“The United States has a long and generally successful track record of using “economic statecraft” to advance its positions and values in the world. It helped rebuild Europe and Japan after World War II, with a judicious mixture of aid and access to the United States markets. Similarly, as the Iron Curtain fell after 1989, the United States stepped in with targeted financial support and general encouragement to converge on the European Union’s political and economic institutions. The International Monetary Fund and the World Bank, where the United States has a big voice, have also played positive roles in many instances over the last 70 years.

“No policy is perfect or without controversy. But surely this approach is better than relying primarily on military power in the way preferred by former dominant powers – think of Rome, the Ottomans or even the British Empire (where there was commerce but also a lot of coercion).

“Can the United States continue to apply the same economics-first approach to the next frontier in economic development – women’s rights? Whether Janet Yellen becomes the chairwoman of the Federal Reserve will provide some insight into the answer.

“Analysts of economic development often point to “human capital” – education, skills and abilities – as a key determinant of which countries become rich. Similarly, entrepreneurs typically stress the importance of skilled labor in determining where they situate and build their companies. And there is no question that technological change has increased the advantages, in the United States and around the world, of people skilled at working with computers (see this recent commentary by David Autor, my colleague at the Massachusetts Institute of Technology, and David Dorn).”

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Read Simon Johnson’s full Economix blog post here