U.S. Competitiveness: Beyond the Trade Deficit

doi:10.1126/science.241.4863.299

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Science 15 July 1988:
Vol. 241. no. 4863, pp. 299 - 307
DOI: 10.1126/science.241.4863.299

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U.S. Competitiveness: Beyond the Trade Deficit

GEORGE N. HATSOPOULOS ¹, PAUL R. KRUGMAN ², and LAWRENCE H. SUMMERS ³

¹ Chairman of the board and president of Thermo Electron Corporation, Waltham, MA 02254.
² Professor of economics at the Massachusetts Institute of Technology, Cambridge, MA 02139.
³ Professor of economics at Harvard University, Cambridge, MA 02138.

Large trade deficits and the corresponding increase in U.S.international indebtedness have raised concerns about the long-runcompetitiveness of the United States. But being competitiverequires more than balance in our foreign trade; it requiresan improving standard of living. The long-term U.S. competitiveproblem is largely caused by low saving rates, high costs ofcapital, and the resulting inadequate level of both visibleand invisible investment. As long as the U.S. national savingrate remains far below that of all our major competitor nations,there is little chance for restoring America's internationaleconomic position.

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