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International Competition in the Products of U.S. Basic Industries

In: The United States in the World Economy

Listed author(s):
  • Barry Eichengreen
  • Charles W. Parry
  • Philip Caldwell

This paper provides an overview of recent trends in the U.S. basic industries. It first documents the dramatic fall in their shares of domestic employment and global production. It then considers explanations for these industries' relative -- and, in some instances, absolute -- decline. Those explanations fall into two categories: domestic explanations which focus on the decisions of labor, management and government, and international explanations which focus on the tendency of the product cycle to continually shift the production of established products and standardized processes to newly-industrializing countries. This review suggests that the recent difficulties of the U.S. basic industries have resulted not from one or the other of these factors but from their interplay. Insofar as product-cycle-based shifts in the international pattern of comparative advantage have contributed to recent difficulties, some decline in the U.S. basic industries is both inevitable -- barring increased protection -- and justifiable on efficiency grounds. Insofar as labor, management and government decisions share responsibility, the recent difficulties of U.S. basic industries may be at least partially reversible.

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This chapter was published in:
  • Martin Feldstein, 1988. "The United States in the World Economy," NBER Books, National Bureau of Economic Research, Inc, number feld88-1, November.
  • This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 6214.
    Handle: RePEc:nbr:nberch:6214
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