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Rising Tide: Is Growth in Emerging Economies Good for the United States?
Rising Tide Is Growth in Emerging Economies Good for the United States Author:Robert Lawrence, Lawrence Edwards Does growth abroad hurt US terms of trade--the relationship between the prices at which a country sells its exports and the prics paid for its imports--and cause wage inequality as pundits such as Paul Krugman and Robert Samuelson claim? As the world works its way through the worst financial crisis in over a generation, this book finds that the ... more »United States and other developed countries' terms of trade in manufacturing have been improving strongly since the mid-1990s, and China in particular is not in direct competition with U S exports. Conversely, oil imports are a source of declining US terms of trade. Furthermore, Lawrence and Edwards argue that while the prices of manufactured imports from developing countries drive the terms of trade improvements, these price declines are concentrated in skill-intensive sectors, such as computers and electronics. Contrary to assertions that these price declines are causing wage inequality, they are actually a source of wage equality. Finally, this book examines competitiveness. Lawrence and Edwards find a one-time, downward shift in the US export function in the recession of 2000-02. The data show a major decline during this period in the number of large US firms that export, and this number has not yet recovered. This volume provides an in-depth examination of the underlying components that affect overall levels of US competitiveness and offers fresh insights into how the United States should address this issue.« less