Trade, Investment and Deindustrialization: Myth and Reality
Author(s)
Chaikin, Sol C.
Abstract
The decline of the US apparel industry especially and of the nation’s manufacturing base in general demand a complete examination of the current implications of post-war national economic policy. The US in the 1970s found itself struggling to maintain a lead in technological achievement, and the ability of foreign competitors to rapidly displace key US manufacturers in both the domestic and international markets indicates a basic weakening of the US economy. Lagging productivity is often listed as the cause, but there is more to the story. The US has been following policies which can only lead to intensified deindustrialization. Reduced labor productivity and unused capacity are part of the issue. Among the specific measures that would facilitate reindustrialization in the US is the implementation of a rational system of fair trade. Central to such a policy would be import quotas negotiated on an international level in those sectors where import penetration has negatively affected domestic employment. A meaningful commitment to full employment will result in new productive investment and important increments in productivity.
