The International Trade Deficit: A Research Proposal

This paper describes a proposed research project. Included in this proposal are (1) a statement of the problem, (2) the research hypothesis, (3) significance of the study, and (4) the research methodology.

STATEMENT OF THE PROBLEM

The American international trade deficit (the largest in the world), and the Japanese international trade surplus (also the largest in the world) invite comparisons of the economic performance of these two countries, and between the United States and other countries as well (The Conference Board, 1989, p. 1). One of the factors often emphasized in comparisons of the economic performance between the United States and other countries is productivity (Thurow, 1985, p. 14).

The available data do not indicate that productivity in Japan or any other country is higher than that in the United States. What the available data do indicate is that Japanese productivity in particular, as well as that of some other countries is improving far more rapidly than is American productivity. Should existing trends continue unchanged, the Japanese labor productivity in absolute terms would equal that of the United States in approximately the year 2000.

There is little question that productivity problems have contributed to the development of the massive American international trade deficit. The productivity situation has also caused problems for American manufacturers in the domestic markets of the United S

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tions (while maintaining the labor force) can go just so far. Further, America's competitors are not standing still. It has been pointed out the benefits of slimming down and restructuring are running out (Pennar, 1988, p. 102). In terms of productivity growth, the United States ranks only fifth among the industrial countries (behind, in order of greatest productivity growth, Japan, Britain, France, and Italy) (Special Report, 1988, p. 102). Additionally, the United States ranks well behind both the European Economic Community and Japan in factory automation growth, and trails in this area, to a lesser extent, the middle industrial countries in Asia (Special Report, 1988, p. 102). The problem is particularly acute for the relatively small precision machine parts manufacturers in the United States. Many of these firms are finding their longtime customers turning to foreign manufacturers for reasons primarily associated with cost. THE RESEARCH HYPOTHESIS The research hypothesis for the proposed project concerns the operations of the relatively small precision machine parts manufacturers in the United States. It is hypothesized that, through the application of technologically advanced (state of

Category: Economics - T