expands transport network to facilitate high-quality development,” Xinhua, February 28, 2024; “China’s railway passenger traffic exceeds 4.31 bln in 2024,” Xinhua, June 6, 2025; “Overview of America’s freight railroads,” Association of American Railroads, March 2020; “Waterways,” The World Factbook, US Central Intelligence Agency, 2019. Today, institutions and infrastructure alone do not make the United States unique; plenty of other countries have high-quality infrastructure and pro-market institutions. But they have supported US competitiveness in a uniquely American way over the course of the past quarter millennium.

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Plentiful natural resources and favorable geography provided both easy connection to markets and security, allowing for rapid advances in industry, science, and technology. But natural resources alone were not enough; harnessing them, in evolving and often innovative ways, has made the difference.⁸²Gavin Wright, “The origins of American industrial success, 1879–1940,” American Economic Review, September 1990, Volume 80, Number 4. The nation’s entrepreneurial spirit was similarly codified and strengthened by strong property rights and pro-market institutions and was further nurtured over time through educational and financial systems. In the next section, we discuss how in the chapter to come, the United States can build on the foundations that have served it so well throughout its history.