ELECTRIC APPLIANCES

MACHINE BUILDING

CHEMICAL PRODUCTS/
PETROCHEMICALS 200

STEEL/IRON

Japan in each case = 100

1967

FOREIGN MARKETS

Confidence has also been shaken by the declining competitiveness of U.S. goods abroad, indicated by the increasing trade deficit. Foreign manufacturers are now selling roughly 50 percent more in this country than Americans are exporting abroad. Most of America's television sets, cameras and typewriters are made by foreign companies.

High productivity of Japanese industries has increased the appeal of lower-priced Japanese goods. In 1980, for the first year ever, the Japanese manu­factured more automobiles than the United States. Steel production in Japan is now higher as well. Stiff foreign competition challenges U.S. manufacturers to step-up productivity levels, modernize their factories, and provide better worker training.

"Yes, sir, it's made right here in this country with Jafanese know-how."

Despite high productivity in farming, agricultural exports began to decline in the early 1980s. American farmers had difficulty exporting their goods because of import restrictions imposed by foreign countries and because of the high value of the American dollar in the early 1980s.

Current international trade developments in areas such as foreign competi­tiveness, import/export policies, and currency exchange rates have posed

62 AMERICA IN CLOSE-UP

CHANGES OF A MATURE ECONOMY

tough problems for the United States' economy. Economic developments on the domestic front such as the shift in production from manufacturing to service industries and the federal budget deficit also create challenges for U.S. business and industry.

In recent decades, the rapid maturity of the United States' capitalist economy has prompted some economists to contend that the country's industrial policy is not prepared for the future in what is being termed the "post-industrial age." One of the most significant structural changes has been a shift in production of goods to the delivery of services as the dominant feature of the American economy. Service industries include banking, hotels and restaurants, and communications, as well as many other areas. This sector of the economy now contributes the greatest share of the nation's gross national product.

U.S.A.

Service Industries — the Decisive Sector of the U.S. Economy Percentage of Gross National Product

U.S.S.R.

FEDERAL REPUBLIC OF GERMANY

Primary Sector

agriculture

forestry

fishing

mining energy industry Secondary Sector construction

Tertiary Sector

transportation service industries

BUDGET DEFICIT

Businesses that manufacture high-technology computer, aerospace, and bio­chemical products and services are also on the rise.

Many economists feel that the U.S. has the potential to increase its overall economic productivity by making heavier investment in the new service and high-tech industries instead of subsidizing competitive manufacturing indus­tries. These observers believe that the U.S. economy, still organized for basic production, is unprepared for the future. They believe the government should play a more active role in developing a long-term industrial policy that directs capital investment and training in the new service and high-tech industries. Leaders of labor and industry, however, resist these proposals.

One serious problem that hampers economic growth domestically and affects the United States' ability to sell products overseas is the enormous federal budget deficit. Almost every year since 1930, the government has been spend­ing more money than it has taken in. Deficit spending in the Reagan adminis­tration exceeded $200 billion a year—nearly three times greater than that of any previous administration. Such huge deficits can cripple the economy because they lead to inflation, high interest rates, and unemployment. One of the reasons for the high value of the American dollar abroad which hurt the sale of U.S. products was these deficits. Pressures to decrease the budget are strong. One important measure to control the budget deficit was the Gramm-Rudman deficit reduction plan, adopted in December 1985. This act calls for yearly spending cuts of $36 billion until a balanced budget is reached in 1991. Most Americans are doubtful these targets will be met. Whether the deficit will be reduced depends on the ability of the president and Congress to agree on areas for spending cuts and/or tax increases.

Many experts blame the budget deficit for the sudden stock market crash in October, 1987, which caused a drop in markets all over the world. The dramatic downturn of the U.S. stock market has intensified Americans' fears of an

THE U.S. ECONOMY 63

AGRICULTURE

imminent recession. A falling market can contribute to a decline in spending which could severely weaken the U.S. economy and create economic distress all over the world.

American agriculture is a highly productive sector of the U.S. economy facing tough challenges. Farming nowadays has become an extremely efficient, highly mechanized industry requiring huge investments. In the past thirty years, agricultural land has been concentrated into fewer and fewer hands as large-scale specialized farms replace small family farms.

Date: 2015-12-18; view: 668