Productivity Growth and the Competitiveness of the American Economy: A Carolina Public Policy Conference Volume

163 Pages·1989·6.662 MB·English

by  Stanley W. Black (auth.), Stanley W. Black (eds.)

Productivity Growth
and the Competitiveness
of the American Economy
Studies in Productivity Analysis
Editor:
Ali Dogramaci
Graduate School of Management
Rutgers University
Newark, New Jersey, U.S.A.
Previously published books in the series:
1. Dogramaci, A. and Adam, N.: Productivity
Analysis at the Organizational Level
2. Dogramaci, A. and Adam, N.: Aggregrate
and Industry-Level Productivity
Analysis
3. Dogramaci, A.: Productivity Analysis; A
Range of Perspectives
4. Dogramaci, A.: Developments in
Econometric Analyses of Productivity:
Measurement and Modelling Issues
5. Sudit, E.: Productivity Based Manage
ment
6. Fare, R., Grosskopf, S., and Lovell, C.: The
Measurement of Efficiency of Produc
tion
7. Dogramaci, A.: Managerial Issues in
Productivity Analysis
8. Dogramaci, A.: Measurement Issues and
Behavior of Productivity Variables
9. Dogramaci, A., and Fare, R.: Applications
of Modern Production Theory: Efficien
cy and Productivity
Productivity Growth
and the Competitiveness
of the American Economy
A Carolina Public Policy Conference Volume
edited by
Stanley W. Black
~
"
Kluwer Academic Publishers
Boston Dordrecht London
Distributors lor North America:
Kluwer Academic Publishers
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Library 01 Congress Cataloglng-In-Publlcatlon Data
Productivity growth and the competitiveness of the American economy:
a Carolina public policy conference volume / edited by Stanley W.
Black.
p. cm.-(Studies in productivity analysis)
ISBN-13: 978-94-010-7625-8 e-ISBN-13: 978-94-009-2494-9
DOl: 10.1007/978-94-009-2494-9
1. Industrial productivity-United States-Congresses.
2. Competition, International-Congresses. I. Black, Stanley W.
II. Series.
HC110.l52P754 1989
338.973-dc19 88-34259
CIP
Copyright © 1989 by Kluwer Academic Publishers
Soltcoverreprint of the hardcover 1s t edition 1989
All rights reserved. No part of this publication may be reproduced,
stored in a retrieval system or transmitted in any form or by any
means, mechanical, photocopying, recording, or otherwise, without
the prior written permission of the publisher, Kluwer Academic
Publishers, 101 Philip Drive, Assinippi Park, Norwell,
Massachusetts 02061.
Contents
About the Authors
Acknowledgements ix
1 Economic Background and Introduction to the Papers 1
Stanley W. Black
2 The U.S. Basic Industries in the 1980s: Can Fiscal 9
Policies Explain Their Changing Competitive Position?
Barry Eichengreen and Lawrence H. Goulder
Comment: Robert E. Baldwin 71
3 Policy Implications of the Slowdown in U.S. Productivity Growth 75
John W. Kendrick
Comment: CA. Knox Lovell 111
4 The Tax Reform Act of 1986 and Economic Growth 121
Patrie H. Hendershott
Comment: Emil J. Sunley 151
5 A Businessman's Perspective on Competitiveness 155
Paul J. Rizzo
About the Authors
Robert E. Baldwin is Hilldale Professor of Economics at the University of
Wisconsin-Madison. He has written several books and numerous theoretical,
empirical and policy-oriented articles in the fields of international trade and
economic development. He served as Chief Economist in the Office of the
u.s.
Trade Representative in Washington, D.C. and as a consultant to several
U.S. and International Organizations. He currently is serving as the Director
of the N.B.E.R. project on U.S. Trade Relations, is a member of the Council
on Foreign Relations, and is on the Advisory Committee of the Institute for
International Economics.
Stanley W. Black is Georges Lurcy Professor of Economics at the University
of North Carolina at Chapel Hill. He has written books and numerous
articles in the area of international monetary economics and has served on
the staffs of the Council of the Economic Advisors, the Board of Governors
of the Federal Reserve System, and the U.S. Department of State.
Barry J. Eichengreen is Professor of Economics at the University of
California-Berkeley. He has published widely in the area of international
economics and international productivity and competitiveness. He has served
on the faculty at Harvard University and was a member of the Federal
Reserve Board in 1979. He is a member of the N.B.E.R. and the author of
a recent N.B.E.R. study on U.S. productivity and international competitiveness.
Larry Goulder is an Assistant Professor of Economics at Harvard University.
He has published in the international economics field and his current research
concentrates on the development of general equilibrium models to investigate
issues in public finance and international economics. His recent papers
explore the effects of U.S. tax policies on U.S. industries' employment, profits
and growth.
Patrie H. Hendershott is Professor of Finance and John W. Galbreath
Chairholder in Real Estate at the Ohio State University. He has well over 90
publications in the areas of monetary policy, finance, tax reform and real
estate. He is currently the Editor of the AREUEA Journal, and an Associate
Editor of the Journal of Money, Credit and Banking, the Journal of Financial
Services, and the Housing Finance Review. He has served as a consultant to
numerous government agencies and to the Federal Home Loan Bank of
Cincinnati, and has written extensively on the implications of tax reform on
capital formation, financial markets and housing.
viii
John W. Kendrick is Professor of Economics at the George Washington
University and adjunct Scholar at the American Enterprise Institute. He has
published seven books and more than 100 articles in the area of productivity
growth, trends and cycles. He has served as an economic consultant to
industry and government and on the advisory committees to the Department
of Commerce, the Office of Management and Budget and the National
Science Foundation. In 1976-77 he was Chief Economist for the U.S.
Department of Commerce and in 1972-73 he served as Vice President for
Economic Research at The Conference Board. He is on the Editorial Board
of the Review of Income and Wealth and is also on the Board of Directors of
the Pioneer Funds of Boston and the American Productivity Center in
Houston.
C. A Knox Lovell is Professor of Economics at the University of North
Carolina-Chapel Hill. He has published widely in the areas of production
economics and econometrics and has collaborated on joint US-USSR research
on production and cost functions and the efficiency of firms and enterprises
funded by the National Science Foundation. He was a Visiting Professor at
the University of Pennsylvania in 1983-84 and at the University of British
Colombia in 1975-76.
Paul J. Rixz.o is Dean of the Graduate School of Business Administration at
UNC-Chapel Hill, and former vice chairman ofIBM's Corporate Management
Board, Policy Committee and Business Operations Committee. He was
responsible for mM World Trade Americas Group; IBM World Trade
Asia/Pacific Group; and mM Information Systems Group. Mr. Rizzo is a
director of Burlington Industries, Inc., Johnson and Johnson, The Business
Council of New York State and NACME. He is a graduate of the University
of North Carolina at Chapel Hill.
Emil M. Sunley is Director of Tax Analysis in the National Affairs Office of
Deloitte Haskins & Sells. He has published in the field of tax policy and is
widely recognized for his expertise on income tax reform. He appears
frequently before the tax writing committees of Congress, has conducted tax
studies for several states and advised foreign governments on their tax reform
programs. In 1977-81 he served as Deputy Assistant Secretary of the Treasury
for Tax Policy. He has also served as Associate Director of the Office of Tax
Analysis in the Treasury Department and as a Senior Fellow in Economic
Studies in the Brookings Institution.
Acknowledgements
It is a pleasure to acknowledge the support and encouragement of the
then Provost of the University of North Carolina, Samuel R. Williamson, Jr.,
and Assistant to the Provost C. E. Bishop. Together with a committee
composed of Jack Kasarda, Edward M. Bergman, Jay Klompmaker, and
Alfred Field, they supported the concept of a series of conferences on public
policy topics, of which this is the ftrst.
The conference, which was held at the Kenan Center of the University
of North Carolina at Chapel Hill, could not have succeeded without the efforts
of Conference Organizer Alfred Field and the assistance of Cheryl Mitchell
and Kathryn Mahoney. Financial support from the Offtce of the Provost and
from the law ftrm of Moore and Van Allen is gratefully acknowledged.
Productivity Growth
and the Competitiveness
of the American Economy
1 ECONOMIC BACKGROUND AND INTRODUcnON
TO THE PAPERS
Stanley W. Black
The stock market crash of October 1987 raised basic questions about
the health and future of the American economy. Can we sustain a rising
standard of living if we rely on a decline in the dollar to restore our
competitiveness? Do we have the right policies in place to encourage capital
formation, technological change, and increased productivity?
These and other questions were debated at the first Carolina Public
Policy Conference, held at the Kenan Center on the campus of the University
of North Carolina at Chapel Hill on February 19, 1988. The theme of the
conference was "Productivity Growth and the Competitiveness of the
American Economy." It brought together a select group of leaders from the
business world, academia, and government to debate the issues underlying the
future of the American economy in these uncertain times.
The conference focused on the key issue of international trade,
specifically, what is needed to restore the competitiveness of American
industry. Three papers relating to various aspects of this question were
commissioned from outstanding experts from the academic world. Well
informed discussants were asked to prepare comments on their papers. This
volume presents the papers, comments by discussants, and an address given
to the conference by the Dean of the Graduate School of Business at Chapel
Hill. The introduction provides a background setting for the conference and
an overview of the conference papers and discussion.