ion has bee mild, and most projections contend that it will remain mild and will be of relatively short duration.
In addition to the recession, however, the country's international trade deficit and its federal budget deficit continue to loom as threats to the economy. The major problem area in the United States balance of payments is the trade deficit.5 The balance of international trade for a country is "the difference between its exports and its imports."6 In a narrow definition, exports and imports are considered to be only tangible goods. A broader definition, however, also covers all intangible services. This broader definition must be further expanded to include remitances, pensions, and other
4Council of Economic Advisers, Economic Report of the President (Washington: United States Government Printing Office, 1991), 222.
5R. Grosse, and D. Kujawa, International Business (Homewood, Illinois: Richard D. Irwin, Inc., 1988), 200 205.
6W. Lederer, International Trade (New York: McGraw Hill Book Co., 1982), p. 55.
unilateral grants, in order to provide a balance on a country's current account.
The overall balance of trade has been on the decline since 1981. The merchandise balance of trade, however, has not been in surplus since 1975, and the deficit increased from that time through mid 1989.7 Since that time, the size of the deficit has been shrinking; however, the absolute size of the trade deficit remains enormous.
In spite of the merchandise trade deficit, the overall balance of trade remained positive, until 1983, when the services surplus was no longer able to overcome the merchandise deficit. It is apparent that the merchandise trade deficit is the major problem area, although the services surplus for the country has also trended generally downward since 1981.
A number of solutions to the problem of the United States trade deficit have been suggested. Foremost among the suggested remedies ...