The Great American Competitive Disadvantage: Fact or Fiction?
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Abstract.Share analysis was performedforthe periodsof 1967-1972and 1972-1977to determinethe source of the slow rateof growthof Americanexports vis-a-visexports of all forEconomicCooperationand Development.Althoughshare membersof the Organization analysis is subject to several theoreticaland practicallimitations,the conclusions indicated clearlythat,duringthese periods, the relativelyslow rateof increasefor American exportswas attributablemainlyto a loss of marketshare ratherthanto exportstructureor mix.So it may be concludedthatif a faster rateof growthfor Americanexports is to be realized, the United States should continue efforts to raise the competitiveness of American goods in international markets and-perhaps more importantly-to provide special
incentivesto firmsthatincreaseexportsales in preferenceto alternativeformsof business
expansion.
* For a numberof years, the UnitedStates has experienced a seemingly intractable INTRODUCTION problemin its balance-of-paymentsaccounts that, by now, is bothwelldocumentedand is the subject of unending and, often, conflictingadvice on what is the properpolicy response. The trade data for the years 1966-1977 presented in Table 1 suggest that over the last decade the UnitedStates has faced both a short-runand a long-runexternal accounts problem. Inthe short run, the unusuallylarge deficits of the last few years of the period have contributedto a significantdepreciationof the dollarvis-a-vis other majorcurrencies, thereby raising importprices that, in turn, have led to even greater short-rundeficits. Moreover,these deficits have furtheredthe erosion of confidence in the dollaras a store of wealth, therebyaccelerating a flightfromthe dollarby certain large multinationalenterprises and foreigngovernments that has resulted in a furtherdeteriorationof the dollar'sexternalvalue. Overthe longer run,there has been a significantlyfaster rateof growthof importsthanfor exports in the Americaneconomy.1 Leaving aside the obviouslyimportantquestion of importgrowth,some analysts have suggested that the relativelyslow rate of growth of American exports is explained mostly by the inabilityof many Americanbusinesses to remain competitivewiththeir principalforeigncounterparts.Other analysts, however, have argued that the problem is due largelyto the type of goods that Americanfirms export (that is, the structureof American exports), which implies that American exports are concentrated in either stagnant or decliningproductlines. Some valuable insights intothe structureand competitiveness of Americanexportsmay be gained by making a comparison between the export performanceof the United States and that of other majorindustrialcountries.Once an understandingis reached on whetherthe Americanlong-termexportproblemis attributableprimarilyto the mixof American export products or to the lack of competitiveness of Americanexports in world markets,the properpolicy mixto alleviatethe situationat the national,industry, and firmlevels may be more apparentthan at present.2 Share analysis is one method that
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