hallenge American dominance.
But the American economy still dominates. That is the continuing trend of the international trade race even when other competitors surpass the U.S. in particular areas. Although the United States suffers from an overall balance-of-trade deficit - as it has for several years - the American economy is still the major influence on the direction of the world's fiscal policies. The U.S. position is that strong (Morais 49).
Still, the United States went from being the world's largest creditor nation in 1980 to the world's largest debtor nation in 1990. America has reason to feel concern about its economic position. Unfortunately, the self-examination necessary to address America's economic problems (re: global trade) is so caught up in domestic political slogans that objective analysis is often a neglected side issue.
What are some of the strengths and weaknesses of the U.S. position in the interdependent global economy? Probably the first point to address is whether having a trade deficit is a weakness or not.
There is no question that America imports more than it exports: those figures are published quarterly for the entire financial community to see. On the surface, this appears unacceptable. After all, when more money is leaving the country than entering it, isn't that an indicator of inevitable bankruptcy?
Not according to some economists. To them there is seen in the rise of capital goods imports signs of a cyclical recovery. According to Robert Lawrence, Harvard University professor of international economics:
"[about capital goods imports exceeding capital good exports] We like to blame foreigners for our problems, but this may be the signal that U.S. companies are investing more [in themselves]... It's inevitable that, as the economy recovers, the trade deficit will rise" (Grober 27).
According to this theory, then, a rising trade deficit is a sign of an improving econo...