Traditionally, the international aspects of the United States economy have not been on the "most frequently discussed" list. Because the United States outstrips all other nations not only in the size of its economy but also in the abundance of its natural resources and the stability of its currency and government, people have tended to focus on the internal aspects of the economy. This lack of interest on the part of the general public does not mean, however, that the country's international position is not worthy of consideration. A view of the United States as self-sufficient and immune from international economic events is myopic.
The seventies ushered in unprecedented interest on the part of business in the United States' position in the world economy. Tremendous exposure by U.S. companies overseas (especially in the so-called Eurodollar market), coupled with substantial U.S. involvement in Vietnam, forced the U.S. government to abandon its traditional closed economy model and to adopt an open economy viewpoint. Since then the United States' vulnerability to external influences has been increasing. The Report of the President's Commission on Industrial Competitiveness (see Table 6.1) makes it clear that concern with international economics in mounting. 1
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Americans are not used to the idea of comparing our economic strengths to those of our trading partners. Our unchallenged leadership position after World War II and our vast domestic economy have led us to ignore the competitive consequences of our actions—or our inaction. Yet the environment in which American business operates has changed dramatically over the past two decades. The interdependence of the U.S. economy with that of our trading partners, the rapid growth of opportunities in world markets, the transportability of technology, and the rise of aggressive new competitors—all these make improving our relative ability to compete in world markets an urgent priority. Today, imports and exports represent twice as large a portion of our gross national product (GNP) as they did just two decades ago. Almost one-fifth of our industrial production is exported, and fully 70 percent of the goods we produce compete with merchandise from abroad. Quite simply, no longer is there a truly domestic U.S. economy. We are inextricably linked to our trading partners in countless important ways. Since 1970, the total dollar volume of world trade has grown sevenfold. International trade is growing faster than the U.S. economy, and it represents a vast area of opportunity for American business. If we are to reap the benefits of this growth, our competitiveness is an urgent consideration. The United States no longer commands an unchallenged lead. Our international competitors are closing the gap. Some slippage of our postwar dominance was both inevitable and desirable, since we need healthy trading partners. But we should be concerned about how rapidly the U.S. lead has diminished. New competitors represent a final change in the global environment in which U.S. firms operate. Japan and the newly industrializing nations of the Pacific Rim—including Taiwan, South Korea, Singapore, Hong Kong, and Malaysia—now represent our major competitive arena. The United States now does more trade with these Pacific Rim countries than with all of Europe combined. If our trade in this arena continues to grow at its current rates, by 1995 America's trade with the Pacific Rim will be double the size of our European trade. Technology is highly mobile, and these nations are aggressively applying it, along with their financial and human resources. They have benefited from governmental policies designed to nurture their export potential. These initiatives have distorted previous trade flows and constitute new rules of competition to which we have not yet responded effectively. Finally, our Pacific Rim competitors have focused attention on developing manufacturing expertise, and their products are often more attractive, in both price and quality, than our own. |
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SOURCE: Global Competition: The New Reality. The Report of the President's Commission on Industrial Competitiveness, Volume 1. (Washington, DC: U.S. Government Printing Office, 1985). |
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