For both soaring Silicon Valley and slumping Central New York, and for firms both large and small, global integration usually has a very positive impact. In this study, Howard Lewis and J. David Richardson explore new gains from deep international integration, some of which were featured in two earlier Institute studies of the underappreciated benefits of deep export dependence"*." Why Global Integration Matters Most updates the export studies and explores the evidence for a more radical idea.

A growing body of research literature demonstrates that globally engaged firms and their workers enjoy numerous performance benefits over local counterparts that are identical with respect to size, industry, and location. Conscious decisions to export, import, invest abroad, or partner with foreign investors or technology seem to be a catalyst for added benefits, especially rapid and stable job growth. Over time, globally engaged firms rejuvenate whole industries as their market share rises and that of more insular firms shrinks. Any, many, or all types of global commitments reward firms, workers, and local communities.

The study supplements its research survey with real-life profiles of representative American exporters, importers (often businesses importing machines and components), investors abroad, foreign affiliates, and technology partners. It also weighs criticisms and alternative interpretations of the research, and discusses the problems of those left on the margins of global engagement.

There is growing consensus among international trade negotiators and policymakers that a prime area for future multilateral discussion is competition policy. Competition policy includes antitrust policy (including merger regulation and control) but is often extended to include international trade measures and other policies that affect the structure, conduct, and performance of individual industries. This study includes country studies of competition policy in Western Europe, North America, and the Far East (with a focus on Japan) in the light of increasingly globalized activities of business firms. Areas where there are major differences in philosophy, policy, or practice are identified, with emphasis on those differences that could lead to economic costs and international friction. Alternatives for eliminating these costs and frictions are discussed, including unilateral policy changes, bilateral or multilateral harmonization of policies, and creation of new international regimes to supplement or replace national or regional regimes.

As border barriers have declined, private barriers to competition have grown more significant. More and more international trade disputes involve private business practices that allegedly block the market access of rival firms. Such disputes include high profile conflicts between Japan and the United States over semiconductors, auto parts, and photographic film, between the European Union and the United States over aerospace and defense mergers, and between Asian nations and others over access to telecommunications networks. More such disputes are inevitable, especially in sectors that have been traditionally state-controlled but that are now subject to privatization. The regulation of private business practices that restrict competition is called competition (or antitrust) policy. In this book, the authors survey national competition policies and the issues they raise for international trade and investment. The book includes detailed recommendations for international agreement on minimum standards in those competition-policy measures that affect the ability of foreign firms to contest markets. These standards could be negotiated and implemented bilaterally, regionally, and globally at the World Trade Organization. At the international level, governments might agree on certain initial steps to accomplish greater contestability: "national treatment" for foreign-controlled firms, abolition of most international cartels (including those that are now sanctioned), and establishment of mandatory consultation procedures when one government believes that private business practices in another nation foreclose exports or direct investment. There should also be premerger notification requirements for transborder or other mergers having cross-border effects. Further steps might be implemented at a future time.

The contributions in this book identify and take up an important problem in international economics -- the split in theoretical and empirical work in international finance and in international trade. This book is unique in attempting to link these two aspects of the international economy together.The eight chapters explore the way exchange rates and international capital movements interact with industrial structure, comparative advantage, and sectoral wage patterns, focusing on results that are valuable to both real and financial analysis in open economies. The principal sources of real-financial linkage discussed throughout the book are structural and intertemporal.In an introductory section, the editors provide an overview of real-financial linkages among open economies and Alan Stockman discusses interactions between goods markets and asset markets. The section on structural sources of real-financial linkages includes chapters by Paul Krugman on pricing to market when the exchange rate changes, Richard Marston on real exchange rates and sectoral productivity growth in the United States and Japan, and Irving Kravis and Robert Lipsey on the assessment of national price levels.A final section on intertemporal sources of real-financial linkages presents an empirical investigation by Michael Hutchison and Charles Pigott into real and financial linkages in the macroeconomic response to budget deficits, and work by Koichi Hamada and Akiyoshi Horiuchi on monetary, financial, and real effects of Yen internationalization.Paul De Grauwe and Bernard de Bellefroid consider long-run exchange rate variability and international trade.