A shortened version of the introductory and concluding chapters of a volume of case studies of American industry in international competition, this article examines the contemporary debate on industrial policy, building on lessons drawn from the case studies. The authors identify several possible economic and political rationales for an industrial policy, as it is one of the instruments with which the government can respond to the competitive difficulties of individual sectors in international trade. They conclude that, in the absence of such a policy, the government will continue to respond to such difficulties with protectionist measures that thwart necessary economic adjustment and reduce our national economic well-being.
Get full access to this article
View all access options for this article.
References
1.
This is certainly a conservative figure. By 1977, employment in textiles, apparel, and iron and steel represented about 15 percent of the labor force. If automobiles are also included as a trade-impacted industry, then adding employment in automobiles to employment in these other sectors indicates that significantly more than one out of every five manufacturing workers is currently employed in a trade-impacted industry.
2.
There is an extensive and growing literature on this subject, which would include numerous studies completed at the GATT as well as the work continuing at Chatham House under the direction of Louis Turner. See TurnerLouis, Living with the Newly Industrialized Countries (Royal Institute for International Affairs, 1980). See also Commissariat General du Plan, Rapport du Groupe d'Etudier l'Evolution des Economies du Tiers Monde et l'Appareil Productif Francais (Paris, 1978).
3.
On this issue, two competing explanations of events are offered: One by BlockFred, The Emergence of International Economic Disorder (Berkeley: University of California Press, 1977); and one by KrasnerStephen, “External Strength and Internal Weakness,” in KatzensteinPeter (ed.), Between Power and Plenty (Madison: University of Wisconsin Press, 1978).
4.
This argument is taken from John Zysman's essay on U.S. regional policy completed for the OECD. See ZysmanJohn, “American Regional Policy,”Social Sciences and Policy Making (Paris: OECD, 1981).
5.
Office of Technology Assessment, Technology and Steel Industry Competitiveness (Washington, D.C.: Government Printing Office, 1980), p. 20.
6.
See ZysmanJohn, Governments, Markets and Growth: Financial Systems and the Politics of Industrial Change (Ithaca, NY: Cornell University Press, 1983).
7.
For a complete breakdown of the characteristics of trade-impacted workers, see FrankCharles, Foreign Trade and Domestic Aid (Washington, D.C.: Brookings Institution, 1977).
8.
This point is made by DasguptaPartaStiglitzJoseph, “Uncertainty, Industrial Structure, and the Speed of R & D,”The Bell Journal of Economics, vol. 11, no. 1 (Spring 1980), pp. 1–28.
9.
This figure is taken from Office of Technology Assessment, op. cit., p. 102.
10.
See GresserJulian, “High Technology and Japanese Industrial Policy: A Strategy for U.S. Policy Makers,” a report submitted to the assistant secretary for East Asian and Pacific Affairs, U.S. Department of State (unpublished, 1980).
11.
BorrusMichaelMillsteinJamesZysmanJohn, “U.S.-Japanese Trade in the Semiconductor Industry,” Policy Papers in International Affairs, No. 17, Institute of Industrial Relations, University of California, Berkeley.
12.
For a discussion of the proposed Reconstruction Finance Corporation, see ThurowLester, The Zero Sum Society (New York: Penguin Books, 1981).
13.
ZysmanJohnTysonLaura, American Industry in International Competition (Ithaca, NY: Cornell University Press, 1983).
14.
YoffieDavid, “Adjustment in the Footwear Industry: The Consequences of Orderly Marketing Agreements,” in TysonZysman, op. cit.
