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Abstract
This paper provides an overview of the debate on U.S. competitiveness which has
fostered a growing and disparate literature. The overview is not intended as a
comprehensive literature review but rather to define what the competitiveness problem is
and identify the principal causes of the U.S.'s supposed deteriorating competitiveness. The basic issue is the U.S.'s decline in relative productivity growth. It is argued that low investment due to low savings rates in the U.S. and the growing strength of other countries' R&D sectors are the most convincing explanations of this competitiveness problem. Recognition of the true source of the problem is important for policy: attempts to deal with the problem by using trade policies (particularly against Japan) will not correct the underlying competitive weakness of the U.S. economy.